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Jio 4G with 3G handsets

Reliance Jio, which is gearing up to launch its 4G services in the next couple of months, is expected to offer a portable device at a discounted price that will be a hotspot to stream data at 4G speeds even to devices that are not 4G-compatible.

By Jayati Ghose
  • Published 5.10.15
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New Delhi, Oct. 4: Reliance Jio, which is gearing up to launch its 4G services in the next couple of months, is expected to offer a portable device at a discounted price that will be a hotspot to stream data at 4G speeds even to devices that are not 4G-compatible.

Called Mi-fi, or mobile Wi-fi, the devices will be leveraged by the Mukesh Ambani-company to wean away subscribers from rivals who are heavy users of data.

The devices are crucial to Jio's plan to build a rapid LTE, or high-speed 4G, ecosystem even in the absence of LTE-enabled handsets.

"As purchasing new LTE handsets will entail additional investment for existing users, Reliance Jio is expected to aggressively promote LTE hotspot (Mi-fi) devices to expand its addressable LTE services market. It may also offer bundled offers to improve penetration of LTE handsets," said Sandip Agarwal, telecom analyst at Edelweiss Securities.

Most of the devices that are used by customers are not LTE-compatible, even though the prices of LTE-enabled handsets are falling (4G handsets are available at a starting price of Rs 5,000).

Mi-fis can connect up to 10 devices at a time and cost around Rs 3,000. Telecom major Bharti has already launched its Airtel 4G Mobile Hotspot to promote its 4G services.

Agarwal said Reliance Jio might cut prices of Mi-fi devices by 50 per cent to around Rs 1,500 to incentivise users to shift to its network.

LTE, or 4G, are high-speed data services that allow users to download movies or music videos within a couple of minutes compared with speeds provided by 3G networks. Domestic telecom operators are betting on an explosive demand for high-speed mobile data to improve profits.

According to analysts, Bharti Airtel and Idea Cellular's data volume will grow 11.3 times and 12.2 times, respectively, from 2014-15 to 2019-20, which means a compounded annual growth rate of 65.1 per cent and 62.3 per cent, respectively.

Most users of heavy data subscribe to the plans of Bharti, Vodafone and Idea.

"Of course it (Reliance Jio) will target a high incremental market share gain by helping to create a viable ecosystem of low-end LTE phones. We estimate Bharti's, Vodafone's and Idea's 3G/LTE subscriber base at 83 million by 2015-16. Reliance Jio will specifically target this segment and may subsidise Mi-fi devices to ensure attractive value proposition for customers. By 2019-20, Reliance Jio will target shifting 25 per cent of incumbents' 3G data subscriber base to its network," Agarwal said.

However, he cautioned that Reliance Jio's dependence on Mi-fi devices to drive penetration would be detrimental to user experience because of the need to carry an extra device. These devices also need to be charged separately and have a limited battery life.