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Reliance Jio NOT TO EXTEND free data offer after March

Reliance Jio will not be extending its Happy New Year free data offer beyond March 31, according to our sources in the company.

The clarification comes in the wake dozens of reports claiming that it will extend the free scheme beyond the March 31 deadline into June.

“There is zero chance of that happening,” said a senior official in the company’s sales team.

HISTORY REPEATS

In November and December, there were a similar number of articles that claimed that it would extend the Welcome Offer by three months from December to March.

What ultimately happened was that the company introduced a new plan, Happy New Year, which cut down the free data allowance by 75% to 1 GB per day.

Though it offered free data, the 1 GB per day scheme was very different from the earlier ‘unlimited’ one. While the earlier scheme was practically unlimited for everyone as it could be used for watching videos and films almost without limit, one has to be more selective about data expenditure under the new scheme.

NEW TARIFF PLAN

According to our sources, the amount of data consumed by users under the Happy New Year scheme is at manageable levels, and does not threaten to degrade the quality of the network drastically or reduce bandwidth

As such, the company is thinking of introducing new tariff schemes with such daily allowance of data in addition to the already announced schemes.

“The challenge is to ensure that any amount of data introduced doesn’t lead to the network getting affected.. subject to this, the company can price its plans at any level as the incremental cost of serving each extra GB is very little,” said a retired telecom industry veteran, who expects companies like Bharti Airtel, Vodafone and Idea Cellular also to come up with daily-limit plans in response.

“Even though it may look like you’re getting 30 GB per month under a 1-GB-per-day plan, actual usage of such a plan will be only around 7-10 GB or so because of the daily restriction,” he pointed out. “People do not, and cannot use a uniform amount of data every day. But if it was a 30-GB-per-month plan, the actual usage would be around the 25-30 GB range for most people.”

In other words, he pointed out, the convenience provided by a 1-GB-per-day scheme is more or less the same as that of a plan of 7 or 10 GB per month.

“However, if they price this 1-GB-daily plan at Rs 100 or 200 per month, it’s still cheap compared to existing 7 or 10 GB plans,” the person added.

At present, Bharti Airtel is the cheapest paid 4G operator in the country, and gives 6 GB of 4G data at Rs 147 to most of its consumers under their ‘my offers’ schemes. As such, the price per GB works out to around Rs 24.50.

Similarly, Idea Cellular offers 10 GB at around Rs 250 under its ‘special offers’ category, which also comes to Rs 25 per GB.

While Airtel has not spelt out any limitation on its ‘special offer’, Idea has put in place a rider that the user can only avail of the 10-GB-for-Rs-250 offer only three times by March.

Both these schemes — which offer around 10 GB per month at Rs 250 — are comparable, in their convenience factor, to what Jio’s ongoing Happy New Year (HNY) scheme.

However, the HNY scheme also has free voice calling.

END OF TARIFF COMPETITION

Bharti Airtel, Idea and Vodafone also have free voice plans, but they cost Rs 350 per month and provide 4 GB of free 4G data.

Considering that the price of 1 GB of 4G data is around Rs 25 at present, the incumbents are pricing their free voice call plan at Rs 250 per month.

So, the total cost works out to 250 + 250 (Rs 500) per month, double of what the newcomer is rumored to be planning to charge.

While Jio’s rivals can also offering unlimited calls and 7-10 GB of data for Rs 200-250 for 90 days — after all, it’s only 90 days — they would be loathe to disrupt their existing voice pricing models.

As such, the best way for these firms to do so would be to restrict such packages to 4G users only.

In fact, they have already taken such a step.

The Rs 345 unlimited calling schemes provide only 50 MB of data for 2G and 3G users, while offering 4 GB of data per month for 4G users.

“These schemes have only one aim — prevent people from going to Jio. Since people with 2G and 3G handsets cannot join Jio’s network, these plans do not deliver much data benefit to such users,” pointed out a New Delhi-based consultant who works with telecom companies.

He believes that if the new entrant converts the HNY scheme into a tariff plan, the incumbents will have no way other than to start offering free calls plus 5-10 GB of data at Rs 250.

“The trick is to restrict it to 4G users only. Perhaps they will launch VoLTE service by then and make this a VoLTE-only scheme,” he suggested, adding that the sooner they match their tariffs, the quicker the pain will end for them.

“It is a game of perception in the minds of people. As soon as the incumbents show that they too can offer cheap prices for as long as Jio can, the newcomer loses the charm and attraction for the consumer.

“So far, they couldn’t do it as services were being offered for free, but once Jio starts charging — even if it is only 200 per month — they will match it scheme for scheme,” he said.

“At this point, this cat and mouse game will end, and everyone — new and old — will go back to more realistic prices. In one year, we will be back at 10-GB-for-Rs-999,” he predicted.

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