There is a sea of questions around JIO:
How & why is Reliance Industries Limited (RIL) offering 4G data at such cheap rates? How & why is RIL providing unlimited voice calls (local/STD) free to every JIO customer? How & why is RIL offering unlimited 4G data at night? How likely is that Jio will revolutionize the internet market in India?
Lets try to answer all above questions by
Understanding what is Jio & what is RIL's Business Model for it.
Brief History of RIL & JIO:
RIL is an Indian conglomerate; that owns businesses across India in sectors like - energy, petrochemicals, textiles, natural resources, retail, telecommunications; founded in 1966 by Shri Dhirajlal Hirachand "Dhirubhai" Ambani and is currently run/owned by his son Shri Mukesh Dhirubhai Ambani. RIL is the 3rd most profitable company in India, the 2nd largest publicly traded company in India by market capitalization, & the 2nd largest company in India as measured by revenue after the government-controlled Indian Oil Corporation.
In Jun 2010, RIL bought a 96% stake in Infotel Broadband Services Limited (IBSL) for INR4800Cr. Although unlisted, IBSL was the only firm to win broadband spectrum in all 22 zones in India in the 4G auction that took place earlier that year. Later continuing as RIL's telecom subsidiary, Infotel Broadband Services Limited was renamed as Reliance Jio Infocomm Limited (RJIL) in Jan 2013.
RJIL doing business as Jio, is a LTE mobile network operator in India. It is a wholly owned subsidiary of Reliance Industries headquartered in Mumbai, that provides wireless 4G LTE service network (without 2G/3G based services) and is the only 'VoLTE-only' (Voice over LTE) operator in the country which lacks legacy network support of 2G and 3G. The services were first beta-launched to Jio's partners and employees in Dec 2015 and later services were commercially launched in Sep 2016.
Facts about JIO:
💚 Largest fiber optic network in India - RIL laid 250k KMs of high quality fiber optic cable and installed over 90k eco-friendly 4G towers. Importantly, Jio is using cables of 288 fibers or 96 fibers in most places while other players have cables with only 12-24 fibers. More fibers means more bandwidth and more speed. This is an unprecedented feat in Indian mobile network industry. Most other companies do not lay such large amount of cables, instead they depend on agreement with various other companies who own fiber networks. Apart from this, Jio also have access to the cables laid by Reliance communications.
Technology angle:
How & why is Reliance Industries Limited (RIL) offering 4G data at such cheap rates? How & why is RIL providing unlimited voice calls (local/STD) free to every JIO customer? How & why is RIL offering unlimited 4G data at night? How likely is that Jio will revolutionize the internet market in India?
Lets try to answer all above questions by
Understanding what is Jio & what is RIL's Business Model for it.
Brief History of RIL & JIO:
RIL is an Indian conglomerate; that owns businesses across India in sectors like - energy, petrochemicals, textiles, natural resources, retail, telecommunications; founded in 1966 by Shri Dhirajlal Hirachand "Dhirubhai" Ambani and is currently run/owned by his son Shri Mukesh Dhirubhai Ambani. RIL is the 3rd most profitable company in India, the 2nd largest publicly traded company in India by market capitalization, & the 2nd largest company in India as measured by revenue after the government-controlled Indian Oil Corporation.
In Jun 2010, RIL bought a 96% stake in Infotel Broadband Services Limited (IBSL) for INR4800Cr. Although unlisted, IBSL was the only firm to win broadband spectrum in all 22 zones in India in the 4G auction that took place earlier that year. Later continuing as RIL's telecom subsidiary, Infotel Broadband Services Limited was renamed as Reliance Jio Infocomm Limited (RJIL) in Jan 2013.
RJIL doing business as Jio, is a LTE mobile network operator in India. It is a wholly owned subsidiary of Reliance Industries headquartered in Mumbai, that provides wireless 4G LTE service network (without 2G/3G based services) and is the only 'VoLTE-only' (Voice over LTE) operator in the country which lacks legacy network support of 2G and 3G. The services were first beta-launched to Jio's partners and employees in Dec 2015 and later services were commercially launched in Sep 2016.
Shri Mukesh Dhirubhai Ambani launching JIO
Facts about JIO:
💚 Largest fiber optic network in India - RIL laid 250k KMs of high quality fiber optic cable and installed over 90k eco-friendly 4G towers. Importantly, Jio is using cables of 288 fibers or 96 fibers in most places while other players have cables with only 12-24 fibers. More fibers means more bandwidth and more speed. This is an unprecedented feat in Indian mobile network industry. Most other companies do not lay such large amount of cables, instead they depend on agreement with various other companies who own fiber networks. Apart from this, Jio also have access to the cables laid by Reliance communications.
Technology angle:
Mobile towers are like large WiFis. Just like the WiFi in your home is connected by wires to your internet service providers, mobile towers needs to be connected to fiber optic cables under the towers and these wires connect to large ISPs. So, when you use 3G/4G, you are only communicating wirelessly inbetween your smartphone and the tower. Once the data reaches the tower, the entire data is sent through these fiber optic cables. This is why fast fiber network cables are really important for providing fast 4G.
Competition angle:
Other service providers already had fiber network laid for 2G/3G - they just replaced the mobile tower with new 4G equipment while relying on old fiber networks - They are worried about upgrading to better infrastructure because last time when they upgraded to 3G, they lost thousands of crores in Investment as 3G never generated as much income as they hoped for.
RIL angle:
Jio knows that 5G will come soon, so they are making their entire fiber optic network in such a way that it can be seamlessly upgraded to 5G tomorrow.
💚 Only company to have 4G spectrum in All zones - Because IBSL/JIO was the only firm to win broadband spectrum in all 22 zones in India in the 4G auction, it has the capability of providing 4G services in all 22 circles
RIL angle:
Jio knows that 5G will come soon, so they are making their entire fiber optic network in such a way that it can be seamlessly upgraded to 5G tomorrow.
💚 Only company to have 4G spectrum in All zones - Because IBSL/JIO was the only firm to win broadband spectrum in all 22 zones in India in the 4G auction, it has the capability of providing 4G services in all 22 circles
Competition angle:
Bharti Airtel can provide 4G services in 15 circles
Idea can provide 4G services in 10 circles
Vodafone can provide 4G services in only 8 circles
RIL angle:
JIO can provide 4G services over India.
Idea can provide 4G services in 10 circles
Vodafone can provide 4G services in only 8 circles
RIL angle:
JIO can provide 4G services over India.
💚 Largest 4G network in India - Jio's coverage is bigger than 2G coverage of most other players! Jio has 4G network coverage at over 1.02Lac villages & 18k towns. JIO plans to cover all of India by 2018.
💚 JIO only has 4G - This has many benefits to both RIL and users. RIL can fully focus on one technology instead of maintaining 2G+3G+4G at all places. It is cheaper as they have only one service. One annoying-problem people face with 3G is that it often switches automatically to 2G. Since Jio only have 4G, one will either get high speed internet or no internet. They also have agreements with BSNL and Reliance communications for using their networks to provide 2G/3G at places which they don't give 4G.
💚 Huge investment - RIL invested $22B (INR150000Cr) into this project - This is almost as much as the major incumbent telecom firms, like Bharti Airtel Ltd, Idea Cellular Ltd and Vodafone India Ltd, have spent over the past more than 20yrs of being in operations.
Competition angle:
This forces other players to invest more into their own infrastructure - Airtel has already announced that they will invest 60,000crore in modernizing their network.
Technology angle:
RIL owns two international submarine cable landing stations - Bay of Bengal Gateway (JIO is part of this 8000KM long submarine fiber optic cable which connects Malaysia and Singapore to Chennai) & Asia Africa Europe One submarine cable system (JIO is part of a 20000KM long cable which connects Europe to Mumbai. This cable has 32-40 terrabit per second capacity against the Airtel's cable system of 3.84 tbps)
💚 Ecofriendly towers - RIL brought the concept of eco-friendly and camouflaged cellular towers to India. JIO's towers look like a tree are not actually a tree. It is a cellular tower which is made to blend with the nature and look like a tree. This is done so that the usual bulky metallic telecom towers don't damage the place's natural view.
💚 Only company in India to use VoLTE (calls are also sent as data) technology - 4G is exclusively designed for high speed data transfer and it cannot handle normal mobile calls. To solve this issue, other players switch to 3G/2G whenever a call is made. Since Jio doesn't have 2G/3G, they send calls as data through 4G itself. This is similar to skype/whatsapp calls but probably in much better quality.
💚 Disruptive Pricing - JIO started with giving FREE calls+data for almost an year. And then moved to giving 30GB data with FREE Calls for INR300 per month.
💚 1GB/sec wired Broadband - Jio is not just about 4G - They are also planning to offer ultra high speed fiber optic connections to homes too with peak connection speeds up to as high as 1 GBps.
Business model of JIO:
Tariff Plans of JIO
After looking ta the attached image, if we exclude the unlimited night data (and the wifi data which many of us may not have access to), then the price per GB of these plans is in range of INR60 to INR125 per 1GB. If you are someone who uses 5GB of data every month, and you were currently spending INR1000 per month with the current providers, you will be happy that you can get same amount of data for INR500. But, you are likely to spend the same amount of money over the time and consume 10GB of data for INR1000, instead. This is because 4G speeds are awesome and now there are many more ways to spend the data. And, since you have the budget for it, you are likely to spend more. So, even though you are getting much more value than the current operator, JIO will still make the same/better revenue, as compared to the existing competitors.
RIL angle:
If you do the math, you will be able to realize that even if 25%-30% of people in India will use 2GB of JIO internet data per month, then RIL will recover the entire initial investment $22B in just 3yrs.RIL/JIO has left no stone unturned for this mega project. According to Shri Mukesh Dhirubhai Ambani, currently India stands 150th in mobile Internet rankings out of 230 countries. He believes that India's rank will go up from 150 to among the top 10 of mobile Internet rankings in the world due to this project. We need huge companies like Reliance to invest in such mega projects for our entire country to progress.
Jio Route (Jio's full fiber network) on Google Maps:
google.com/maps/d/embed?mid=1dAcxwsLqgNaMiqkf4r6pXMQN_8o
Sources:
https://en.wikipedia.org/wiki/Telecommunications_statistics_in_India
https://en.wikipedia.org/wiki/Jio
http://www.trai.gov.in/sites/default/files/Press_Release_11_17_Feb_2017_Eng_0.pdf
telecom.economictimes.indiatimes.com/news/3g-4g/reliance-jios-voice-and-broadband-network-is-upgradable-to-5g-mukesh-ambani/47644803
http://www.livemint.com/Industry/tyb7WgA82kVA9vGM5DtHoJ/Reliance-Jio-to-raise-Rs15000-crore-via-rights-issue.html
http://www.airtel.in/leap
telecom.economictimes.indiatimes.com/news/undersea-8000-km-long-cable-project-by-reliance-jio-vodafone-others-reaches-chennai/50686502
http://www.dnaindia.com/money/report-rjio-logs-into-biggest-broadband-cable-system-2157904
http://telecomtalk.info/reliance-jio-takes-the-green-towers/143650/
https://www.youtube.com/watch?v=vgZoVtu8aag
http://trak.in/tags/business/2016/03/30/reliance-jio-data-price-voice-calling-sim-card/
http://telecomtalk.info/jio-fiber-to-the-home-deliver-speeds-up-to-1gbps/147416/
indianexpress.com/article/technology/tech-news-technology/with-rjio-4g-indias-mobile-internet-ranking-to-reach-top-10-globally-mukesh-ambani/
https://www.quora.com/How-likely-is-that-Reliance-Jio-4G-will-revolutionise-the-internet-market-in-India/answer/Kshitij-Salgunan
https://www.quora.com/What-is-the-business-model-of-Reliance-Jio/answer/Kshitij-Salgunan
https://www.google.com/maps/d/embed?mid=1dAcxwsLqgNaMiqkf4r6pXMQN_8o&hl=en_US
https://www.quora.com/How-likely-is-that-Reliance-Jio-4G-will-revolutionise-the-internet-market-in-India/answer/Kshitij-Salgunan
https://www.quora.com/What-is-the-business-model-of-Reliance-Jio/answer/Kshitij-Salgunan
https://www.google.com/maps/d/embed?mid=1dAcxwsLqgNaMiqkf4r6pXMQN_8o&hl=en_US
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