So, Reliance Jio is finally here in India and is entirely living up to our expectations. Jio’s model focuses on creating a customer base with high ARPUs, a future proof 4G network and on transforming the telcos’ dumb pipes to earn money through content. Considering that they are entering the business now means that they managed to leapfrog over the traditional Indian operators still slugging out trying to repay the loans from the 3G auction in 2010. The much vaunted next-gen Jio network and its unique business model could end up transforming Indian telecom forever.
Jio’s smart pipes
In fact, Jio’s entry might end up transforming a lot of other businesses apart from traditional CSPs since like RIL, Jio also has leveraged backward integration with scale. RIL is already present in multiple businesses such as online retail, content production, news, magazines etc. RIL intends to leverage their current presence in the brick and mortar format through their app-ecosystem using Jio’s network. Through Jio, RIL can easily leverage economies of scale and earn fat profits through their app-ecosystem. This study says that Jio could potentially kill 30+ businesses in India. Jio, in essence has set the cat amongst pigeons.
Another opportunity for MVNO’s?
Alongside RIL Jio’s entry in the Indian market, another potential disruption has finally moved from the drawing boards to execution. This is the DoT’s order to allow the entry of MVNOs in the Indian telecom market. Earlier, Virgin mobile and Future group’s T24 had both tried and failed at retailing to Indian telecom subscribers. It was partly due to bad strategy and worse implementation. Now it seems that nearly 70 companies want to apply for MVNO license in India.
Over the years Indian telecom providers – market leader Airtel, followed by Reliance and Videocon have been expanding their offerings to quad play – though its a quad play model that promotes DTH in place of traditional IPTVs in the west. Now, with increasing data consumption and even more expected in the years to come, Indian players are making the slow and certain shift towards a complete quad play set up. Quad play though, comes with its own set of problems with subscribers preferring better service over simplified billing processes.
Future for Indian telcos
I think Indian telcos are pretty well poised to withstand the onslaught of Jio. Jio is the first player to actually open up value innovation using the blue ocean strategy described in my earlier posts. With the regulatory framework in place, we might actually see MVNOs trying to bring in their own value innovation in the market. This, coupled with the fact that airtime isn’t the only denomination that helps increase ARPUs could actually help spawn and sustain a number of MVNOs in the Indian market.