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Predatory pricing unleashed by a telecom provider in India is leading to massive queues and a shortage of SIM cards.
Reliance Jio is just another 4G network in just another country, but that country happens to be India. A land of one billion plus people.
Jio is an offering by Mukesh Ambani of the Reliance Group, and the son of Dhirubhai Ambani, a successful businessman who is legendary in India for his rags-to-riches story.
Reliance Jio is a pan-India 4G network which offers both data and voice services. Although there are many companies who offer similar services in India, there is no one who has the reach and the potential that Reliance has.
Reliance Jio was the first operator to get its unified license which their rivals like Bharti, AIrtel, Vodafone and others lack. Jio can now operate across 22 service areas.
This is not the Ambani family’s first foray into telecoms. They had a made a previous attempt way back in 2002, when the company which was then branded as Reliance Infocomm. had used predatory pricing as a strategy to launch a CDMA network. They had at that time given away mobile phones for Rs. 501, or less than US$10, at today’s current conversion rate.
Needless to say, that sort of pricing in a country where many people live on incomes of less than US$2 a day has managed to attract hordes.
If there is one thing that the Indian people like it is - free. Reliance Jio is offering free internet to all its users until December 31, 2016, although it is just not the internet which is going to flow free on Jio.
Mashable India reported Mukesh Ambani, the Chairman of Reliance Industries, as saying:
“India and Indians cannot afford to be left behind; the era of paying for voice calls is ending.”
What this means is that voice calls on Reliance Jio’s LTE network will also be free. Sure enough Mr. Ambani’s plan to give away freebies has attracted the masses again with queues of people visible outside Reliance SIM vendors.
Procuring a Jio SIM card is a difficult task as they have become somewhat of a rare commodity as experienced by this writer firsthand a few days ago.
The question on many people’s mind is perhaps how Reliance Jio is able to deliver all this free data and free voice, and the answer may lie in the deep pockets of the parent company.
The Economic Times newspaper writes:
"Its free voice calls and dirt-cheap data tariffs offer might not seem sustainable in the long run, but one mustn't forget that Jio derives its strength from RIL's balance sheet, and can easily treat its pricing model as a business development cost to poach quality customers from incumbents over a period of time.”
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