According to International Data Corporation, India has about 250 million feature phone users, many of whom still use their 2G phones for voice calls only.
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The world may be transitioning to 5G and even 6G ultra-fast internet, but many people in rural India are still stuck in the 2G era.
That all could change when Reliance Jio launches a new $12 phone this week.
Telecommunications division of Indian conglomerate Reliance Industrieshas opened the door for more people to access the Internet through the launch of new Internet-enabled phones with 4G mobile networks. A feature phone is essentially a non-smartphone with a push-button keypad and a small non-touch display.
Reliance Jio’s new feature phone aims to reduce the mobile connectivity gap between rural and urban India by offering non-smartphone users a cheaper alternative to switch from 2G to 4G mobile networks is intended for
Akash Ambani, Chairman of Reliance Jio, said: “India still has 250 million mobile phone users, still trapped in the 2G era and the world is at the height of the 5G revolution. are not available,” he said.and press release.
5G refers to next-generation mobile networks that will deliver data at ultra-fast speeds, required to support advanced technologies such as driverless cars and virtual reality.
The new phone, named Jio Bharat, will serve as an entry-level phone for first-time internet users who rely only on basic functions without being cluttered with a myriad of applications on their smartphones. Analyst Varun Mishra said. said Counterpoint Research.
India, already the world’s second-largest smartphone market, is expected to add 300 million new internet users, making it the fastest country to provide internet services to those without internet access, Mishra said.
“With its familiar form factor and internet connectivity, the device will help users experience key services such as digital payments and content through Jio’s ecosystem for the first time,” Mishra told CNBC. “However, the screen size can limit the experience a little bit, but it’s still good for someone new to the internet.”
customer retention
Jio has an edge over its competitors in the telecommunications services space. vodafone ideas — partnership between Aditya Birla Group and vodafone group — So are Bati Air Terrace and BSNL.
In addition to selling phones at such low prices, Jio’s monthly plans are also so affordable that other carriers may even start losing customers, Mishra stressed. .
Reliance Jio claims its monthly plans are 30% cheaper than other telecom companies and give customers seven times more data.
For $1.50, users get unlimited voice calls and 14 gigabytes of data, while other carriers charge almost $3 for voice calls and just 2 gigabytes of data, according to a press statement from Reliance Jio. Not available.
According to Navkendar Singh of International Data Corporation (IDC), this is Jio’s strategy to get more feature phone users to sign up for the plan, even though it only offers 4G and 5G mobile network services. .
Reliance Jio is rolling out 5G services in 406 cities in India.
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Mishra said there are about 250 million feature phone users in India, many of whom still use their 2G phones for voice calls only.
Reliance Jio attracts these consumers and separates them from “traditional carriers” by offering more “comfortable” tariff plans, Singh told CNBC in a telephone interview.
“From what we understand, Jio’s main objective is to get more customers to the Jio platform and Jio network, so they can start cross-selling their services. ’” he said, explaining that customers can also use Jio payments and services. streaming service.
Singh also stressed that Reliance Jio hopes that first-time internet users will purchase Jio Barrat and encourage them to upgrade to more advanced mobile phones in the future.
“Right now, Jio makes about $1.50 to $2 a month, but if a customer upgrades their phone in three to four years, at some point they will choose a more advanced feature phone or a lower-cost smartphone.” he added.
Price competition with other telecommunications companies?
Analysts interviewed by CNBC also agreed that other carriers are unlikely to cut rates significantly, despite Jio’s cost-friendly plans.
“There is an ongoing battle between Jio and other telcos in India,” said Nikhil Batra, research director at IDC.
“Reducing prices across the board is not a viable option, but it will be a challenge for companies.” [other telcos] To create new customer experiences and product bundles to increase customer retention,” Batra said.
According to data from Macquarie Research, Jio currently has the largest subscriber market share in Delhi (34%), Mumbai (35%) and Kolkata (42%). vodafone ideas, Bertie Airtel and BSNL.
But other telecoms could still benefit from Indian telecoms, which continue to opt for mobile phones that can’t browse the internet.
Macquarie’s data also showed that Bharti Airtel holds a larger market share than Jio in rural areas such as Bihar, Jammu and Kashmir and Himachal Pradesh.
5G deployment in India
According to IDC data, India has the world’s second largest telecommunications industry with a subscriber base of 1.17 billion as of September 2022. According to the market intelligence firm, the sector’s growth trajectory will accelerate from here.
“Industry growth over the past few years has been driven primarily by price reductions, the availability of affordable smartphones, the launch of telecommunications services by Reliance Jio, the expansion of 4G coverage, and increased data consumption by subscribers. It’s been brought in,” Batra said.
More consumers are expected to purchase smartphones equipped with 5G mobile networks.
About 52 million 5G-enabled mobile phones will be purchased in 2022, up from 26 million the year before, according to IDC data.
“India’s 5G rollout is much faster and smoother, with Jio on track to reach all of India by the end of the year. Jio and Airtel already offer 5G services, and Vodafone Idea and BSNL are also on track. We plan to participate in the 5G rollout “by 2024,” said Mishra of Counterpoint Research.
Men talk on their mobile phones in front of an iPhone 14 advertisement in Kolkata on September 27, 2022.
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Counterpoint Research estimates that there are about 85 million 5G-enabled smartphone users in India, with 5G devices capturing 32% of the market share in 2022. Over 50% of smartphones shipped in April 2023 also had his 5G capabilities.
But this is largely supply-driven, Batra said. The reason for this is that “5G rollouts will improve supply and demand for 5G phones in other countries such as China and South Korea will allow brands to deploy more 5G devices.”
“Indian consumers have been less demanding of 5G devices so far, and with nearly all smartphone models priced around $300 and 5G-enabled, the motivation for purchase is affordability,” he added. rice field.
Despite regulatory and telecom infrastructure challenges, “India will become a major market for 5G by 2026, accounting for the majority of net 5G growth just as China matures and begins to slow down,” Batra said. said.
Technology has played a much bigger role these days, and “we can expect India to accelerate further and lead by example,” he said, citing banking and unified payment interfaces as examples.
“India has leapfrogged the majority of developed countries in making digital payments convenient, accessible and widely accepted, regardless of merchant size,” he added.
