Mo­bile price wars as ty­coon pledges free 4G

The Myanmar Times - - International Business -

OUT­SIDE a tiny Re­liance store in a trendy Mum­bai neigh­bour­hood, res­i­dents queued for hours last week for a new SIM card promis­ing free data – and a dra­matic re­shap­ing of the In­dian mo­bile land­scape.

Mukesh Am­bani, In­dia’s rich­est man, an­nounced his long-awaited Re­liance Jio 4G net­work with an au­da­cious free ser­vice for the rest of 2016, fol­lowed by vastly cheaper data plans and free voice calls for life.

An­tic­i­pat­ing the shake-up, ri­val Air­tel has al­ready slashed 3G and 4G prices by up to 80 per­cent while Voda­fone has heaped more data into its pre­paid tar­iffs.

Yet an­a­lysts say com­peti­tors will strug­gle to match the deep pock­ets of a startup backed by Re­liance In­dus­tries, the en­ergy-to-chem­i­cals con­glom­er­ate.

In­dia’s mo­bile mar­ket is plagued by patchy re­cep­tion, fre­quent call drops, er­ratic pric­ing and 3G in­ter­net speeds that fluc­tu­ate wildly.

With his US$20 bil­lion in­vest­ment in mo­bile, Mr Am­bani is bet­ting on a fast-evolv­ing in­ter­net land­scape in a coun­try where nearly 1 bil­lion peo­ple are still not on­line.

Pub­lic Wi-Fi is scarce and broad­band ac­cess is weak, with many ru­ral ar­eas lack­ing the in­fra­struc­ture to de­liver high speeds.

Most of the hun­dreds of mil­lions of In­di­ans com­ing on­line over the next decade will start with smart­phones, some­thing be­ing avidly tar­geted by tech gi­ants Google and Face­book.

Mr Am­bani hopes to win over those who have never had an in­ter­net con­nec­tion and for whom mo­bile data was pre­vi­ously un­think­ably ex­pen­sive, with a high-speed 4G cov­er­ing 90pc of In­dia by March 2017.

“This is go­ing to change the dy­nam­ics of the game,” said Bhasker Cana­garad­jou, head of re­search at Ip­sos Busi­ness Con­sult­ing in Mum­bai, adding that data use was al­ready grow­ing at an “ex­or­bi­tant” rate.

Un­der the Re­liance plans, a gi­ga­byte of data costs as lit­tle as one-tenth of the pre­vi­ous 250 ru­pees ($3.70). He ex­pects com­peti­tors to slash their prices by 30-40pc.

Com­bined with ever-cheaper smart­phones, the new 4G net­work will swell the num­ber of in­ter­net users and prompt those al­ready us­ing data, mil­lions of them on slug­gish 2G net­works, to up­grade.

Com­pe­ti­tion has hit full stride in the form of war­ring front-page news­pa­per ad­ver­tise­ments by the main ri­vals – with Re­liance con­tro­ver­sially us­ing an im­age of Prime Min­is­ter Naren­dra Modi to pro­mote its of­fer­ing.

The new­comer seeks to up­end a mar­ket at present two-thirds dom­i­nated by three play­ers – Air­tel, Idea and Voda­fone – say­ing it aims to se­cure 100 mil­lion cus­tomers in the short­est pos­si­ble time.

Yet while free­bies have won Jio at­ten­tion, the proof will be in the ser­vice, an­a­lysts say.

While low-in­come cus­tomers may switch straight away, bet­ter-off users are more likely to wait and see.

Oth­ers sug­gest it is an eye-catch­ing gim­mick and that, as with most things, free does not re­ally mean free.

Umesh Me­hta, re­search head at SAMCO Se­cu­ri­ties in Mum­bai, said that “hid­den costs and in­di­rect charges” meant the sav­ings would not be as great as the mar­ket­ing cam­paigns sug­gest. –

Photo: AFP

A woman and her grand­daugh­ter walk past a Re­liance Jio In­fo­comm 4G mo­bile ser­vices logo in Mum­bai on Septem­ber 6. In­dia’s rich­est man Mukesh Am­bani has fi­nally launched his Re­liance In­dus­tries’ long-awaited 4G mo­bile ser­vices, send­ing shares of ri­val Bharti Air­tel plum­met­ing al­most 7 per­cent.

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