Reliance Jio Infocomm Ltd may extend its “Welcome Offer” till march 2017, which is three months more than expected 31 December. Jio has already been burning a large amount of money by offering free services and extending it will only add to the woes of investors. So there must be some substantial reasons that persuaded Jio to take this decision. In this article, we will try to figure out those reasons:
4G speed slower than existing 4G networks:
Back in June-August, people were applauding Jio for providing high data speeds round the clock. But with growing users, the data speeds started plummeting, and now it is highly unlikely to get 4G speeds during peak hours. Though it can be attributed to lack of a cap on the usage (Whopping 16,000TB per day), nevertheless, the speeds are sub-par and unusable at times. Also, Jio stands at No.5 in India with average download speed of 6.2Mbps, whereas, incumbent Airtel retains the top position with 11.2Mbps.
Unviable voice calls:
If you are using Jio SIM, you would have most probably experienced difficulty in placing a call to the mobile number on another network. On an average, only 25 out of 100 calls made are successful. There has been a never-ending tussle going on between Jio and incumbent players over interconnect points (Pols) and resolution to the problem seems a distant dream. As unlimited calls are part of Jio commercial plans, it needs to resolve the problem before it can actually start charging the customer.
Commenting on this, Anshuman Thakur, head of strategy and planning at Reliance Jio, said: “We have told Telecom Regulatory Authority of India (TRAI) and government that customers have faced issues with regard to the quality of service due to the interconnection congestion and they have not been able to enjoy the services that they deserve and what we want to deliver to them. And till we are in a position where we can deliver the quality of service as desired by the Jio management, it will be unfair to charge the customer.”
Current players gearing up for the fight:
Today, Airtel partnered with Nokia to test VoLTE in certain circles. Also, it is planning to come up with aggressive pricing to combat Jio. Gopal Vittal, CEO of Airtel, said, “It’s difficult to compete with a free services offer and we expect Jio’s full-fledged price launch to happen sometime in December, but we too will come up with aggressive 4G bundled packs to take them on shortly.”
On the other hand, Vodafone is planning to invest big in India over 12 months. Sunil Sood, CEO of Vodafone, said, “Data is the next big opportunity. We will double our network rollout target this year together with partner Nokia. A massive amount of money will go out in next 12 months”. In the first step, it acquired airwaves across 1800, 2100 and 2500 MHz bands in the recent auction.
Conversion of Current Users into Customers:
On October 5, Jio boasted that it created a record by getting 16 million subscribers to its network in the span of 26 days. But the real question is how many of these users will convert into full-time customers of Jio? Keeping in view of the current network performance, the prospects of big conversion are bleak. Jio needs to incorporate trust among its current users by providing exemplary services. Only after that it can expect some long terms customers.
Altogether, it is quite apparent that Jio is not in a position to kick start commercial plans. It needs to figure out solutions for the above problems which may not be possible in two months. So, Jio’s decision to extend “Welcome Offer” is indeed be a wise move.