Jio: A Monopoly in the making

Jio with every passing day has managed to capture the imagination of its growing consumer base. The fanfare behind its unmatched pricing and great service is one that is garnering unmatched interest from all corners of the globe with every passing minute. While there is no doubt on the fact that Jio is managing to provide top of the line services the strategy being adopted by them is one that will hurt the market severely in the long run. A simple example of this is that in 2016 when Jio launched commercially Vodafone, Idea, and Airtel together held a 75% market share. Although today Jio holds 32% alone while those 3 players together have only 56% to show for. This is thanks to the penetrative pricing of Jio which has managed to woo its customers.

In 2016 when Jio launched commercially Vodafone, Idea, and Airtel together held a 75% market share. Although today Jio holds 32% alone while those 3 players together have only 56% to show.

Recently at their last AGM RIL, Chairman Mukesh Ambani announced that Jio would enter the DTH and Internet space. Recently TRAI applied regulations on DTH operators regarding channel prices which would make them standardized across all DTH operators. Although Jio has already managed to tackle the same with JioTv that streams all channels for free on mobile phones of all Jio customers. This would ensure that Jio would eat in the share of DTH operators. They have also stated that they would provide 10 times faster internet than the average internet speed in India at 1/10th of the average price thereby wooing consumers to consume JioFibre.

While Jio holds every right to decide the price of the product and the customer has every choice to decide which product he would like to go for, somewhere the government needs to intervene because while these cheap prices may seem like a steal now and attractive in the short term, in the long term this would lead to a total monopoly for Jio and with no competition in its close quarters it can set the price it wants without any worries of a falling demand. This is because capital investment and entry barriers in Telecom, DTH, and Broadband industries are very high and once other players exit re-entry for them would become very difficult later on.

Therefore it really is “Jio ya Maro” at the moment for the industry.