TV Show: The impact of low cost handsets on India’s Internet

On CNBC-TV18, we discussed yesterday the launch of a low cost Reliance Jio handset and its impact on India. My key topic points:

My notes for the show:

  • Handsets are important: Low cost handsets are important for Internet access because they bring access to the internet for users. You cant give 1GB a day for a few hundred rupees a month, and then expect a user to pay Rs 10,000 for a handset. Users also transition eventually from low cost devices to higher cost devices as their understanding of the utility of the Internet increases.
  • India’s internet user base has mostly been stagnating over the last few quarters. So another price war might actually help shake things up a bit.
  • Jio 5G: 6,024 Cities/Towns, but 51 in J&K, 74 in Uttarakhand, 11 towns in Mizoram, 19 in Nagaland, 18 in Manipur
  • Address shared access in low income households: Lower cost handsets also drive personal Internet access, rather than shared Internet access. RIght now many handsets are essentially household internet access, and this makes it difficult for women in these households to get to use the Internet. Lower cost devices address this gap.
  • Downward pricing pressure for other operators: the pricing of the bundle brings Internet pricing down to Rs 123 (around $1.5) per month. Other incumbent mobile operators have increased Internet access pricing recently, and this will probably bring costs down for all users, and other operators feel downward pricing pressure.
  • Great for Startups targeting Bharat: Augurs well for startups targeting Digital Bharat, including agritech startups
  • Jio has been critical for Internet growth in India: if you check the charts, the launch of Jio in 2016 led to a decline in 2G connections and a massive increase in mobile broadband (3G+4G connections). Most people leapfrogged 2G and 3G and went straight to 4G.
  • Ubiquitous infra rollout still needed: We still don’t have adequate 4G infra in all spaces. There are areas in the hills and in between towns and cities where it’s not adequate. At times, in some areas, one mobile operator has better infrastructure than the other, including in case of Jio. I think eventually the availability of network will be more important than pricing of Internet of access in some regions, and that’s where Jio still needs work.
  • Bundling services into the same price and replacing other forms of entertainment also makes a lot of sense. It’s not as if it has not been tried before, like Airtel had Wynk and its own movie services as well… all of this competition is fantastic for consumers.