4G new entrants like Reliance Jio may look at leveraging intranet based data offerings in an attempt to take market share. At present telcos monetize data connectivity and charge for data usage. 4G entrants may disrupt the traditional data business model, leveraging intranet-based data offerings.
Despite Expert Recommendations to Plug the Net Neutrality Loophole, it appears TRAI has specifically left the Gap with power on deciding in its own hands. As we await more clarity from the regulator on the scope of telco intranet offerings, we believe the following options exist: (a) Free Data: in a recent development, regulator suggested that rules prohibiting differential pricing for data will not be applicable to intranet-based offering of telcos. This allows telcos to have a B2B model by charging content providers/ ecommerce players a carriage fee and in turn subsidizing subscribers’ data services; (b) enhancing value proposition and charge fixed fee: aggregating intranet with content around movies / sports and enhancing subscriber value proposition. Such an approach may allow 4G entrants to ask for a fixed fee that is not directly linked to data usage, to target the medium / high ARPU data users and churn subscribers from top incumbent telcos.
Incumbent telcos have not focused much on content and if 4G entrants were to launch soon, incumbents may experience difficulties. Incumbents may be limited by the new model as they have not focused much on content, focusing more on data coverage based monetization. Incumbent telcos have been pursuing the traditional telco model. Globally too, telcos have not found success in being smart pipes. Airtel can always leverage content relationships of its DTH business and Wynk Apps to offer on 4G Intranet, if at all it chooses to exploit the loophole.
4G new entrants led by Reliance Jio have been deferring their launch for quite some time and as a consequence have lost out on the first mover advantage in 4G to incumbents. If 4G entrants continue to delay, incumbent telcos may replicate similar offerings on intranet