We like to think we can foretell developments in the industries we study. I can recall meeting a Jio operative at Abu Saeed Khan’s home in Dhaka before they launched and chatting about what was to come. We all agreed that Reliance would disrupt the market. All I could come up with was that voice would most likely be free, or very cheap. That was nothing very insightful, because that was where the technology was at that time.
The consumption of “fast fashion” and airline travel may decline, but Internet use and consumption of various Internet-based services is likely to rise. This is an opportunity for start-ups as well as the China-based behemoths that the US media makes a habit of ignoring. It’s our job to recognize the bias and correct it. But the actions of the American tech cos will affect our lives in multiple ways, the Facebook investment in Reliance Jio being a prime example. But again, it’s important to note who will be in the driving seat at Reliance Jio: all Facebook got for USD 5.
Hammered by retrospective tax determinations and non-traditional pricing plans introduced by Reliance Jio, the Indian telecom sector appeared to be in some kind of death spiral. But T.K. Thomas, one of the most knowledgeable observers of the sector, sees hope in the recent infusions of funds by entities ranging from Facebook to the Government of India. Beyond the immediate cash inflows he sees the overall prospects as positive: More than 50 per cent of the market is still not connected by data services.
As I was reading about Facebook becoming the largest minority shareholder of Reliance Jio, I was reminded of a piece I worked up on the flight back from Baku in late 2012 after doing serious damage to ETNO’s efforts to impose an archaic termination fee regime on the Internet. Here’s the last para (it was a parable, so the quotation may not make sense all by itself; please read the post): Parallel to this confrontation, there were those on both sides who sought common ground. Could the “big data” capabilities of the amusement park, used for marketing and for smoothening the peaks and valleys of demand for its attractions, be mobilized to better manage the demand for the trains? Could the amusement park take over parts of the ticketing and reception interfaces (the stations) of the system? Could there be joint ventures?
Once before, the Ambanis (Reliance) disrupted the Indian telecom market, and in the process changed the dynamics of markets across the developing world. This was the “fixed mobility” stunt they pulled off around 2000, when CDMA phones were sold as being usable only within defined areas. But they were actually mobile phones and the company made it possible for the phones to be used across multiple areas. On unintended (or perhaps intended) consequence was to drive down the costs of CDMA network equipment and handsets dramatically. CDMA, which did make sense for Sri Lanka in 1999, made eminent sense in 2003.
The headline said that Bharti Airtel has now reached the exalted status of having the third largest number of mobile customers worldwide, after China Mobile and Vodafone Group. But as the writer concludes, the real challenge is going to be how new business models can be implemented to make Internet access as successful as voice access. As Reliance Jio gets set to roll out a data-first network, only the networks that successfully implement a new business model that are likely to survive and prosper. He said the next phase of the company’s growth would be led by mobile internet. “This will again be a transformational phase and we have the opportunity to work with disruptive models and technologies and add value to the lives of our customers in an even more meaningful way,” he said.