No sign of higher tariff as Jio works on next disruption

Experience Centre showcases Jio's futuristic products and services like Jio Money, JioMags, JioNews

Ghansoli, with its origin as a small fishermen’s village, is known for its railway station linking distant parts of Mumbai. But, young professionals may now be more familiar with this part of Navi Mumbai for the large industrial area as a career opportunity. The 505-acre Reliance Corporate Park (RCP) is one among the many industrial hubs there, in the midst of change. Although the 20-somethings walking into the complex with their backpacks may give an impression it’s a BPO or a start-up, most of them are headed to Jio, the latest telco that has forced the big players in the sector to drop tariffs like never before and take a hit where it hurts. With the telecom industry debt at a worrying Rs 4.5 lakh crore, incumbents have alleged “predatory pricing’’ by Reliance Jio has made the going tough for companies. 

Business Standard spent half a day at RCP last week to piece together what’s keeping the telecom industry on its toes. While the jury is split down the middle on whether Jio is really a gamechanger or if it’s just a short-term disruptor, the scale of the project would make one believe the race has just begun. 

At the entry to the complex, the warning is clear — no vehicle can go beyond 30 km an hour. It must be a coincidence that speed has been part of the narrative around Jio. While a latest report by the Telecom Regulatory Authority of India (Trai) rated Jio’s 4G network as the fastest, another research by Hong Kong-based UBS Securities said the company had lost momentum. Citing a Trai report, UBS pointed out broadband subscriber addition at Mukesh Ambani’s telecom business had slowed down considerably in March compared to the previous months.

Insiders dismiss any talk around loss of momentum and reiterate the role that incumbents (Bharti Airtel, Vodafone, Idea) have played in denying Jio points of interconnection (PoI) resulting in call drops. The incumbents, such as Bharti Airtel, have fought back, saying they have given more PoIs and much faster to Jio than to any other company in the past. Interconnection cases between Jio and others are being fought in courts now.

Critics argue it’s tough to convert Jio telecom subscribers, used to free data, into consumers who would pay. “If you give away cheap, it’s not easy to get your subscribers to pay,’’ an analyst said, stressing that Reliance had “self-selected its customers.’’

Company insiders denied there was anything such as “self-selection’’. There was no effort to look for people for free, they maintained, adding that Jio subscribers were now spending as much as Rs 10,500 on smartphones. A recent analysis showed Jio Arpu (average revenue per user) at over Rs 300 was higher than that of other telcos. 

The Wednesday meetings are well-known where Mukesh Ambani, mostly along with his right-hand man Manoj Modi, is learnt to have an open-house with the employees. But, meetings are called at a short notice on other days as well. When BS visited the premises (it was not a Wednesday), the most-packed cafeteria in one of the 20-plus buildings of the complex was suddenly emptying out. The murmurs across the tables indicated the chairman had arrived and was calling people to his seventh floor office in an adjacent building for an urgent meeting on Jio.

This particular cafeteria is different from the rest. Out of the 10 plus cafeterias or restaurants, this is the only one offering non-vegetarian cuisines of many kinds. Even as the Reliance group is known to be strictly vegetarian, it broke from tradition to cater to thousands of expats working at RCP, especially for Jio. International vendors, especially Samsung, Cisco, Nokia, have a dominant presence here. 

There are other changes, too. A group such as Reliance is often associated with employees in their 40s and 50s. At Jio, the current average age is 30 years. A company source explained that Jio is not a telco at all, it’s more a start-up and therefore it’s natural to have much younger employees. 

On the way to the Experience Centre, that showcases Jio’s futuristic products and services, one is given to understand that out of the 61 lakh square feet builtup area in the premises, around 32 lakh sq ft is dedicated just to Jio. More than 14,000 Jio employees and consultants work from here. Across offices all over the country, around 100,000 people work for Jio, according to estimates. 

The experience centre, with several pods and clusters, demonstrates the experiments that the company is going through for anything from transaction to reading, entertainment to education, health to futuristic cars and automated homes. It’s about reducing time to acquire SIM cards through cheap and easy to assemble scanbox — a foldable cardboard box fitted with an LED strip that removes the need for a scanner and submission of lengthy paperwork, for instance. Then, there’s SwitchNwalk to help transfer data through a hotspot (available at JIO centres). During the walkthroughs, one gets to learn that. 

Jio has seen maximum data consumption in North-eastern states so far. Jio Money (like mobile wallet Paytm), JioMags, JioNews are all there being showcased in large plasma screens. Connected car, about to go into pilot, allows users to track the car and send alerts if it leaves a certain area. Smart homes can be connected to 44 devices for multiple functions. 

Sources indicated that the experience centre would be expanded soon with several other futuristic services likely to be included. And what would be the next round of disruption? Could be entertainment and gaming. 

Freebies and telecom charges are part of any conversation at Jio, but indications are that there’s unlikely to be any increase in tariff in the near future. What about profitability then? Way before 2021, Jio would be profitable, according to sources. 

The company had in statements in February said its subscriber numbers had crossed 100 million, though critics argue that the figure may have come down after the service has gone pay. 

A company spokesperson said, “With superior technology, spectral efficiency and an extensive fibre backhaul, Jio has built a capacity that can easily cater to bulk of India's forecasted demand for data over the next five years.’’ But, sources said if the Department of Telecommunications (DoT) holds a spectrum auction, Jio’s surely going to be there bidding along with others.