Why Jio may not bring down your mobile bill

The newest telecom player offers more bang for the buck

Though Reliance Jio’s offerings look jaw-dropping, they may not necessarily bring down your monthly mobile outgo, an analysis of the company’s tariff plans shows. However, the latest telecom player offers you much more data at almost the same cost.

Jio on Thursday unveiled seven different monthly plans in the price range between Rs 149 and Rs 4,999 (pre-taxes for postpaid). These plans have validity of 28 days for prepaid users and one month for postpaid. The entry-level pack of Rs 149 offers just 300 MB of data, 100 SMSs and free calling. As the data consumed by most users is much higher than 300 MB, they will have to consider the second-most economical monthly plan — Rs 499 a month — to meet their data requirements. An average Airtel user consumes 1 GB data a month, and this is growing at double-digit rate.

Jio’s Rs 499 plan offers 4 GB of data, 100 SMSs a day and free calling. Jio also has Rs 299 plan which offers 2GB data, however, its validity is only three weeks and is not available for postpaid customers.

Jio’s plan details show it would provide an extra one GB at Rs 50 over Wi-Fi. However, we don’t know whether the company would have enough Wi-Fi hotspots for users to rely on. Also, the Wi-Fi data plan is not available on the Rs 149 plan.

Therefore, a typical consumer will have to opt for Jio’s Rs 499 plan, which is a steep 2.5 times more than what the average user pays at present.

The bill may not come down for the average user. However, those who already spend more than Rs 500 might be able to save on Jio as it is offering free calls.

Airtel and Vodafone’s monthly data packs at present start at Rs 150 a month for a 300 MB data and around Rs 300 for 1GB. Back of the envelope calculations show, in Rs 200 a month one gets about 200 minutes of calling, or about 150 minutes and 100 SMSs a day. A Jio user on the Rs 500 plan will get much more — 4 GB data and unlimited calling. However, the average user who spends Rs 200 a month will have to commit at least Rs 500 to get this benefit.

Given that the Indian telecom market is very price-sensitive it remains to be seen if the average user will be willing to make that quantum leap.

However, analysts expect the tariffs could change when Jio starts charging customers in 2017. According to a Credit Suisse report, “Our initial impression in that this may not be the final rate offers (ie company has not revealed all their cards yet). As mentioned, these plans are applicable only from January 1, 2017, by when the incumbents will have ample time to match (with meaningful pain of course). We suspect a new set of tariffs could be announced closer to January.”