All You Need To Know: Shocking Facts About The Business Model Of Reliance Jio

All You Need To Know: Shocking Facts About The Business Model Of Reliance Jio

Reliance Jio 4G services will be open for everyone to avail from September 5. However, there is still a lot

of confusion in the market how they are offering 4G data at such cheap rates? And how are they providing unlimited voice calls (local/STD) free to every JIO customer?How are they offering unlimited 4G data at night?

It is really simple. Most of you are going to pay the same or probably more money to Jio compared to your current network provider. After reading this article, you will realize what a clever businessman Mukesh Ambani is.

However, Reliance’s Jio has caused a ripple in the market forcing many rival telecom operators to slash their prices for call and data rates.

What is the business model of Reliance Jio?

Everything Jio have done till now is intended at making money. Their tariff plans may look unbelievably awesome, but they will make more money by giving free voice calls than what the other companies make by charging you for it!

In India, the monthly average revenue per user (ARPU) the current network providers get is around Rs 150 per month. That is the money they get on average from each user. If you spend over Rs250 per month, you are considered a high-value customer.

Look at the "terrific" plans:

Which plan would you choose?

If you are a voice-only kind of person, then you would be okay with the Rs 149 per 28 days plan, as you will get free unlimited voice calls. But, even though you are not explicitly paying for voice, you are already paying over Rs 150 per month, thus their ARPU will by default be as good as the current players.

If you are someone who uses over Rs 150 worth of voice calls every month then it is a totally awesome plan for you. But, the point is that other telecom companies make about Rs 150 per month on average from each user by charging for voice, SMS, data, and roaming. Jio will be making the same/more amount of money on average from each user even after providing SMS, roaming and voice-calls for free, by just pricing things differently.

Also, notice that all these plans are for 28 days which can easily be perceived as ‘a month’ by most people. If we divide the number of days in a year with 28, we will realize that we are paying for 13 ‘billable months’ in a year. (365/28=13.03)