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Reliance Jio’s strategy of free services has boomeranged, high end customers have left it

Manoj Gairola, Editor - TelecomTiger
  Manoj Gairola |  | 05/12/2016

Reliance Jio was supposed to usher in Digital revolution in India. It has succeeded in forcing its competitors to improve their quality of services (QOS). However, its own QOS has deteriorated drastically in last three months, since it launched its services.

So, no one was surprised when MukeshAmbani announced that Jio will offer free services till March, 2016.

In his announcement, last week, Ambani applied basic management rule of 80/20in justifying his decision to extend free service offer and in explaining the reason for poor data services. The 80/20 rule (Pareto principle) states that for many events, roughly 80% of the effects come from 20% of the causes.

Ambani said: “…We have noticed that 80% of Jio users consume less than 1 GB of data daily. 1 GB per day is still a substantial amount of data. In fact, it is 30 times the average usage on other networks!”

“But, the other 20% of users consume disproportionately higher amounts of data, and we have observed that this disproportionate usage contributes significantly to the congestion that I mentioned earlier. In short, 20% of the users create a poor experience for the other 80%.”

In its new free offer Jio has capped data usage to 1GB per day, after which speed will be reduced to 128 kbps per day.

Reliance Jio’s top management is slightly late in realising 80/20 rule. My observation is that the same rule would apply to the subscribers also. Generally, in a telecom service company 20% of the subscribers generate 80% of the revenue.

These 20% subscribers were fed up with poor quality of services of the incumbent operators. Many were waiting for Jio to launch services and were eager to shift to Jio. Many subscribed to Jioservices as second phone. However, most of them had bad experience with Jioin last couple of months.

These customers had potential to contribute 80% of the revenue. They have stopped using Reliance Jio services. They are not even carrying it as their second phone.

Unlike voice services, Jio can’t blame Airtel, Vodafone and Idea for poor data services. So, it blamed subscribers for it, which is not fair. First you invite subscribers to experience high data services and then claim that the high usage subscribers are responsible for poor services.

I have always said that Jio could be a strong player only if it offers good quality of services. It would not matter whether its services were free or not. Accumulating a large subscriber base is not the only important thing. All operators including government-owned BSNL have roped in large number of subscribers in last three months. It is important to offer good quality of services, which Jio is lacking.

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