NEW DELHI: Reliance Jio’s plans to enter the high-speed wired communications segment next month will see the company gain a foothold across the entire digital communications value chain -- in both the home and enterprise segments -- at a scale none of its peers can match currently.
Not only will the company take on fixed-line broadband internet providers with Jio Fiber, but it is also likely to significantly disrupt the Direct-To-Home (DTH) television and home entertainment market with its high-powered set-top boxes, which every Jio Fiber subscriber will get.
Analysts see the launch opening up immense opportunities for the company, giving it access to diverse market segments like industrial and smart home-focused Internet of Things (IoT) services, entertainment, enterprise cloud computing and even video gaming. Going by Reliance Industries chairman Mukesh Ambani’s speech at the Annual General Meeting on Monday, Jio is looking to gain a wide range of synergies from its multiple offerings across the digital communications space.
“(Reliance’s) foray into telecom is increasingly becoming apparent as a means to an end and not an end in itself,” noted Antique Stock Broking in a research report this morning. Other analysts agree. “Jio’s offerings are quite disruptive not only because of its reach or price, but what it wants to do with fibre-to-the-home (FTTH)..,” observed Neil Shah, Research Director, Counterpoint Research.
Many fingers in the home entertainment pie
In the home segment, Jio Fiber will provide high-speed internet at a minimum speed of 100 Megabytes per second (Mbps) at Rs 700 per month (the cheapest plan), which market analysts say is a highly competitive price. But, its set-top boxes will be compatible with those offered by local cable operators and its controlling interest in large cable network providers Hathway, DEN Networks and GTPL will allow it to leverage their 30,000-strong local cable operator partners. A likely revenue sharing partnership model with LCOs for TV services also reduces resistance to adoption from the partner side, Elara Capital observed.
But, high-speed internet and TV aside, Jio Fiber set-top boxes will also offer virtual reality content, multi-party video conferencing, voice-enabled virtual assistants and interactive gaming, alongside subscriptions to top video streaming services and landline telephony services. “No player offers so many services under one package,” Shah pointed out.
The wired broadband market also offers significant room for expansion for Jio, with very low penetration levels when compared to the mobile broadband segment. For instance, TRAI data shows that there were just 18.45 million wired broadband subscribers at the end of May 2019, compared to over half a billion mobile broadband connections. India’s top five wired broadband service providers were BSNL (9.09 million users), Bharti Airtel (2.39 million), Atria Convergence Technologies (1.44 million), Hathway Cable & Datacom (0.83 million) and MTNL (0.75 million).
Rapid expansion in the enterprise segment
In the business-to-business space, Jio is going after both small businesses and large corporates with plans to offer integrated FTTH internet, IoT and cloud services, another package of offerings no rival sells currently.
“Jio Fiber will enable SMBs to gain a powerful combination of fixed-line connectivity and cloud applications,” Ambani had said, pointing out that this would see them leapfrogging them from “no technology to having a complete line-up of cutting-edge, plug-and-play technology-enabled tools”.
The partnership with Microsoft for setting up public cloud infrastructure and providing Azure cloud tools will enable Jio to provide a host of cloud storage and analysis solutions, Shah said, adding that Jio would likely take on the role of a system integrator or solutions provider on a “highly flexible platform where multiple solutions can be built”.
Jio and Microsoft’s entry into the cloud services and storage space is likely to impact Google and Amazon’s offerings, which are not only priced much higher, but do not offer enterprises the advantage of a combined service bundle across the service chain. Analysts also note that the Jio-Microsoft partnership will see increased business opportunity from payments firms due to the RBI diktat to store sensitive payments data locally.
Vast IoT network in pipeline
With Jio Fiber and Jio 4G mobile covering the internet services spectrum, analysts believe Jio will begin building a vast Internet of Things (IoT) network riding on its high-speed internet services to unlock future value. According to Ambani, Jio has already developed a service called Narrowband Internet-of-Things (NBIoT), with which “billions of smart sensors whether residential, industrial or public can be collected from across India with the highest reliability and lowest cost”.
Such IoT devices and networks are seen as the bedrock of the rapidly growing smart-home solutions segment. And, with Jio aiming to connect at least 1 billion IoT devices on the NBIoT platform in a few years, the company sees a whopping Rs 20,000 crore revenue opportunity in the segment.
“Take a manufacturing firm that wants to do predictive analysis and maintenance. Jio can offer it its IoT platform and tools, high-speed internet to operate the system on and cloud analysis and storage services,” pointed out Shah. “This will be a very attractive offering to large businesses, especially since Jio has a better understanding of the Indian business environment than foreign-based rivals,” he added.