9/2/2016(3) Kshitij Salgunan's answer to What is the business model of Reliance Jio? Quora Ask or Search Quora Ask Question Read Answer 3 Notifications Gaurav What is the business model of Reliance Jio? Questions: a. How are they offering 4G data at such cheap rates? b. And how are they providing unlimited voice calls (local/STD) free to every JIO customer?... (more) Kshitij Salgunan, Indian Internet activist 178.4k Views 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 answer, you will realize what a clever businessman Mukesh Ambani is. I have been following the news about Jio since many years, and have written multiple articles about Jio in the past many months. Why Mukesh Ambani wants to enter networking field so badly? https://www.quora.com/WhatisthebusinessmodelofRelianceJio/answer/KshitijSalgunan?srid=fxzG&share=d8a9cf65 1/11 It is like he gets to control Internet/communications in India. With his experience in starting up Reliance communications. they had inserted a noncompete clause in the agreement. their mother intervened and split Reliance into two parts in 2005. https://www.com/WhatisthebusinessmodelofRelianceJio/answer/KshitijSalgunan?srid=fxzG&share=d8a9cf65 2/11 . it was Mukesh Ambani who started it and revolutionized the Indian mobile industry by reducing the call rates in the early 2000s. then I recommend to read one of my previous answers. In 2002. After some public feud between both the brothers for the control of Reliance empire. while Anil Ambani was not even having a seat in it’s board of directors. It was his baby all the way. when Dhirubhai Ambani died. That is not all.quora. Mukesh Ambani knows that existing network providers are not good enough and that he can easily compete with them and win. and started building fiber optic network around the country. [2] In 2010. entertainment and financial services business while Mukesh Ambani received Reliance Industries and IPCL. Kshitij Salgunan's answer to How likely is that Reliance Jio 4G will revolutionize the internet market in India? (Written 5 months ago. It will brief you about how awesome their network is. if you do not know much about Jio. 1600 upvotes) This is not just about personal rivalry. [4] Now. power. Telecom is also a very lucrative business. Jio’s Business Model. Mukesh Ambani bought 96% stake in Infotel Broadband which had won 4G spectrum in all sectors in India. which made mobile phones affordable to Indians. Anil Ambani got telecom. [1] 3 Notifications Gaurav Although Anil Ambani got the Reliance Communications. [3] Later they renamed it to Jio. as soon as the noncompete agreement was scrapped/expired.9/2/2016 (3) Kshitij Salgunan's answer to What is the business model of Reliance Jio? Quora This story requires us to know why Mukesh Ambani is investing so much in yet another Ask Question Ask or Search Quora Read Answer telecom company especially when there is already another company named Reliance Communications. To prevent Mukesh Ambani from making another telecom company and competing with Reliance Communications. there were some major ownership issues between his two sons Anil Ambani & Mukesh Ambani. If you spend over Rs250 per month. you are considered a high value customer.9/2/2016 (3) Kshitij Salgunan's answer to What is the business model of Reliance Jio? Quora Everything Jio have done till now is intended at making money. even though you are not explicitly paying for voice. you are already paying over Rs 150 per month. Which plan would you choose? If you are a voiceonly kind of person. then you would be okay with the Rs 149 per 28 days plan. That is the money they get on average from each user. but they will make more money by giving free voice calls than what [5] the other companies make by charging you for it! 3 Notifications Gaurav In India. the monthly average revenue per user (ARPU) the current network providers get is around Rs 150 per month.com/WhatisthebusinessmodelofRelianceJio/answer/KshitijSalgunan?srid=fxzG&share=d8a9cf65 3/11 . my 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. 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. as you will get free unlimited voice calls. [6] Look at this tariff plan. Their tariff plans may look Ask Question Ask or Search Quora Read Answer unbelievably awesome. But.quora. thus their ARPU will by default be as good as the current players. Jio will be making the same/more amount of money on average from each user https://www. notice that all these plans are for 28 days which can easily be perceived as ‘a month’ by most people. it offers less data. but these plans do not really offer any more value than their main plans as they have even less validity. then the price per GB of these plans will be 0. then you have to spend double and move to the 999 plan. which plan would you choose? Did you see that there is no plan inbetween the Rs 149 and Rs 499 plans? This is basically a psychological trick to get you into the Rs 499 plan.03) They have some smaller plans at Rs 19. we will realize that we are paying for 13 ‘billable months’ in an year.9/2/2016 (3) Kshitij Salgunan's answer to What is the business model of Reliance Jio? Quora even after providing SMS. Also. 3 Notifications Gaurav Now. by just pricing things Ask Question Ask or Search Quora Read Answer differently. What does 1GB costs? If we exclude the unlimited night data and the wifi data which many of us may not have access to. again see that if you want to really use more than 4GB of 4G. Many people will compare it with the smaller plan and see that you are getting Unlimited 4G night data and choose atleast the 499 plan. Now. Also. 199 and 299. If we divide the number of days in an year with 28. (365/28=13. since there is no separate package for voice calls. https://www. roaming and voice calls for free.com/WhatisthebusinessmodelofRelianceJio/answer/KshitijSalgunan?srid=fxzG&share=d8a9cf65 4/11 . Did you notice that there is nothing inbetween? Also.quora. if you are a moderately data using person.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 doesn’t go as low as their advertised Rs 50/GB rate. I think you must be subscribed to some of their plans to even make calls. There is not really any point in charging for voice anymore. Jio had tariff for voice calls. they do not have much of the data bandwidth problem. then some company similar to WhatsApp would have launched an app through which you can do free voice call over the internet (infact WhatsApp itself has a voicecall option). it is likely that Jio will also further reduce their prices. So. They have already decreased prices on average by 50%. because that will decrease their profits. Jio has an all IP network. it really doesn't cost anything for the network provider to give you internet data. This means people will anyway be happy to use their services. It is an outdated system and there shouldn’t really be any surprise in why Jio totally abandoned it. In the case of Jio. Once everyone has a good internet connection. This is the reason other companies don’t usually provide unlimited plans. they have already laid an awesome fiber optic network which is designed to even handle the 5G and 6G. so they have to pay to use the fiber network of other companies. Also. people would anyway use such services to make their calls. then lesser people will buy their higher plans.quora. I have explained this in the form of a story in one of my other answers Kshitij Salgunan's answer to What is the cost of the Internet? How much extra are we paying? 3 Notifications Gaurav The reason why most internet providers limit your data is basically because they do not have enough bandwidth to handle so much data. If they provide more GBs in the lower end plans. Jio currently have the ability to provided truly unlimited data plans. So.com/WhatisthebusinessmodelofRelianceJio/answer/KshitijSalgunan?srid=fxzG&share=d8a9cf65 5/11 . currently their pricing is optimally placed to increase their profit. How can they provide unlimited free voice calls? Again. but they will not do so. so all voice calls will go through the internet just like skype or whatsapp. How Jio makes money with LYF phones? https://www. If hypothetically. other companies do not own nationwide fiber network. When other companies reduce their prices.9/2/2016 (3) Kshitij Salgunan's answer to What is the business model of Reliance Jio? Quora How can they provide unlimited night data? Ask Question Ask or Search Quora Read Answer Once you have build an entire network infrastructure. Other telecom companies were primarily made to handle voice calls and they have limited data bandwidth. com/WhatisthebusinessmodelofRelianceJio/answer/KshitijSalgunan?srid=fxzG&share=d8a9cf65 6/11 .quora.9/2/2016 (3) Kshitij Salgunan's answer to What is the business model of Reliance Jio? Quora Many of you may be knowing about their LYF phones. The only reason why people bought their phones were because of the unlimited internet+voice calls preview offer. purchasing these Ask Question Ask or Search Quora Read Answer phones were the only way you could get access to a Jio Sim Card to get their their free unlimited preview offer. Few months ago. Did you ever wonder why they have so many versions of these phones? 3 Notifications Gaurav Nearly all of their phones have very low specs compared to the competition at the price point they sell. https://www. No one wants to buy these phones. Jio would go to China and then buy previous generation unsold 4G phones for dirt cheap prices in bulk. they get to test their network and solve the bugs. they can venture out into the mobile device market. https://www. I saw real potential in them. Plus. A totally outdated phone which no one would otherwise buy is coupled with Jio preview offer and now everyone wants to buy it just for the Jio offer.com/WhatisthebusinessmodelofRelianceJio/answer/KshitijSalgunan?srid=fxzG&share=d8a9cf65 7/11 . 4.quora. Plus. isn’t it? The real money is in Jio Apps Many people may consider their apps to be bloatware and don’t even install it. But. Then it is relabeled and sold in India.) 2. This is how they have several phones with totally different specs. (They really do not have to buy old phones. so obviously the manufactures will happily sell it for a very low price. Brilliant idea. The reason why there are so many versions of these Ask Question Ask or Search Quora Read Answer phones is because of this business model: 3 Notifications Gaurav 1.9/2/2016 (3) Kshitij Salgunan's answer to What is the business model of Reliance Jio? Quora This was a very clever move by Jio. 3. when I tested them out. Jio can now sell these phones and make profit. I also thought of it as a bloatware when I first heard of it. instead they need to just choose a manufacturer who is ready to build them phones with whatever previous generation components are cheapily available in the market. com/WhatisthebusinessmodelofRelianceJio/answer/KshitijSalgunan?srid=fxzG&share=d8a9cf65 8/11 . 3. The ability to watch Live TV channels on smartphones is also a cool idea. But. JioPlay : This has the potential to become a TV channel company. especially in India. 4. Imagine if those who currently pirate movies had an option to get those movies in HD quality legally for nearly free. JioBeats : Legal music. This may become the most used app in rural areas too. JioMags : Most popular magazines in eBook format. You get the point? They can make any type of app in the future and dominate that category with minimal efforts. that is done so that they can get maximum users to get addicted to these apps. They are currently giving these apps for free till 2018.9/2/2016 (3) Kshitij Salgunan's answer to What is the business model of Reliance Jio? Quora Ask or Search Quora Ask Question Read Answer 3 Notifications Gaurav 1. Then they can start subscription charges for https://www. My cousin who reads tech magazines on a regular basis loved it. JioOnDemand : This has the potential to become the Netflix of India. It has the potential to become Spotify of India.quora. 2. It can benefit both the users and the producers. My prediction is that Jio will soon release something like Google Chromecast to provide this service directly to TVs. It will increase the progress rate in India and will improve our quality of life. Currently. this will force other people into joining Jio. as a customer will get 2x to 3x more value for your money. we need companies like Reliance to make such bold moves and invest in India. So. And. they are almost unstoppable.com/WhatisthebusinessmodelofRelianceJio/answer/KshitijSalgunan?srid=fxzG&share=d8a9cf65 9/11 . Thus. they are here here to win multiple business verticals. Is this good? Yes. these apps are locked to Jio network. 3 Notifications Gaurav Apart from that. It is totally relevant and useful here.9/2/2016 (3) Kshitij Salgunan's answer to What is the business model of Reliance Jio? Quora these apps. yet Jio will make make as much profit as existing telecoms by pricing things differently. a person using any other internet service won’t be able to use it. Airtel and Vodafone have similar looking pricing which charges Rs 250 for one GB data? If you need to know how awesome their network infrastructure is. When their apps. at current stage. How likely is that Reliance Jio 4G will revolutionize the internet market in India? Conclusion By just making their tariff plan in such a way that most people interested in 4G have to pay over Rs 500 per month. It will also give much needed jobs to millions of people. we absolutely need competition in this stagnated telecom industry which is currently dominated by players who may have secretly made agreements with each other to not compete on the basis of price. but they too may not be able to release such apps on time. Instead of paying for your TV service or MovieDVD or Magazines. and they maybe able to achieve a huge market share in next couple of years. only Airtel is capable of properly competing with Jio in the 4G market. You. Most of the high value customers of other players will instantly port to Jio. Jio wants Ask Question Ask or Search Quora Read Answer you to pay them. and fiber services are added up. Why do you think Idea. Jio will be making way more money than the current players. It is a winwin situation. Also. Footnotes https://www. This is good for everyone.quora. then I really suggest to read this answer of mine. devices. Designer.com/WhatisthebusinessmodelofRelianceJio/answer/KshitijSalgunan?srid=fxzG&share=d8a9cf65 View More 10/11 .2k this month Most Viewed Writer Kerala.3m answer views 83. Kerala. India I currently live here 3.9/2/2016 (3) Kshitij Salgunan's answer to What is the business model of Reliance Jio? Quora Ask Question Ask or Search Quora Read Answer 3 Notifications Gaurav [1] Mukesh Ambani’s $20 billion bet on cable TV. telecom could start a new family rivalry [2] It's personal: Why Mukesh Ambani pulled out all stops for the Reliance Jio 4G launch [3] Jio [4] Ambanis cancel noncompete agreements in major step towards reconciliation [5] Reliance Jio 4G launching publicly in India next week; tariff plans announced [6] Jio may achieve Rs 250 ARPU driven by high 4G usage: CLSA Written 4am · View Upvotes Upvote 4. Developer.9k Downvote Comments 107+ View 72 Other Answers to this Question About the Author Kshitij Salgunan Thinker. Adventure Travel Follow 7k Turn On Notifications More Answers from Kshitij Salgunan https://www. India.quora. com/WhatisthebusinessmodelofRelianceJio/answer/KshitijSalgunan?srid=fxzG&share=d8a9cf65 11/11 .9/2/2016 (3) Kshitij Salgunan's answer to What is the business model of Reliance Jio? 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