Wednesday, February 8, 2017

Incentives Always Matter; Free Always Encourages Usage

Nothing encourages use of any desirable product so much as a price point of "zero." That seems clearly to be the case in India, where Reliance Jio in the fourth quarter of 2016 allowed new customers 4 GB of mobile data usage, each day, and even now offers new customers 1 GB of free mobile data usage, as a promotion.

Such generous offers should have consequences. Indeed, they have, allowing Reliance Jio to sign up 50 million new accounts in a few months. But such generous mobile data promotions also seem to decrease use of Wi-Fi.

We normally expect consumers to rely on Wi-Fi for much of their internet access from mobile phones, and often expect the majority of total data consumption (not sessions) to occur over Wi-Fi networks, since such behavior helps customers protect their mobile data usage allowances.

In India, where Reliance Jio has been offering first 4 GB of free data usage per day, and 1 GB of free data usage per day through early 2017, such offers have proven to increase use of mobile data far beyond what one might typically expect.

Since September 2016 Reliance Jio has signed up 50 million customers and has triggered a price war among India’s established mobile operators.

But Jio customers also differ from other mobile customers in India in one way: they have a very low usage of Wi-Fi connections, according to OpenSignal.

OpenSignal data from Sept. 1 to Nov. 30, 2016  (the three months in which Jio has been available), Jio users connected to Wifi networks about 8.2 percent of the time. That is well below the average of 29.8 percent of internet access time on Wi-Fi.

  • Jio                  8.2 percent
  • Idea               24.1 percent
  • Telenor          24.3 percent
  • Aircel            24.9 percent
  • Airtel             27.1 percent
  • Reliance        28.1 percent
  • Tata DoCoMo 30.4 percent
  • BSNL             31.1 percent
  • Vodafone      31.3 percent

The obvious reason for the low Reliance Jio customer use of Wi-Fi is that they simply have so much free access on the mobile network that Wi-Fi access to “save on data usage” is simply an unnecessary move. Of course, all that could--and should--change once Jio starts charging for mobile data usage.  

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