Perhaps, Jio will be ready to lower tariffs when its reach, in terms of number of homes it can connect to, has greater scale
Tariffs announced for JioFiber three months ago was more or less in line with prevailing market rates
Unlike the big-bang launch of Reliance Jio Infocomm Ltd’s mobile broadband services three years ago, the company’s plans for its fixed broadband services, under the JioFiber tag, have been far more restrained. While tariffs for its mobile services were far below competition, the tariffs announced for JioFiber three months ago were more or less on a par with prevailing market rates.
According to some news reports, this is set to change, with the Reliance Industries Ltd subsidiary offering a ₹351 monthly plan for fixed broadband services.
However, a company official clarified that JioFiber offerings start from ₹699 per month, and the ₹351 base cost is part of all the plans which were announced three months ago. There is no new low-priced plan as of now, he added.
The confusion arose as a result of a ₹351 plan being filed with the regulator, although it must be noted that customers can buy only bundled offerings which start at ₹699 per month, and not the reported base plan.
Note that the total broadband subscriber base in the country is less than 20 million subscribers, and Jio’s target of reaching 20 million subscribers in the near term, and 50 million subscribers eventually, seemed far too ambitious.
Unless tariffs are brought down meaningfully, analysts expect growth to be sluggish in the segment. Even so, Reliance Jio has done well to garner about 0.7 million subscribers for its fixed broadband services by end-September, according to data collated by the Telecom Regulatory Authority of India.
Considering that competitor Bharti Airtel Ltd took years to reach its current subscriber base of 2.4 million in the home fixed broadband segment, Jio’s feat is commendable.
But to achieve its stated goal, tariffs will have to be lowered. There is also the matter of reach. Challenges with last-mile connectivity act as a constraint on growth. Taking broadband services to residences involve multiple approvals from authorities, such as municipal corporations and housing societies, which aren’t very easy to come by. Perhaps, Jio will be ready to offer lower tariffs when its reach, in terms of the number of homes it can connect to, reaches greater scale.
To achieve scale, Jio’s recent acquisitions of Hathway Cable and Datacom Ltd and Den Networks Ltd will help, as they have a customer base of about 14 million in terms of cable connections.
Jio’s reach of 1,600 towns and fibre layout of 700,000 route km (rising to 1.1 million going forward) is a key positive as it is likely to reach most potential customers, analysts at Jefferies India Pvt. Ltd said in a note to clients.