Scatmag.com

September 2019

JIO DECLARES ITS FIBER BROADBAND ROLL OUT


For the past two years wired broadband service providers have been extremely apprehensive about Jio's plans to roll out its JioFiber broadband.

Most players assume that Jio will adopt extremely aggressive, predatory pricing similar to what it had adopted for the Jio Mobile roll out. As a result, no fresh investments were made by the industry to install wired broadband to homes. JioFiber has already been test marketed, for almost 18 months, in select localities within select towns and cities. Reports were that a formal announcement for JioFiber's roll out would be made at the Reliance AGM in early August.

The Reliance AGM held in Mumbai on 12th August was eagerly awaited. RIL Chairman Mr. Mukesh Ambani made several key announcements linked to the JioFiber roll out.




SEPTEMBER ROLL OUT

Speaking at the 42nd Annual General Meeting (AGM), Reliance Industries, Chairman and Managing Director Mukesh Ambani said "I want to announce that starting 5th September this year - on the Third anniversary of JIO's launch - we are launching JioFiber services on a commercial basis."

The service includes free voice calling via the broadband connection.




COMFORTABLE PRICING

Mukesh Ambani declared that JioFiber Broadband would be rolled out at a base price of ₹ 700. At the time of writing it is not clear whether this implies a rate of ₹ 600 + 18% GST (₹ 708) or ₹ 700 + GST.

The basic package will provide download speeds of 100 Mbps with probably a data limit of 100 GB per month.

Mukesh Ambani also announced that there will be additional plans that would provide speeds of upto 1 Gbps at prices upto ₹ 10,000 per month.

Detailed plans and commercials are to be declared on 5th September.


Operators Must Upgrade To 100 Mbps To Compete



3 MONTH TRIAL

During its test marketing, JioFiber had promised users that its service would be free for the early adopters for 3 months after its commercial launch.


IMPACT ON INDUSTRY

Wired broadband is already being provided by MSOs, Cable Operators, ISPs and VNOs at prices equal to or below the ₹ 700 per month declared by Jio.

Jio's price is excellent news for existing service providers since the pricing is not destructive or predatory. The market is in a position to provide keen price competition to JioFiber.


The ₹ 700 / Month Base Price Is Lucrative For The Industry & Small Operators To Deliver Home Broadband.


As an example, Asianet Broadband, Kerala already offers broadband @ 200 Mbps ₹ 499 per month (200GB FUP limit).

However, many operators will have to upgrade their infrastructure for delivery of at least 100 Mbps broadband. JioFiber's rates and plans should boost the industry sentiment and benefit broadband consumers.

Karan Taurani, vice-president, research, Elara Capital said "The broadband penetration until now in India has been 10 percent. Launch of Jio FTH will lead to surge in the number of users which will enable this penetration to multiply over the medium term. It will boost the overall wired broadband market, for other players also."


STB & TV

Mr Ambani also declared "The experience of JioFiber & the JIO Set-Top-Box really comes to life when combined with an LED television. So, JioFiber customers who opt for our annual plans which we call JIO-FOREVER plans, will get an HD OR 4K LED television and a 4K STB absolutely free. We are calling this the JioFiber Welcome Offer."

It should be noted that:

  • The Free TV is only against the annual plan
  • The Free TV Size & HD or 4K will depend on the plan chosen
  • Price for the annual plan has not been declared
  • TV Tariffs Will Be As Per TRAI NTO Pricing

IoT (INTERNET OF THINGS)

JIO's 4G mobile service also supports Narrowband Internet-of-Things or NBIoT. It enables data from billions of smart sensors whether residential, industrial or public to be collected from across the country, with high reliability and the lowest cost. As an example, there are over 300 million electricity meters which need to be read every month.

Going forward, every home & business premise will have dozens of connected devices. It is estimated that there will be more than 2 Billion Connected IOT devices in India, within the next 2 years.

Jio is aiming for a 50% market share, yielding ₹ 20,000 Crore in revenue per year.


FIRST DAY FIRST SHOW

JIO also announced its "First-Day-First-Show" plans for JioFiber customers. It will provide movies the same day as their theatrical release.

The service will only be launched in mid 2020 for its premium customers.


Broadband Delivery Is Far More Profitable Than Cable TV



GREAT OPPORTUNITY FOR LCOS

JioFiber's minimum price of ₹ 700 per month provides ample opportunity for Cable operators to upgrade or even install new broadband distribution networks, delivering atleast 100 Mbps.

Broadband delivery is far more profitable that cable TV delivery. The cost of bandwidth to support a ₹ 700 per month consumer will be less than ₹ 150.

Further, Cable TV content must be sourced from specific pay channel broadcasters, at their asking price as well as (often unfriendly) terms and conditions.

In contrast, broadband bandwidth can be purchased from multiple sources, and the lowest price vendor selected.

The world over, TV delivery is shifting quite rapidly from DTH & cable TV to delivery via broadband. The world's largest MSO - Comcast USA has seen a continuous decline in its number of Cable TV consumers, but its revenues & profits have been steadily increasing, due to the high revenue and profitability from broadband subscribers.

This is an excellent market opportunity for Cable Network owners to invest in broadband delivery, to sustain their business for the next 10 years. n