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How Jio becomes the cheapest internet service provider?

Currently India is in one of the worst economic slowdowns, but despite this, a company called Jio is thriving in a matter of four years. Its user base has grown from zero to more than 385 million users, making it the world's fastest-growing telecom network. 

In fact, JIO's rise is actually inadvertently responsible for the whole PewDiePie versus T series SUBWAR.  Seeing the potential of the company Facebook and Google have collectively invested more than $10 billion for approximately 18% minority stake in the company.

So let's find out what makes this company so special. The company was built by Asia's richest man Mukesh Ambani before this Indian billionaire even entered the market, he invested $20 billion in Jio to set up an optical fibre network across India. At that time there were more than 1 billion mobile users in India, out of which only 34% were connected to the Internet in less than 12% had a reliable connection.

Now imagine if you were living in India and someone offered you a high-speed Internet connection for free for three months without any privacy concerns. Would you take it? This is what Jio did after its public launch in September 2016. It offered free high-speed Internet connection to get people onto their network while the process of SIM activation for its competitors took around two days, Geo reduced that time to just two hours, which made the process of having a Jio SIM card hassle-free and very fast. Jio brought more than 100 million people onto the Internet within the first year of its launch.

The majority of which were first-time Internet users. While people in India were accustomed to expensive and low-speed Internet connections, Jio offered 4G Internet at next to nothing. To put things in perspective, the lowest you can pay for one gigabyte of mobile data is around $2.00 in North America, whereas in India after the arrival of Jio, it costs less than $0.10. After three months of free Internet Jio provided their high-speed Internet connection at ridiculously low prices with unlimited voice calls for free with every Internet pack. This directly targeted its regional competitors like Vodafone Airtel who made 60 to 70% of their revenue by charging for voice calls and since Jio was the only one with a high-speed Internet connection at such a low price, people naturally shifted towards it.

After getting people hooked on to their network, Jio has been aggressively pushing towards bringing more and more users to its digital ecosystem which it calls Jio platforms. The Jio platform is a subscription-based service which covers almost every aspect of your life from healthcare services to e-commerce to streaming content. You name it, Jio has it.

I don't know if it's a coincidence, but surprisingly it feels as if the government is working in favour of the company. The Prime Minister of the country who has huge public support appeared in the advertisements with colour-coordinated dresses with the logo of the company. However, the government denied any link between them and the company and further stated that these images were used without the consent of the Prime Minister's CEO of Vodafone, the British Telecom giant has alleged that decisions in India had unduly favoured Reliance Jio, which is severely hurting the competition before Jio commercial launch, it started test trials in May 2016. Its 4G services by giving SIM cards to its employees and their family. Soon the restrictions were loosened and by August 2016 its user base had grown to more than 2.5 million users. In the trial phase, the competition alleged that this was a ploy to grow its subscribers before commercially launching as a commercial launch would result in license payments to the government, as well as strictly working with respect to the number of regulatory requirements. However, it wasn't illegal, in fact, it was a loophole in the law. Soon the questions were asked to the Telecom Department about the issue, but they responded with a statement after the commercial launch of the company.

It was already too late after this. In 2018, competitors started complaining about Jio's predatory pricing behaviour. Predatory pricing is the illegal act of setting prices low in an attempt to eliminate competition. Predatory pricing is in violation of the antitrust laws, as it makes markets more vulnerable to a monopoly. Previously, rules on predatory pricing behaviour applied to a company with significant market power, which Jio of course had. During the same time, the Telecom Regulatory Authority of India altogether changed the way the market power was calculated. Till then, it was calculated on the basis of revenue market share, subscriber market share, the volume of traffic and capacity. But to the benefit of the company's volume of traffic and capacity was removed as a basis for calculating market power. As a result of which Jio with huge funding from its parent company Reliance and other investors continue to provide its services at next to nothing. Moreover, on May 17th of 2020 for the first time in the history of the country Union Minister for Finance and Corporate Affairs announced that the Indian government has allowed Indian companies to list their stocks overseas. 

Interestingly, at the same time, a few reports indicated that Reliance Industries Limited, which is the parent company of Jio, was planning to list the shares of Reliance Jio on NASDAQ. If there is a profitable service that Jio does not provide, it basically acquires the company that does and then it tries to overtake its foreign competitors with that. For example, in 2018, Jio acquired Indian-based music streaming platform Savan to compete with Spotify, YouTube Music and its regional competitors. This strategy worked before Jio acquired someone. It had around 20 million active users, but after the acquisition, Jio brought an additional 100 million users to the platform. Currently, Jio somehow controls more than 24% of India's music.

Streaming market overtaking Spotify Wink, YouTube Music and more. And just a matter of four years after its launch, it is acquired companies from a variety of sectors like haptic and neutrodyne for competing against Alexa and Google Assistant Radicis and Asteria Aerospace for expanding its operations in the area of 5G medical imaging and defence sector. Basically, everything that touches and affects human lives Jio is either acquiring or building due to the border dispute between India and China at Galwan Valley. 20 Indian soldiers lost their lives as a result of which the Indian Government banned 59 apps including Tiktok. At the same time, a fake rumour spread that Zoom was also a Chinese app. As a result of which many people shifted towards the new video conferencing app. Jio meets. The app recorded a record-breaking 1,000,000 downloads within a week of its launch. Later on, Zoom clarified that it wasn't a Chinese app and it also accused Jiomeet of having a similar UI to Zoom. But it was already too late. After taking over the Internet, it is also planning to take over the online retail sector too. 

Currently, Amazon and Walmart control more than 60% of the India e-commerce market, but soon that might change, Jio has launched what it calls Jio Mart instead of building huge warehouses and getting their supplies from the suppliers. Jio is partnering with local retailers to deliver products to households. Basically it is bringing local retailers to the Internet and considering the amount of retailers in India. It is safe to say that Jio Mart soon may overtake Amazon and India. With all these things taken into account, JIO's platform is currently being valued at more than $100 billion. After conquering India, it's possible that Geo might expand globally. First, it will lure people into its network by providing high speed Internet connections at a fraction of a price that competitors offer, and then after attaining a significant market share, will slowly roll out Jio platforms to the people and make that ecosystem so good and affordable that people become its long lasting customers.   


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