Strategic issue of reliance jio

The reliance jio launch has aroused huge interest among subscribers. The telco has added more
than 50 million subscribers to its network and aims to reach the 100-million subscriber target set
by Reliance Industries chairman Mukesh Ambani.
Recently, Ambani unveiled Reliance Jio's Happy New Year Offer through a live stream. Under
the latest offer, all new users from December 4 will get free services till March 31, 2017. Also,
the existing Jio customers will get the extended benefits on current SIMs.
However, after the launch, a number of issues related to the new services have surfaced which
could pose a challenge for Ambani in the days ahead as battles it out with other telcos.
Though the new network is still functioning under a 'Welcome Offer' that doesn't charge for its
services, these issues are quite consistent with the new subscribers.
Voice call failures:Reliance jio has been stuck in a dispute with incumbent operators over points
of interconnectivity. jio has accused Bharti Airtel, Vodafone and Idea Cellular of providing
insufficient points of interconnectivity leading to call drops. Jio put out data for September 22
saying over 12 crore out of 15 crore call attempts by its users failed. Of the 6.13 crore call
attempts made to Airtel network on September 22, 4.8 crore or 78.4 per cent of the calls failed.
The failure on Vodafone network was higher at 84.1 per cent with 3.95 crore call drops out of
4.69 crore calls. Calls to Idea saw 3.36 crore call drops out of 4.39 crore calls made.
Bharti Airtel has hit back at Reliance Jio saying network connectivity issues and call drops are
due to Jio's own "under-preparedness", insufficient testing efforts and acquiring a large number
of customers at the pre-launch stage itself.
Decreased internet speed:With addition of users to the Jio network, the speed of Jio's 4G data
services has come down drastically after September 5. Now, the internet speed has come down to
6-10 Mbps from 50Mbps during the launch stage.
On paper, the difference is huge but in terms of average customer use, even a speed of 8Mbps
should work flawlessly. However, the Jio connection faces frequent fluctuations hampering the
user experience. Users have also complained about varying speeds despite no change in location.
Buggy Jio apps: The Reliance Jio apps have not shown consistent performance but the idea of
free content sits pretty well with the Indian audience.
The Jio TV app is subjected to frequent crashes and has a long boot-time, which is also the case
with most apps released by Jio. In our experience, the Jio4GVoice is one of the most glitchy Jio
apps. The app often fails to load and when it does, the experience is pretty laggy.
Lack of VOLTE support in older phones: All those who don't have VOLTE technology-
supported phones cannot make voice calls without the use of Jio4GVoice
app which, as mentioned above, seems buggy. This one drawback makes the lucrative free voice-
calling feature obsolete for most new consumers.
Apart from the VOLTE support, most Indian smartphone users are still stuck with 3G phones.
The Jio sims won't benefit them in any way.
Battery consumption: Reliance Jio has launched its internet services on the 4G band. With not
much difference in the rates of 2G or 3G services and 4G connection, new users are inclining
towards Jio. The only constraint with 4G services is that they take a toll on the phone's battery,
forcing the user to charge it repeatedly. With no 2G or 3G options, the user can't switch to a
slower connection to save battery.

ANOTHER ISSUES WITH RELIANCE JIO

1. Challenges in Technology
It is true that 4G ecosystem is developing quite well, but it cannot be denied that it is far from
being mature. Also, Voice Over LTE (VoLTE) is still relatively new and might face initial
teething challenges.Jio would be using a combination of VoLTE and Circuit Switched Fallback
(CSFB) to offer voice to subscribers, which might lead to a some bit of technical issue initially
and this is the reason why the company has delayed the commercial launch of its 4G services.
Reliance Communications and Reliance Jio are close to signing a spectrum sharing and trading
agreement, which might further lead to technical and interoperability issues.

2. No first mover advantage

Initially, when Reliance Jio had procured pan-India spectrum of 2300Mhz , it had an advantage
to a very large extent. Aggregated licensing and auctions have made sure that incumbents are in
a fairly strong position where spectrum is concerned. Also, Bharti Airtel, Vodafone, and Idea
Cellular have already launched 4G services. Bharti Airtel would have gained a fair bit of
valuable understanding the knowledge of 4G network since it was the first one to launch it in
India.Hence, Reliance Jio has got deprived of its first mover advantage although being first one
to initiate the technology in India.
3. The Devices Problem
Reliance Jio plans to differentiate its product on the basis of VoLTE, which requires a different
device. Availability, accessibility and pricing of these devices is going to play a major role in
the success of Jio. The company is trying to resolve this issue by launching dual-SIM devices,
that would enable a customer to not just use the telcos network, but also other established
networks. However, this require cooperation from other service providers to share the network
from same towers in particular range of locality.
4. Core addressable market
Although China and India have almost identical 4G networks, there has been a steady flux of 4G
devices in India. The circulation of 4G devices has been gradually improving but the 4G enabled
devices right now in India is still small in number. This indicates that the core addressable
market share for Reliance Jio is very small and telecom is a game of abundance . Airtel, Idea
and Vodafone all have 60%+ market share, whereas in case of Reliance Jio, the core addressable
market is just a mere 1.5% as of now. This is mainly because of the complexity of devices and
technological issues mentioned above.
5. Spectrum ecosystem
Apart from core addressable market problem, there exists issue of ecosystem. Currently,
Reliance Jio has spectrum in three bands namely 1800 MHz band, 2300 MHz band and 800 MHz
band. The first two bands have less penetration in terms of coverage. However, this 800 Mhz
band is absolutely crucial for Reliance Jio to have a robust coverage. But still recent 4G
smartphones in India support 2300 MHz and 1800 MHz and very few support the 800 MHz
band. It is the biggest challenge for Reliance Jio to align the network to align its emerging 4G
technology with spectrum which has large penetration compared to others.
6. Stiff Competition
Reliance Jio has indicated that it would take three more years from 2015 to achieve its goal of
100 per cent network coverage in the country. That still gives a lot of time for its competitors
Bharti Airtel, Idea Cellular and Vodafone, apart from regionally strong players such as Reliance
Communications, Tata Teleservices and Aircel to strengthen their footprint in spreading its
network coverage. The revenue market share among telecom operators has become extremely
skewed towards the top three players . Bharti Airtel, Idea Cellular and Vodafone control nearly
75 per cent of the revenue market share among telecom players. Besides, it also lost its chance of
being first mover in emerging 4G technology, which in any way does not pave its way to achieve
its target.

7. Failed promotional strategy

Reliance Jio tied up with facebook to support the initiative of Free basics in India. With this
Facebook partners with Reliance Jio, emerging 4G telecom network service to access the social
networking site for free if subscriber is using Reliance Jio network. This costs reliance some $14
billion to set up. However this influenced the controversy of violation of net neutrality. TRAI
was concerned about fostering equal level in telecommunication sector which is legitimate when
telecom ecosystem includes number of service providers. This was supposed to create significant
entry barriers which can harm competition and innovation. It would deprive the opportunity to
new and emerging service providers with better insight and technology.

8. Low Average Revenue per user (ARPU)

Reliance Jio face daunting task of convincing, bundling and subsiding 4G users to adopt new
handsets and hence it could face problem in adopting subscribers due to low ARPU. This is
mainly due to losing the opportunity of being first mover in spite of such a large investment.
Reference:
1. http://www.ibtimes.co.in/low-arpu-adoption-4g-volte-handsets-obstacles-reliance-jio-gain-
customers-clsa-656345#vmj2CXSiIbe1pBUW.97
2. http://telecomtalk.info/here-are-the-bumps-in-the-road-that-reliance-jio-might-face/148460/

When someone promises 4G speed reaching up to 135Mbps, in an internet-scarce country like India, the
market can only go crazy. And so it did after September 5, when Reliance made the Jio SIM available to
public under Welcome Offer. The situation has changed in the last one month. Numbers by Ookla, the
company behind world's most popular speed test app, show that the Jio speed is down significantly
compared to how it was earlier. Although, don't count out Jio yet. The same report by Ookla also says that
despite its imperfections Jio is actually a big deal and has changed the 4G market in India.

Ookla has recently released a report based on speed tests done in India since the launch of
Reliance Jio. The report shows an exponential increase in 4G users across India. Since these
numbers are based on people using Ookla's Speedtest app the real number should be higher.
According to Reliance Jio, it has registered over 1.6 crore customers in Welcome Offer, which
doesn't include users who registered before September 5.

India grabs Jio with both hands

A graphic presentation by Ookla shows a continuous increase in 4G speed tests in first nine months of
2016. These tests are conducted across all the networks providing 4G services. In January, only 97,630
people used the app to test 4G speed. In August the number was 2,742,413, and took a massive jump to 8,
214,512 in September 2016, the month when Reliance Jio became more widely available.

The metrics company has also presented a graph showing, first a gradual increase in 4G speed
tests and then a sudden jump in September. The following graph shows Reliance Jio users in the
blue colour and rest of the 4G users with purple colour.
By August 16, the number of people testing 4G speed stands at somewhere around 8 million across
country. Out of these 8 million people are shown to be using Reliance Jio. Then in the next one month, on
Sept 16, the number of Reliance Jio tester jumps to over 21 million, which is about 5 million more than
the officially recorded number of Welcome Offer users.

But what about the promised speed?

As we have seen, and continue to do so, queues of people outside Reliance Digital store, the popularity of
Jio was never in doubt, what is up for question is the speed promised by Reliance Jio.

Users have continuously moaned and groaned about the falling speed but now since we have the
numbers released by Ookla, we can confirm their groans are not fake. The struggle is real.
The data released by Ookla shows that mean download speeds for 4G capable phones dropped
23 per cent month-over-month. In September alone the mean download speed has fallen
from11.31 Mbps to 8.77 Mbps.

It should be noted that while the mean download speed is still 8.77Mbps, according to Ookla, it doesn't
mean most users are getting the speed. In our experience we have registered speed as low as 0.5Mbps and
also as high as 25Mbps. Reliance Jio users have also complained of abysmal speed on the network.

Good speed or not Reliance Jio has definitely managed to make its mark not just in India but
globally as well. The 4G surge has been so powerful that the global data has also been affected.
Take a look at this graphs.

The graph shows that global 4G test stayed at around 10 million throughout the year and from
Aug 16 to Sept 16 the company recorded a jump to more than 20 million tests on 4G LTE
networks.
Reliance Jio's interesting strategy of free SIM, free internet, free voice calls and free SMS has gathered
plenty of steam in last few months. It would be more interesting to see how Indian customer reacts once
the services are not free, which is from January 1, 2017. Reliance has managed to improve its call quality
in the last one month, if it can also work on the speed it could be the moment Indian telecom market
changes for good.