A research report from Deutsche Bank indicates that Mukesh Ambani is probably limiting the choice of mobile Internet users by selling JioPhone, which will be available for a refundable security deposit of Rs 1,500.

“JioPhone is based on a Firefox OS. The apps for the phone will come from Jio’s own store. Thus, Jio will provide a “walled garden” to its subscribers, which goes beyond the traditional connectivity,” Harshad Katkar and Srinivas Rao, research analysts at Deutsche Bank.

“We note that Jio already has an entire spectrum of apps spanning the social, content, payments verticals. Thus, JioPhone user will likely have a very low churn both due to the refund feature and the software platform,” Harshad Katkar and Srinivas Rao said.

The research report from Deutsche Bank did not mention Net Neutrality. The report rather used “Walled Garden”.

Blocking Net Neutrality?

India’s 1 billion phone users need freedom to select both the content and the Internet provider. We have seen millions of Americans supporting both Google and Facebook in their initiative to promote the Net Neutrality in the US.
JioPhone does not have the popular messaging platform WhatsApp. This is probably due to the fear that WhatsApp can take away some future revenue streams from Reliance Jio. There are several reasons for analysts to believe that JioPhone will reduce choice for millions of subscribers.

First, since the much-hyped JioPhone does not have the popular Android OS from Google, users cannot access several apps from App Store and enjoy the works of several third party technology developers. This will limit the choice of the 125 million 4G subscribers on the Reliance Jio 4G network. Mukesh Ambani and team want all Jio customers to access Jio apps.

Second, JioPhone is believed to be a locked intelligent phone. This means that you cannot use other SIMs in JioPhone. Mukesh Ambani at the 40th annual general meeting of Reliance Industries (RIL) clearly said the company will be taking a “security” deposit of Rs 1,500 for handing over the phone to the buyer.

Third, JioPhone is believed to be a single SIM phone. No way, you can insert the SIM of other service providers in JioPhone. Mukesh Ambani, who has invested more than $20 billion in the telecom venture, has taken a brave decision to bring out the JioPhone with single SIM though Indians are eager to buy double SIM phones.

Fourth, several analysts are questioning the security features of JioPhone. Will Jio consumers be forced to compromise on security aspects because of the low cost of the phone?

Deutsche Bank said the feature phone gives Jio access to the low-end subscriber base in India and expands its addressable market to the entire mobile sector of India.

Currently, the unique subscriber base in India is around 1 billion consisting of 150 million 4G phones, 300 million of 3G phones and 550 million of feature phones.

“The 3-year refund feature will minimize churn. Subscriber numbers running ahead of our forecasts, though at lower ARPU Jio has announced a 100 million paying subscriber base which we estimate is at an effective current ARPU of around Rs 140. This compares to our forecast of 70 million subs by FY18E with an average ARPU of Rs 190 for FY18E,” Deutsche Bank said.

Baburajan K
[email protected]