Empirical Evidence on Wireless Broadband adoption from across the World suggest that meaningful 3G penetration is a necessary condition for accelerated LTE adoption. Can a deep pocket player like Reliance Jio Infocomm overcome the challenges posed by low 3G penetration in India ? Can R-Jio create an offering / ecosystem to drive 4G adoption by 2G customers without the in-between 3G upgrade? Quite honestly, we do not know. However, we do believe that a price disruption centric strategy to achieve this will make any business case extremely challenging for Mukesh Ambani led Reliance.
Consider just the handset challenge – a new player looking to accelerate LTE adoption may adopt an aggressive handset subsidy strategy. Unless the entry price point drops to US$100 per SmartPhone it is impossible for Reliance Jio to scale on this front meaningfully [say 50 Mn subscribers]
R-Jio LTE is primarily a threat to the high-end subs base of the incumbents. A high-end customer is highly unlikely to adopt a low-end handset, irrespective of technology. User experience delivered by the network depends heavily on the quality of handset being used; a fast streaming HD video on a handset with low-resolution screen will find few takers, in our view.
From what is shared by Reliance Jio, we believe they are adopting a dual-disruptive strategy of service disruption (driven by superior quality networks) and price disruption by offering entire bouquet of services using massive Optical Fiber Infrastructure – Voice, IPTV and Broadband in one package OR just Mi-Fi devices OR 4G LTE based Mobile Broadband on SmartPhones.