Reliance Jio, the much-talked about venture of Mukesh Ambani, is finally upon us. The super cheap call rates and data plans definitely grabbed a lot of attention.
The prices are roughly one-fifth of what you are being charged so far. And that is Rs 50 for one gigabyte. Reliance Jio will also not charge for voice calls or for roaming calls within India.
And though Mukesh Ambani did not announce the rates, he said that the international roaming rates will be cheaper than other telecom companies.
For obvious reasons, Jio generated a lot of interest with many signing up for the company’s trial offers. And while it definitely sounds lucrative, don’t you think you need to know everything.
A Quora user has very efficiently explained about the business model of Reliance Jio, and we think that you need to read this before you make you decision.
Click the slide to read what he had to say to make an informed decision…
Some of the very obvious questions that come to mind after knowing about the rates of Reliance Jio are –
How are they offering 4G at such low rates?
How are they offering unlimited 4G data at night?
How are they providing unlimited voice calls for free to every Jio customer?
One Kshitij Salgunan, an ‘Indian Internet Activist’, had something to say about their business model, and you cannot miss this.
He spoke about the tariff plans of the venture, explaining why the customers will end up paying more than claimed.
He wrote: ‘If you are a voice-only kind of person, then you would be okay with the Rs 149 per 28 days plan, as you will get free unlimited voice calls. But, even though you are not explicitly paying for voice, you are already paying over Rs150 per month, thus their ARPU will by default be as good as the current players.
Now, if you are a moderately data using person, which plan would you choose? Did you see that there is no plan in-between the Rs 149 and Rs 499 plans? This is basically a psychological trick to get you into the Rs 499 plan. Many people will compare it with the smaller plan and see that you are getting Unlimited 4G night data and choose atleast the 499 plan.
Now, again see that if you want to really use more than 4Gb of 4G, then you have to spend double and move to the 999 plan. Did you notice that there is nothing in-between?
Also, notice that all these plans are for 28 days which can easily be perceived as ‘a month’ by most people. If we divide the number of days in an year with 28, we will realize that we are paying for 13 ‘billable months’ in an year. (365/28=13.03).’
Reliance Jio promised that the rate will be as low as Rs 50/GB. Salgunan, however, explained how it is not.
He wrote on Quora: ‘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 will be
0.3GB for Rs149 = ~Rs 497/GB (Will anyone choose this for data?)
4GB for Rs 499 = ~Rs 125/GB
10GB for Rs 999= ~Rs 100/GB
20GB for Rs 1499= ~Rs75/GB
35GB for Rs 2499= ~Rs71/GB
60GB for Rs3999= ~Rs66/GB
75GB for Rs 4999= ~Rs66/GB
Did you see that even their highest plans doesn’t go as low as their advertised Rs 50/GB rate.’
On providing unlimited data at night, Salgunan said that it doesn’t really cost anything for the network provider to give you free internet if you have built an entire infrastructure.
Here’s the reason in detail: ‘The reason why most internet providers limit your data is basically because they do not have enough bandwidth to handle so much data. In the case of Jio, they have already laid an awesome fiber optic network which is designed to even handle the 5G and 6G. So, they do not have much of the data bandwidth problem.
Other telecom companies were primarily made to handle voice calls and they have limited data bandwidth. Also, other companies do not own nationwide fiber network, so they have to pay to use the fiber network of other companies. This is the reason other companies don’t usually provide unlimited plans.
Jio currently have the ability to provided truly unlimited data plans, but they will not do so, because that will decrease their profits. They have already decreased prices on average by 50%. This means people will anyway be happy to use their services. If they provide more GBs in the lower end plans, then lesser people will buy their higher plans. So, currently their pricing is optimally placed to increase their profit. When other companies reduce their prices, it is likely that Jio will also further reduce their prices.’
About the unlimited free voice calls, here’s what Salgunan said. Read on…
Here’s what he said: ‘Again, Jio has an all IP network, so all voice calls will go through the internet just like skype or whatsapp. There is not really any point in charging for voice anymore. It is an outdated system and there shouldn’t really be any surprise in why Jio totally abandoned it.
If hypothetically, Jio had tariff for voice calls, then some company similar to whatsapp would have launched an app through which you can do free voice call over the internet.(Infact whatsapp itself have a voice-call option) Once everyone has a good internet connection, people would anyway use such services to make their calls.’
We bet most of you do not know about LYF phones. Do you?
Some months ago, you could only get access to a Jio SIM if you bought these phones. People bought these phones just because of the unlimited internet and voice calls.
Salgunan explained why this was a clever move by Reliance. Here’s what he wrote: ‘This was a very clever move by Jio. The reason why there are so many versions of these phones is because of this business model.
- Jio would go to china and then buy previous generation unsold 4G phones for dirt cheap prices in bulk. No one wants to buy these phones, so obviously the manufactures will happily sell it for very low price.
- Then it is re-labeled and sold in India. This is how they have several phones with totally different specs.
- A totally outdated phone which no one would otherwise buy is coupled with Jio preview offer and now everyone wants to buy it just for the Jio offer.
- Jio can now sell these phones and make profit. Plus, they get to test their network and solve the bugs. Plus, they can venture out into the mobile device market.’
Here’s where their real money is coming from. Click the slide to know…
They have several apps which have true potential in them.
- ‘JioPlay : This has the potential to become the TV channel company. My prediction is that Jio will soon release something like Google chromecast to provide this service directly to TVs. The ability to watch Live TV channels on smartphones is also a cool idea, especially in India. This may become the most used app in rural areas too.
- JioOnDemand : This has the potential to become the Netflix of India. Imagine if those who currently pirate movies had an option to get those movies in HD quality legally for nearly free. It can benefit both the users and the producers.
- JioBeats : Legal music. It has the potential to become spotify of India.
- JioMags : Most popular magazines in ebook format. My cousin who reads tech magazines on regular basis loved it.
You get the point? They can make any type of app in the future and dominate that category with minimal efforts.’
He further wrote: ‘We need companies like Reliance to make such bold moves and invest in India. This is good for everyone. It is a win-win situation. It will increase the progress rate in India and will improve our quality of life. It will also give much needed jobs to millions of people.
Also, we absolutely need competition in this stagnated telecom industry which is currently dominated by players who may have secretly made agreements with each other to not compete on the basis of price… By just making their tariff plan in such a way that most people interested in 4G have to pay over Rs500 per month, Jio will be making way more money than the current players.’
Click here to read his full post.