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Lanon Wee

A $12 Investment is Allowing Rural India to Access the Internet

Reliance Industries' telecom division, Jio, has unveiled a $12 4G feature phone, dubbed Jio Bharat, intended to bridge the chasm between rural and urban India. With this phone, first-time users of the internet can access its basic functions without feeling overwhelmed by the multitude of applications available on a smartphone, according to Varun Mishra, senior analyst at Counterpoint Research. As the world advances towards 5G and 6G technology, rural India is still stuck in the 2G era. Reliance Jio is endeavoring to reduce the disconnect between rural and urban areas by launching a new $12 phone featuring 4G mobile network.The device, dubbed Jio Bharat, is a feature phone with push-button keypad and a small non-touch display. It provides a cheaper alternative than smartphones to those 2G users who want to switch to 4G mobile networks.According to Reliance Jio Chairman, Akash Ambani, there are still 250 million mobile phone users in India prevented from accessing basic features of the internet while the world is on the brink of a 5G revolution.The device is aimed at first-time internet users who are just looking for a few basic functions, as per Varun Mishra, senior analyst at Counterpoint Research. India is the world's second-largest smartphone market and is projected to add 300 million new internet users faster than any other country. Mishra points out that the phone, while having limited display size, is good for those starting out on using the internet as it allows users to access features such as digital payments and content. Compared to its competitors such as Vodafone Idea — a partnership between the Aditya Birla Group and the Vodafone Group — Bhati Airtelas and BSNL, Reliance Jio has a considerable edge. Not only is the phone being sold at a very low price point, its monthly plans are also extremely affordable, as Mishra pointed out. Jio claims that their plans are 30% cheaper than those of other telcos, and offer seven times more data. The press statement of Reliance Jio stated that for $1.50, users are permitted unlimited voice calls and 14 gigabytes of data, compared to nearly $3 for other services and 2 gigabytes of data. This is Jio's strategy to draw more feature phone consumers to subscribe to their plans, despite the fact that they only offer 4G and 5G mobile network services, as Navkendar Singh of the International Data Corporation (IDC) asserts. Mishra states that in India there are around 250 million feature phone users, several of whom still rely on 2G phones exclusively for voice calls. In an interview with CNBC over the phone, Singh described how Reliance Jio is aiming to entice these customers from the more established operators, offering "palatable" plans. He said that when users join the Jio network, they will be offered various services, such as payments and streaming capabilities. Singh also pointed out that Jio anticipates that the people acquiring the Jio Bharat will upgrade to more able feature phones and low cost smartphones in the future. He explained that the corporation earns between $1.50 and $2 monthly from the Jio Bharat, yet when customers switch to an upgraded device, they will gain more revenue. CNBC spoke to various analysts who do not think other telco companies are likely to reduce their prices in response to Jio's cost-friendly plans. According to Nikhil Batra, research director of IDC, there has been an extended confrontation between Jio and other telcos in India. Batra asserted that it is unfeasible for other telcos to adjust their rates across the board, however, they must form new customer experiences and product bundles to uphold customer loyalty. Analysis of Macquarie Research data shows that Jio is the top choice in Delhi (34%), Mumbai (35%), and Kolkata (42%) compared to Vodafone Idea, Bharti Airtel and BSNL. On the other hand, there are those in India who still choose phones that cannot connect to the internet. Rural areas such as Bihar, Jammu and Kashmir, and Himachal Pradesh are still largely favorable to Bharti Airtel, with them having more subscribers than Jio. IDC has reported that India is home to the second largest telecom industry, with over 1.17 billion subscribers as of September 2022. The market intelligence firm predicted that growth in the industry will continue to rise from this point. According to Batra, the driving forces behind this uptrend are lower call rates, an abundance of affordable smartphones, the penetration of Reliance Jio's telecom services, increased availability of 4G networks, and increased data usage among users. Additionally, more individuals are predicted to purchase smartphones that are 5G-enabled, as evidenced by the 52 million purchased in 2022, double the amount from the year prior. The launch of 5G is progressing easily and swiftly in India and is projected to reach all parts of the nation by the end of the year. Currently, Jio and Airtel already offer 5G services, with Vodafone Idea and BSNL following suit in 2024. Counterpoint Research estimates that there are roughly 85 million 5G capable smartphones being used in India, with 32% of the market share in 2022. More than half of the phones shipped in April 2023 also have 5G capabilities, however this can be primarily attributed to improved supply. Batra noted that consumers have yet to express a need for 5G devices due to the similar pricing of $300 on all smartphone models. Despite regulation and telecom infrastructure issues, India is anticipated to be a major 5G market by 2026, outpacing the likes of China. Technology's impact is certainly prominent and India has the potential to serve as a model, like in the case of banking and Unified Payments Interface. Batra highlighted the accomplishment of making digital payments convenient, accessible, and widely accepted, despite merchant size.

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