It’s like that epic scene in Jurassic Park. A few people trapped in a car, scared. A glass of water on the dashboard. Ripples forming in it as something huge approaches. Unseen. Its arrival, a terrifying inevitability. Terrifying, because it may just spell the end for the people in the car. In today’s story, the car is India’s wired broadband space; the trapped passengers are incumbents like Airtel, ACT, Spectra and others. And the looming behemoth? Reliance Jio.
When it comes to Jio, the fear, as we’ve seen in the telecom sector over the last few years, is all too real. Backed by the might of Reliance Industries’ bottomless coffers, Jio is capable of entering a space, radically defining the market dynamics, and disrupting well-established competitors with ease. In the three years since its launch in 2015, Jio already has over 205 million wireless mobile customers. That’s 18.17% of the market.
Jio made these strides by slashing tariffs and undercutting incumbent telecom operators. In the ensuing price war, Jio’s competitors have fallen by the wayside as they struggled to keep pace. This has led to a consolidation in the industry. Before 2015, there were nine wireless telecom operators in the country. Today, there are effectively just three.
With a firm and ever-tightening grip on the wireless cellular space, Jio’s ambitions have grown to include the wired broadband space as well. To this end, it is set to announce its wired broadband offering—Jio Gigafiber—on 15 August. In a country with an average internet speed of 6.5 Mbps in 2017 according to Akamai’s State of the Internet report, Jio Gigafiber is promising speeds of 1 gigabit. It’s a promise that will have consumers excited, but competitors worried.
And these competitors are not just limited to the wired broadband space. Mukesh Ambani, chairman of Reliance Industries, said that Jio Gigafiber will offer broadband internet, cable television and landline voice services. In telecommunications parlance, it’s called a triple play. One provider offering three services to a household. This effectively means it will be Jio versus everyone—cable television operators, internet service providers (ISPs) and DTH services.
The shockwaves have already been felt. Shares of multisystem operators (MSOs)—which offer both cable and broadband services—fell after the announcement. On the day of the announcement, Hathway’s shares fell by 15%, Den Networks and Siti Networks fell by 10%. Airtel, Jio’s biggest rival in the telecom space, is already readying for the fight–it did away with its fair usage policy (FUP) on wired broadband services in the Hyderabad circle. FUP is a cap on how much data a customer can consume at high speeds, beyond which speeds drop to 512 Kbps.
Source: Yahoo Finance
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Jio’s goal is grand—onboard 50 million home broadband users across 1,100 towns and cities.
