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Reliance Jio looming, Idea declares 4G tariff war, offers 20 GB at Rs 1350

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Idea Cellular, which today became the third operator in the country to launch commercial 4G services, seems to have decided to pull out all stops to counter the launch of Reliance Jio next week.

In doing so, Idea has decided to offer 4G tariff that is roughly 50% cheaper than its two closest competitors, Bharti Airtel and Vodafone.

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While Bharti and Vodafone have priced their 10 GB packs at Rs 1350 and Rs 1500 respectively, Idea is offering 20 GB for Rs 1,350. This translates to a pricing of Rs 67.50 per GB.

This is clearly aimed at Reliance Jio, which is expected to offer 10 GB for Rs 600. (More details on that here.)

Of course, Idea’s calling this a promotional offer, but if the Jio’s pricing turns out as expected, the promotional offer is more than likely to become its permanent 4G tariff. Unlike in the 3G era, where Idea was dependent on partners Airtel and Vodafone for launching 3G services in many areas; in 4G, each operator will launch their own. As a result, they have more freedom to price their offerings cheaper to protect their customers from Jio.

“Idea’s primary concern seems to be to keep its data customers happy. It doesn’t want them going anywhere with Jio’s launch,” said a Mumbai-based stock analyst who tracks the company.

In fact, just last week, brokerage firm CLSA said Reliance Jio’s initial subscribers will include the high-paying, data-guzzling users of other premium networks like Bharti Airtel and Vodafone.

Though Idea Cellular was not specifically mentioned, the Aditya Birla firm is the leader in some markets like Kerala, and wouldn’t want its high-ARPU customers to shift to Reliance Jio.

The initial launch has been done in 75 Towns in all five states of South India – Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana.

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Besides offering the above pack, Idea will also offer 2 GB of 4G data for Rs 249, and 10 GB for Rs 850.

It should be remembered that 4G customers are not the ones who buy 2 GB and 3 GB packs. Instead, they would be the ones that go for packs that offer 10 GB or more of data — and this is where the real competition will be felt.

Going forward, 3G tariffs are likely to remain attractive for those who use data for services like chatting and social networking, while the video and PC tethering users will shift to 4G.

At present, watching online video on mobile phones is prohibitively expensive and costs you about Rs 100-150 per hour. Online video is likely to take-off in a big way only if data pricing falls to the Rs 25-40 per GB range from the current Rs 240 per GB scenario.

According to industry reports, Reliance Jio will primarily target people who spend at least Rs 300-400 per month on data, which means 5 GB and more of data consumption per month.

UDPATE: Reliance Jio did not specify the tariff of its upcoming 4G service when it unveiled the service on Sunday. Instead, Chairman Mukesh Ambani called on group employees to test the network and give feedback so that the services can be opened up to the public.

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Idea is also offering free 4G SIM upgrades in 750 towns — its initial target market.

“Customers in key non-4G towns will also be able to enjoy Idea’s 4G services while roaming in these 4G towns by upgrading to 4G SIM cards from 15th February 2016,” it added.

It has also tied up with Hungama Digital to offer music services at Rs 29 per month.

On the hardware side, it has launched 4G Dongles and Mi-Fi devices starting at a price of Rs 2,599 (Airtel is offering Huawei MiFi devices at Rs 1,500 in some of its circles.)

The company has also tied up with Snapdeal to provide bundled data offers on 4G devices.

On Voice over LTE, it said “While the company possesses the capability to introduce VoLTE feature, existing customers’ current 4G devices do not support this feature. Accordingly, the deployment of VoLTE will be evaluated at a later stage.”

It said it is deploying ‘single radio access network’ equipment which supports multiple technologies in a given frequency band.

“For every 4G site on 1800 MHz, this equipment also provides additional 2G voice capacity on GSM spectrum.” This is likely to help in areas where the operator has left-over spectrum after allocating 5 MHz towards LTE, and can divert the remaining to augment its 2G service.
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