The much awaited Jio Tariffs have taken the industry by storm. It could well disrupt the industry as cheaper data and free unlimited calls have sent telecom captains into tizzy and massive anxiety. Bundling of free voice along with data service offering was not at all a surprise to us. However, we are not sure whether free voice (which would be VoLTE) would be billed any data or not (in that case it is not free). [Update: Jio’s Voice Call will Always Remain free, the Management has Clarified, that means Data for Voice Calls will not be billed if they are carried on VoLTE network. If you place a call through Skype or Whatsapp, it will be billed.]
How Much Data VoLTE Call Costs for Reliance Jio Infocomm ?
Assuming a AMR-NB Codec for VoLTE Calls, Data Consumption will be 5.4 MB for a 15 Minute Voice Call. Average Minutes of usage of Consumer in India is around 400 Minutes. So for 400 Minutes he will end up consuming 144 MB. Even at the cost of 5 Paise / MB, the bill works out to mere Rs 7.2 per month which is now approximately Rs 200 on Airtel Network. Additionally, Jio has to pay IUC charge of 14p/min while providing free voice service, which could be to the tune of Rs 27 per month (assuming 400 MoU, 60% outgoing, 80% to other network). By providing Free Voice Calls,Jio is spending Rs 35 / Month as subscriber Acquisition Cost. This is analogous to the new millennium discounting business model followed by Internet companies.
What is Mukesh Ambani Confident about Jio offering Free Unlimited Calling ?
It appears to us that using his clout in the Central Government, Mukesh Ambani has gotten a Paper released by the TRAI on reduction of Interconnect Usage Charges. Jio will vehemently lobby from 360 degrees to push for ZERO IUC Regime while A-Vo-Id operators will oppose the same and the matter will end up in the Court of Law. We believe that Jio will not be able to successfully target the premium subscribers who drive 50% of profitability, as they would seek network stability and seamless connectivity before making the switch.
A-Vo-Id Lobby is preparing a petition to be filed against Reliance Jio with the Competition Commission of India for unfair business practices after Jio’s launch on September 5th.
This has been Mukesh Ambani’s Voice Strategy to eliminate Voice dependent operators, which will lead to further consolidation in the Industry. Stay tuned as we’ll update more on Jio’s Data Strategy.