Six years after announcing plans to enter the market, Reliance Jio finally launched 4G service on 5 September, with its entry expected to dramatically alter India’s mobile landscape.
Jio’s launch will serve to accelerate migration of mobile users to 4G and help drive 3G adoption as prices fall across the board, according to a report from GSMA Intelligence (GSMAi). Its entry will also accelerate consolidation by increasing the pressure on the financial health of smaller operators and compelling India’s larger operators to consolidate their positions.
Jio has entered a market that is already the most competitive globally, as measured by the Herfindahl-Hirschman Index (HHI), the report said. Its aggressive pricing has forced rivals to slash data prices, with the price (incremental cost) per gigabyte of data falling by as much as 80 per cent across both 3G and 4G services.
Additional network investment and pressure on tariffs will spur 3G and 4G adoption, with the GSMAi report forecasting mobile broadband will account for about half of all connections (670 million) by 2020, while LTE adoption will jump from less than 1 per cent today to 20 per cent, or 280 million connections.
Subscribers are currently using the Jio service for free as part of a trial until the end of the year. When it begins charging customers in January, Jio’s rates will be the lowest anywhere in the world according to Mukesh Ambani, chairman of Reliance Industries.
Assuming Jio can manage the demand, the report said the free trial will help accelerate its entry into an already hyper-competitive, price-sensitive market. Offering free voice (VoLTE) will be particularly attractive for Indians, who are currently charged roaming rates for making calls to different areas within the same country.
The key barrier to Jio’s success, the report’s authors argue, is the price differential between 3G and 4G handsets. However, Jio is helping drive down the price of 4G handsets through its own-brand LYF smartphones, with a number of models offered at or below $50.
Access the full report here.