All You Need To Know: Shocking Facts About The Business Model Of Reliance Jio

All You Need To Know: Shocking Facts About The Business Model Of Reliance Jio


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Reliance Jio 4G services will be open for everyone to avail from September 5. However, there is still a lot of confusion in the market how they are offering 4G data at such cheap rates? And how are they providing unlimited voice calls (local/STD) free to every JIO customer?How are they offering unlimited 4G data at night?

It is really simple. Most of you are going to pay the same or probably more money to Jio compared to your current network provider. After reading this article, you will realize what a clever businessman Mukesh Ambani is.

However, Reliance’s Jio has caused a ripple in the market forcing many rival telecom operators to slash their prices for call and data rates.
What is the business model of Reliance Jio?
Everything Jio have done till now is intended at making money. Their tariff plans may look unbelievably awesome, but they will make more money by giving free voice calls than what the other companies make by charging you for it!
In India, the monthly average revenue per user (ARPU) the current network providers get is around Rs 150 per month. That is the money they get on average from each user. If you spend over Rs250 per month, you are considered a high-value customer.
Look at this tariff plan:

Which plan would you choose?

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 Rs 150 per month, thus their ARPU will by default be as good as the current players.

If you are someone who uses over Rs 150 worth of voice calls every month then it is a totally awesome plan for you. But, the point is that other telecom companies make about Rs 150 per month on average from each user by charging for voice, SMS, data, and roaming. Jio will be making the same/more amount of money on average from each user even after providing SMS, roaming and voice-calls for free, by just pricing things differently.

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 a year with 28, we will realize that we are paying for 13 ‘billable months’ in a year. (365/28=13.03)

What does 1GB cost ?

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 don’t go as low as their advertised Rs 50/GB rate?

How can they provide unlimited night data?

Once you have built an entire network infrastructure, it really doesn’t cost anything for the network provider to give you internet data.

The reason why most internet providers limit your data is basically because they do not have enough bandwidth to handle so many 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.

How can they provide unlimited free voice calls?

Again, Jio has an 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 the tariff for voice calls, then some company similar to WhatsApp would have launched an app through which you can do a free voice call over the internet (infact, WhatsApp itself has a voice-call option). Once everyone has a good internet connection, people would anyway use such services to make their calls.

Is this good?

As a customer, you will get 2x to 3x more value for your money, yet Jio will make as much profit as existing telecoms by pricing things differently.
When their apps, devices, and fiber services are added up, they are here to win multiple business verticals. And, at the current stage, they are almost unstoppable.

Yes, 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.

News Source :-AllindiaRoundUp

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