FREE SIMS for EVERYONE: How Reliance Jio totally sandbagged Bharti Airtel, Idea Cellular via its preview offer

jio-preview

Today, Reliance Digital stores across the country are seeing long queues of customers waiting to get free SIMs with three months of unlimited data and voice calls.

“We are taking about half an hour to complete the process for each person,” said an employee at a Digital store in Kerala. “There are customers waiting. Please be ready to stand in queue if you are coming today,” he warned.

With this public beta, Reliance Jio has reached the final stages of its test program which started eight months ago with a limited employee launch. Yet, if you thought this was merely about network testing, you couldn’t be farther from the truth.

AMBANI’S MASTERSTROKE

It was in May that Jio first started inviting the public on to its network by giving free 90 day unlimited trial experience to anyone who bought a LYF handset. Last month, it was again expanded to people who owned a high-end Samsung phones and on Independence Day, Jio started sales of its JioFi device, bundling the Rs 2,899 device with three months of unlimited data usage.

The latest move to extend it to anyone with a 4G device means that the company has more or less made its services available to anyone who wants it.

The only people who cannot use the company’s services now are those who do not have 4G handsets– who don’t matter anyway to a 4G-only provider.

So, the question is, why hasn’t the company started full commercial launch yet? Why not launch the port-in service? Why not launch tariff plans?

The reason is likely to be regulatory and competitive rather than technical.

If Jio was to start commercial operations right now, it would have to get its data tariffs and schemes approved by the TRAI. If it said: We will offer free data and calls till we reach X number of users, TRAI may have found it difficult to approve such a ‘plan’. Besides, competitors could have challenged the ‘tariff plan’ in front of the competition commission as predatory pricing.

This wouldn’t have helped RJio’s primary aim — to be present on all high-spending telecom consumers’ handsets, even if it is in the form of a second SIM.

And what can be a better way to do it than to offer free calls and data for anyone who owns a 4G handset?

Moreover, since it’s a ‘test’ and not ‘commercial’, Jio also does not need to get TRAI approval for any tariff plan either.  In fact, there is technically no tariff plan.

It can argue that the network is still being tested, and it would be difficult to disprove it.

ANGRY COMPETITORS

Jio’s shrewd strategy is starting to pay off as the biggest data users on rivals’ networks — who also tend to be the highest revenue-generating customers — are opting to buy a second SIM from Jio on an experimental basis.

This is exactly the opening that Jio needs to attract them to its network.

And this is also the kind of tactic that Jio’s rivals failed to anticipate.

Bharti Airtel, Idea Cellular and Vodafone had drawn up contingency plans to cut their data tariffs in case Jio priced its plans and packs very low, but these plans were drawn up on the assumption that Jio will charge some price for its data.

Now that data and voice is being given totally free to anyone with a 4G handset, they cannot compete with the offering unless they too reduce their prices to zero — an unthinkable proposition.

So what will happen?

The answer is that Jio will get what it wants — an entry into the dual-SIM smartphones of the most high-spending telecom consumers in India.

It will then try to wean these customers away from their current provider — whether Bharti Airtel, Idea Cellular or Vodafone — by offering big discounts if they port their main number to its network after three months.

Whether the Mukesh Ambani-led firm will succeed in its gameplan or not depends on the impression that the company is able to create on these big-spending consumers during the preview period of 90 days.

If these consumers feel that the network is reliable and consistent, there is a high chance that they may port their numbers to Jio at the end of the 90-day period.

Even if they don’t port their numbers, Jio still stands to benefit as it is primarily a data operator, and it doesn’t really matter if these high-spending consumers use Airtel, Idea or Vodafone to make voice calls as long as they use Jio for data.

And this can be achieved by being present on one SIM slot of the two that are present on most phones.

The rivals, expectedly, are not very happy at being sandbagged this way.

They were expecting straight competition, but to be whacked out of the blue like this is something they were clearly not prepared for.

For now, they are trying to get the trial offer withdrawn using regulatory pressure: The TRAI has reportedly been asked to prescribe norms for how big a network trial can be.

However, given that a regulatory process will not complete within two months, Jio will already have entered the handsets of at least 50% of the big data users on all these rival networks in that time. In other words, they don’t have much of an option that than to grin and bear it.
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