"The Era of Paying for Voice Calls is Ending," Says Reliance Jio CEO

source: ITU

Reliance Industries Chairman Mukesh Ambani says domestic voice calls will be free forever on the Reliance Jio network. He also and announced a four-month introductory offer of free voice and data services for new customers, starting on September 5, 2016.

“The era of paying for voice calls is ending,” he said.

That, in a nutshell, the fundamental revenue problem faced by legacy service providers in the Internet era: it is tough to compete with providers that “give away what you sell.”

Analysts at Morgan Stanley Research expect Reliance Jio to generate more than $2 billion revenues in 2017 to 2018 period, gaining two percent voice market share and 19 percent market share in mobile data, without overall mobile market share of six percent.

That forecast sees Jio getting  more than 40 million subscribers in a year.

Analysys Mason says mobile data tariffs need to be reduced 75 percent to bring costs in line with developed nation levels.

India’s data tariffs for 1 GB of usage represent 2.6 percent of gross national income per capita

Developed country levels are 0.4 to 0.5 percent GNI per capita.

source: ITU

“Our analysis concludes that a 75 percent cut in data tariffs (average revenue per GB of Rs 57) alone could increase the user base to 645-667 million SIMs, and the level of monthly data usage to around 4.2-4.3 GB per SIM in 2019-20,” said Analysys Mason.

Perhaps nobody expects a 75-percent fall in tariffs over the next couple of years. Longer term, it is hard to bet against such an outcome. Fixed network Internet access prices in the developing world--arguably a much-tougher proposition, still have been falling towards developed country levels, on a percent of GNI basis.

By 2015, average mobile broadband prices corresponded to 5.5 percent of GNI per capita, worldwide. In developing countries, the average was more like seven percent. Of course, mobile Internet access was below one percent in developed countries, as a percentage of GNI per capita.

Further reductions in fixed network costs might be difficult, some data suggests. Since 2013, for example, fixed network costs seem to have grown, not shrunk.

source: ITU