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Why Airtel, Idea and Vodafone desperately want Reliance Jio to reveal its tariff

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If you believe the current fight between incumbent operators like Bharti Airtel, Idea Cellular and Vodafone on the one hand and Reliance Jio on the other is about everyone paying the same taxes, think again.

While the Cellular Operators’ Association of India, which is batting for the big three operators, has focused its attack on Jio not paying revenue share to the government in the guise of conducting trials, its real target is something altogether different.

What Jio’s rivals primarily want is not that Jio should stop its trial — though they would be very happy if it did — but that the Mukesh Ambani firm should reveal its post-trial tariff as soon as possible.

“We believe the pressure is working,” said an official in the anti-Jio camp. “They (Jio) will file their tariffs early next month.”

SUBCONSCIOUS MARKETING

These rival operators think that once Reliance Jio reveals its regular tariff plans — which they believe will be higher than what people expect — the company will be forced to fight them on the same turf.

At present, they believe, the Ambani firm enjoys a secret marketing weapon — the power of subconscious suggestion.

Those who are signing up for its 90 day trial offer subconsciously think that the company’s regular tariffs will also be dirt cheap just like its preview offer.

It is this innate suggestion that is at least partly responsible for the long queues of SIM-seekers outside the company’s retail showrooms.

“We are pretty sure the final tariff will not be as cheap as people think, or have been led to believe,” says an industry official. Forcing Jio to reveal the tariff will deprive the company of this powerful marketing tool and considerably dull the current attraction of the brand for their customers.

In addition, if more and more of their premium customers start ditching the big operators, these operators believe that they can address issue by cutting their prices to match Jio’s new tariffs. “We too can offer 90-day trials if comes to that. But without them revealing their true tariffs, it’s a truly uneven fight,” rues the above mentioned official
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CONSUMER INTEREST

The rivals are also pitching the consumer interest angle.

“All these consumers who join them expecting ultra-cheap offerings may be disappointed to learn of the real tariff after three months. They should know what they are going to get,” the person argued.

The official does have a point, as consumers can make a more informed choice if the final tariff is also known.

WILL REVEALING TARIFF WORK?

But whether revealing the final tariff will prevent the long line of SIM-seekers outside ‘Digital’ outlets remains to be seen for various reasons.

First, the rivals are assuming that the Ambani firm’s final tariffs won’t be that much different from their present rates, or that even if it is, they would be able to match those rates by cutting their prices. It remains to be seen how valid an assumption this is and whether they can indeed match the prices.

Second, they are also assuming that consumers will not line-up for a free SIM if they see that cheap data is on offer only for 90 days, and not forever. This too is something that remains to be proven. Even if the regular tariff is as high as that of the incumbents (Rs 1000 for 10 GB), many consumers may still sign up for the 90-day offer, or just to see how fast the new network is.

Finally, on the topic of bandwidth and data speeds, both Idea and Vodafone suffer from a key shortcoming when it comes to network data capacity compared to Jio and Airtel.

For the same number of towers, Idea and Vodafone will be able to offer only about 20-25% of the bandwidth that Jio will be able to, due to a difference in the quantum of spectrum deployed.

Of course, they can try to get over this by deploying more towers, but this may not be very practical in a congested city like Mumbai. Besides, setting up new towers means driving up operating costs.

Until the next spectrum auction, therefore, some of the competitors of Jio and Airtel will face some issues regarding spectrum, which will have an impact on the speeds and prices they are able to offer.
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