Jio tries to disrupt India's feature phone market with 4G model

Reliance Jio, India’s largest service provider, has launched Jio Bharat, an entry-level Internet-enabled feature phone priced at just 999 Indian Rupees ($12.2), to target the 250 million feature phone users in the country.

It is not just the price of the device, Jio has also introduced new rates of INR123 ($1.50) for unlimited voice calls and 14GB of data, compared to INR179 for voice calls and 2GB offered by other telcos, according to the Jio press release. That means a "30% cheaper monthly plan and 7 times more data compared to feature phone offerings of other operators," says the press release.

Jio Bharat offers several features, including access to mobile payments with UPI and its video and music streaming services, JioCinema and JioSaavn. The company plans to produce the device and to also work with other device manufacturers like Karbonn, which has joined the platform, to build the handsets.

"It [the new Jio Bharat phone] is at the centre of innovation, and it continues to demonstrate our focus on bringing disproportionate and true value for different segments of users with meaningful, real-life use cases," says Akash Ambani, chairman of Reliance Jio, in the press statement issued by the company.

The company plans to carry out a beta trial for one million subscribers to test the device's scalability. Jio Bharat device will be available from July 7 onwards.

This is not the first time that Jio has disrupted the device market by introducing low-priced handsets. In 2017, it launched the JioPhone, which was followed by JioPhone Next, made in collaboration with Google, in 2021. It provided an optimized version of the Android operating system; however, it was met with limited success because of its $80 price tag.

Jio Bharat can help the company in growing its subscriber base by attracting 2G subscribers of other telcos to move quickly to Jio’s 4G network. The lack of affordable smartphones is one of the key reasons why India has a large base of feature phone users. By offering an economical smartphone, Jio hopes to change this.

What does it mean for Airtel and Vodafone Idea?

What also works in its favor is Airtel's recent decision to raise the monthly rate of its introductory prepaid tariff from INR99 ($1.2) to INR155 ($1.87) across all circles (service areas). Jio is offering a much lower tariff along with an Internet-enabled device, thus making it easier for a user to move to its network. In addition, Vodafone Idea continues to lose subscribers, and customers are growing increasingly uncertain about the telco’s future. Vodafone Idea has also increased the tariff for prepaid users in a few circles.

So on one end, Jio hopes to attract high-paying subscribers of other telcos by offering 5G, but it is also attacking the lower end of the segment by introducing Jio Bharat. Meanwhile, the phone will likely accelerate Airtel and Vodafone Idea's efforts to move their 2G customers to the 4G network.

While JioPhone played a crucial role in helping Jio increase its subscriber base, what it really needs now is a greater percentage of high-end consumers who will help the service provider boost its average revenue per user (ARPU).

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— Gagandeep Kaur, Contributing Editor, special to Light Reading