Why Reliance Jio's Rock-Bottom Data Prices Make Sense to Experts

The Reliance Jio announcements are distinctly disruptive and a "bold move" towards digitising millions in the rural parts of the country, setting a tough benchmark for its competitors as data becomes the new oil, experts said on Thursday.

Reacting to an array of announcements made by Reliance Industries Chairman Mukesh Ambani at the company's 39th Annual General Meeting post its listing in Mumbai, they said data mining is the future and Jio is a "perfectly-planned" move towards that.

"To make digital revolution a success in our country, especially for millions of rural Indians, data mining is the future. I feel Jio is targeting nearly 450 million feature phone users who will make a shift to smartphones in the near future," Tarun Pathak, Senior Analyst, Mobile Devices and Ecosystems, Counterpoint Research, told IANS.

(Also see: Reliance Jio Prices Revealed: 5 Facts on What's on Offer and When)

"With its disruptive pricing and lucrative offers, Jio is set to beat the rivals and become their first choice," he said.

According to a latest study by Analysys Mason, telecom companies won't actually lose out by lowering tariffs.

It underscores that in terms of affordability, an average monthly increase in data usage to 10.2 GB at a discounted tariff of Rs. 57 per GB, with 10 percent contribution from voice, translates into a total increase in monthly average revenue per user of Rs. 645.

According to Pathak, "The Jio start-up is looking at a minimum of five-year window to make profit as more and more users get on board while the company builds a complete Jio ecosystem."

(Also see: Reliance Jio's Controversial Beginning Explained in 5 Facts)

Experts also say that Jio's move will increase data usage across the board. "For a price-sensitive market like India, launch of affordable data services and free voice calls is indeed a welcome step. This is expected to drive greater data adoption across segments," noted Prashant Singhal, Global Telecommunication Leader, Ernst and Young.

"Telcos form the backbone of 'Digital India' and need to make higher investments in data network. Any market erosion, at this stage, may impact the outcome of the upcoming Rs. 800 billion spectrum auction critical for the 'Digital India' vision," Singhal added.

But experts say that in the end it's the quality of service which really counts. "The real differentiator will come only then. Right now, these bold announcements are a red flag for rivals who must have gathered by now in their boardrooms, chalking out their next strategy. The game has just begun where data is the new oil," added Vishal Tripathi, Research Director at global market consultancy firm Gartner.

Reliance Jio has partnered with several smartphone brands where Jio Preview Offer is available for a period of 90 days.

Jio's 4G-LTE services include unlimited HD voice calls and video calls, unlimited SMS, unlimited high-speed data and a host of Jio Premium apps such as JioPlay, JioOnDemand, JioBeats, JioMags, JioXpressNews, JioDrive, JioSecurity and JioMoney.