[ad_1]
There are about 250 million feature phone users in India, and many of them are still using only 2G phones and voice calls, according to the International Data Corporation.
Indranil Mukherjee Afp | Getty Images
The world may be moving to super-fast internet speeds on 5G or even 6G networks, but masses in rural India are still stuck in the 2G era.
All of that could change with a new $12 phone from Reliance Jio this week.
The telecommunications arm of the Indian conglomerate Reliance Industries, opened the door for more people to access the Internet by launching its new phone that supports the Internet with a 4G mobile network. Feature phones are basically smartphones without a keypad and a small, non-touch screen.
Reliance Jio’s new feature phone aims to reduce the mobile connectivity gap between rural and urban areas in India by giving non-smartphone users a cheaper alternative to switching from 2G to 4G mobile networks.
“There are still 250 million mobile users in India trapped in the 2G era, unable to take advantage of the basic features of the internet at a time when the world stands on the cusp of the 5G revolution,” said Akash Ambani, President, Reliance Jio. in press release.
5G refers to next-generation mobile networks that deliver data at very high speeds, and are needed to support advanced technologies such as driverless cars and virtual reality.
The new phone, called Jio Bharat, acts as an entry-level phone for first-time internet users that relies solely on basic functions without getting tangled up with the endless number of apps that can be found on a smartphone, Varun Mishra, senior analyst at Counterpoint Research, said.
India is already the world’s second largest smartphone market and is likely to add 300 million new internet users, Mishra said, making it the fastest country to provide internet services to those who remain offline.
“With a familiar form factor and internet connectivity, this device can help users experience key services such as digital payments, content and more for the first time through Jio’s ecosystem,” Mishra told CNBC. However, the screen size can limit the experience a bit, but it’s still fine for first-time internet users.
Customer retention
Jio has the upper hand against its competitors in the telecom service space, such as Vodafone idea Partnership between Aditya Birla Collection And Vodafone Group – As well as Bhatti Airtelas and BSNL.
Aside from selling the phone at a rock-bottom price, monthly plans from Jio are also quite affordable — and other carriers may start losing customers, Mishra explained.
Reliance Jio claims its monthly plans are 30% cheaper than other carriers, and offers customers seven times more data.
Paying $1.50 will get users unlimited voice calls and 14GB of data, compared to nearly $3 for other voice calls and only 2GB of data from other operators, Reliance Jio’s press release claimed.
This is Jio’s tactic to get more feature phone users to sign a plan with them even though they only offer 4G and 5G mobile network services, according to Navkendar Singh of the International Data Corporation (IDC).
Reliance Jio has launched 5G services in 406 cities in India.
Norphoto | Norphoto | Getty Images
There are about 250 million feature phone users in India, and many of them are still using only 2G phones and voice calls, according to Mishra.
Singh told CNBC in a phone interview that Reliance Jio is luring these consumers away from the “legacy operators” by offering more “palatable” pricing plans.
he said, explaining that customers can also tap into Jio payments and streaming services.
In addition, Singh explained that Reliance Jio hopes that first-time netizens who purchase Jio Bharat will eventually upgrade to more advanced phones in the future.
“Currently, Jio is getting $1.50 to $2 per month in revenue, and when customers later upgrade their phones in three or four years, they will choose phones with more advanced features or sometime low-cost smartphones,” he added.
Price war with other carriers?
Analysts who spoke to CNBC also agree that despite Jio’s cost-friendly plans, other telcos are unlikely to cut their prices significantly.
“There has been an ongoing struggle between Jio and other telecom companies in India,” said Nikhil Batra, director of research at IDC.
“Cutting prices across the board would not be a viable option, but it will be a challenge (for other telcos) to create new customer experiences and product bundles to further attract customers,” Batra said.
According to data from Macquarie Research, Jio currently has the largest subscriber market share in Delhi (34%), Mumbai (35%) and Kolkata (42%), compared to vodafone idea, Bharti Airtel and BSNL.
However, other carriers can still take advantage of those in India who continue to choose phones that do not allow them to surf the Internet.
Macquarie’s data also showed that in rural areas like Bihar, Jammu and Kashmir, and Himachal Pradesh, Bharti Airtel has a larger market share than Jio.
Roll out 5G in India
Data from IDC showed that India has the second largest telecom industry in the world with a subscriber base of 1.17 billion people as of September 2022. The market intelligence firm said the growth trajectory of the sector would pick up from here.
“The growth of the industry over the past few years has been mainly driven by lower tariffs, availability of affordable smartphones, launch of telecom services by Reliance Jio, expansion of 4G coverage, and increased data consumption by subscribers,” Batra said.
It is also expected that more consumers will buy smartphones that have 5G mobile network.
IDC data showed that about 52 million 5G-enabled phones were purchased in 2022, up from 26 million in the previous year.
“5G implementation in India has been faster and smoother, and is on track to reach pan-India by Jio by the end of the year. Jio and Airtel already have 5G services, and Vodafone Idea and BSNL are expected to join in 5G rollout by 2024,” said Mishra of Counterpoint Research.
Men talk on their mobile phones in front of an iPhone 14 ad, in Kolkata on September 27, 2022.
Norphoto | Norphoto | Getty Images
Counterpoint Research estimates that there are approximately 85 million 5G-enabled smartphone users in India, with 5G phones accounting for 32% of the market share in 2022. More than 50% of smartphones shipped in April 2023 had 5G capabilities. 5G too.
But Batra said this is very much show-driven. That’s because “brands are able to bring in more 5G devices because of the better supply achieved by the 5G rollout and the demand for 5G phones in other countries like China and Korea.”
“Consumers in India have not really demanded a 5G device yet, their purchase is driven by availability as almost all smartphone models are around $300 and 5G capable,” he added.
Despite the challenges of regulation and telecom infrastructure, Batra said, “India will be a major 5G market by 2026 and will dominate 5G additions just as China begins to mature and slow down.”
Technology plays a much bigger role these days and “we can expect India to step up even further and lead by example”, citing the example of banking and Single Payments Interface as an example.
“India has leapt ahead of the majority of developed countries in making digital payments convenient, accessible and widely accepted, regardless of sizes of merchants,” he added.
[ad_2]
