Signal strength: Reliance Jio wages price war in fixed-line broadband

Reliance Jio has taken a disruptive call in the fixed broadband space by offering an entry-level unlimited 10 mbps home broadband service for just Rs 198 a month, slashing their earlier entry price of Rs 399 (for 30 mbps). Analysts say that the offer will lead to a price war with rival Bharti Airtel whose minimum pack currently is Rs 499. Bharti is expected to respond to Jio’s gambit soon.

Clearly, Jio plans to use the low-priced entry offer as a “back up plan” to expand the country’s home broadband market, which is limited to only 27.5 million homes at present. Of this, there are over 15 million homes with fibre broadband, which is provided by Jio and Bharti Airtel.

Analysts at BOFA Global Research say that Jio is trying to replicate what it did with its 4G mobile services to encourage customers to try out their service as a secondary SIM at a low price and then have them convert to Jio completely. 

In home broadband too, the low entry-level price is aimed at pulling in customers who use only mobile internet to also start using fixed broadband. The plan is to let them use it and then upgrade their packs at additional cost.

The low tariff could also be attractive to pay-TV users who fork out Rs 300- Rs  400 for a TV pack. They have to pay an additional Rs 100 and get 400 live TV channels plus 14 OTT apps, apart from a free set-top box. 

The growth of the home broadband market in India has been constrained by the fact that only 10 per cent of the households are connected by fibre. 

But with the advent of 5G fixed wireless broadband, the sweepstakes will change. Jio has an aggressive target to reach over 100 million customers with a combination of fibre-to-home and 5G wireless fixed home broadband. And it has got the timing right to woo potential new customers  — Reliance’s Viacom 18 is going to live-stream the upcoming Indian Premier League for free on its digital platform. 

But will Jio’s move see a big shift to home broadband connectivity? India has been a laggard in the penetration of households with fixed broadband, which is as low as 9 per cent. In comparison, it is 48 per cent in Thailand, 18 per cent in Indonesia, 72 per cent in Vietnam, 95 per cent in the US and over 103 per cent in China.

Reliance Jio’s target to cover 100 million households is ambitious, of course. It accounts for a third of the entire universe of 300 million TV households in the country (paid and unpaid). Although, it may well be a possibility, given that the total number of pay-TV households in the country is over 145 million.