According to the International Data Corporation, India has about 250 million feature phone users, many of whom are still using 2G phones and only for voice calls
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The world may be moving to 5G or even 6G for super-fast internet, but the masses in rural India are stuck on 2G.
A new $12 phone from Reliance Jio this week could change all that.
telecom arm of indian conglomerate Reliance Industries, opened the door for more people to access the Internet by launching new Internet phones equipped with 4G mobile networks. Feature phones are essentially non-smartphones, with button keypads and small non-touch displays.
Reliance Jio’s new feature phone aims to bridge the mobile connectivity gap between rural and urban India by offering non-smartphone users a cheaper alternative to switch from 2G to 4G mobile networks.
Akash Ambani, Chairman, Reliance Jio, said: “As the world is on the cusp of the 5G revolution, 250 million mobile phone users in India are still stuck in the 2G era, unable to take advantage of the basic functions of the internet. “in a Press release.
5G refers to the next generation of mobile networks that deliver data at extremely high speeds and will need to support advanced technologies such as driverless cars and virtual reality.
Senior analyst Varun Mishra said the new phone, dubbed Jio Bharat, is an entry-level phone for first-time Internet users who rely on basic features and are not stuck on a smartphone. Beset by countless applications. Counterpoint Research said.
Already the world’s second-largest smartphone market, Mishra said India could add 300 million new internet users, making it the fastest-growing country in delivering internet services to unconnected users.
“With a familiar form factor and internet connectivity, the device can help users experience key services such as digital payments and content through Jio’s ecosystem for the first time,” Mishra told CNBC. “However, the screen size may limit the experience, but for the first time There are still benefits for users of the Internet.”
customer retention
Jio has advantages over its competitors in telecom services such as Vodafone Idea — partnership between Aditya Birla Group and Vodafone Group — and Bhati Airtelas and BSNL.
Mishra emphasized that, in addition to selling phones at extremely low prices, Jio’s monthly plans are also very affordable – and other telcos may even start losing customers.
Reliance Jio claims that their monthly plans are 30% cheaper than other telcos and provide customers with seven times the data traffic.
Reliance Jio’s press statement said that paying $1.50 gets users unlimited voice calls and 14 GB of data, while other carriers cost almost $3 for other voice calls and offer only 2 GB of data.
Navkendar Singh of International Data Corporation (IDC) said this is Jio’s strategy to attract more feature phone users to sign up for plans with them, even though they only offer 4G and 5G mobile network services.
Reliance Jio has launched 5G services in 406 cities in India.
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Mishra said India has about 250 million feature phone users, many of whom still use 2G phones and use them only for voice calls.
Singh said in a phone interview with CNBC that Reliance Jio has attracted these consumers and wrested them away from “traditional operators” by offering more “palatable” price plans.
“From what we understand, Jio’s main goal is to attract more customers on Jio platform and Jio network, and then they can start cross-selling services,” he said, explaining that customers can also take advantage of Jio’s payment and service streaming services .
Moreover, Singh stressed that Reliance Jio hopes that first-time internet users who buy Jio Bharat will eventually be able to upgrade to more advanced phones.
“Currently, Jio’s revenue is about $1.50-$2 per month, and when customers then upgrade their phones in three or four years, they will at some point opt for a more advanced feature phone or a low-cost smartphone,” he added .
A price war with other telcos?
Analysts interviewed by CNBC also agreed that while Jio has a cost-friendly plan, other telcos are unlikely to cut prices significantly.
“The battle between Jio and other Indian telcos has been ongoing,” said Nikhil Batra, research director at IDC.
“Cutting prices across the board is not a viable option, but it will be a challenge for (other telcos) to create new customer experiences and product mixes to increase customer stickiness,” Batra said.
According to Macquarie Research, Jio currently has the largest user market share in Delhi (34%), Mumbai (35%) and Kolkata (42%), compared to Vodafone Idea, Bharti Telecom and BSNL.
However, other telcos can still benefit from Indian telcos as they continue to choose phones that do not allow them to get online.
The Macquarie data also showed that Bharti Airtel has a bigger market share than Jio in rural areas such as Bihar, Jammu and Kashmir and Himachal Pradesh.
5G deployment in India
According to IDC, as of September 2022, India has the second largest telecom industry in the world with a user base of 1.17 billion people. The market intelligence firm said the industry’s growth trajectory will be higher from now on.
“The industry’s growth over the past few years has been largely driven by lower tariffs, the advent of affordable smartphones, the launch of telecom services by Reliance Jio, the expansion of 4G coverage, and higher data consumption by users,” Batra said.
More consumers are also expected to buy smartphones equipped with 5G mobile networks.
According to IDC data, about 52 million mobile phones supporting 5G will be sold in 2022, an increase from 26 million in the previous year.
“5G rollout in India is faster and smoother, and Jio is on track to have all-India coverage by the end of this year. Jio and Airtel are already offering 5G services, and Vodafone Idea and BSNL are expected to join the ranks of deploying 5G by 2024,” said Mishra of Counterpoint Research explain.
Kolkata, September 27, 2022 Men chat on mobile phones in front of an iPhone 14 commercial.
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Counterpoint Research estimates that nearly 85 million users in India use 5G-enabled smartphones, and 5G phones will account for 32% of the market by 2022. More than 50% of smartphones shipped in April 2023 will also be 5G capable.
However, Bartra said this was largely supply-driven. This is because “brands are able to introduce more 5G devices due to the rollout of 5G and better supply resulting from demand for 5G handsets in other countries such as China and South Korea.”
“Until now, Indian consumers have not really needed 5G devices and their purchases are driven by availability as almost all smartphone models are priced around $300 and are 5G-enabled,” he added.
Despite regulatory and telecom infrastructure challenges, “India will be the main market for 5G by 2026 and will dominate new additions to 5G networks as China starts to mature and slow down,” Batra said.
Now that technology is playing a bigger role, “we can expect India to accelerate further and set an example”, he said, citing banking and UPI as examples.
“India has surpassed most developed countries in making digital payments convenient, accessible and widely accepted, regardless of merchant size,” he added.
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