In India, the Basics Still Matter

Reliance Jio Offers Free Feature Phones and Service

India has about 350 million smartphone users. On one hand, it’s an impressive statistic — that’s larger than the population of the US. On the other hand, it also highlights that basic handsets are still an important part of the Indian telecommunication infrastructure.

Last week, Indian operator Reliance Jio introduced an eponymously-branded basic handset called the JioPhone. Jio, a start-up operator with big backing, quickly disrupted the high-end of the Indian wireless market by selling inexpensive smartphones and giving away 4G connectivity. The operator is on the offensive, looking to take a chunk of India’s large basic phone volume.

Jio started offering services about a year ago. It was able to bypass earlier generations of wireless technologies, leapfrogging the competition with 4G services. Although main rivals Bharti Airtel and Vodafone India are maintaining several legacy network services, Jio is running what it calls the world’s largest LTE network. As an LTE-only provider, the JioPhone must rely on voice-over-LTE services for cellular voice. It’s a show of confidence in the network.

The JioPhone is based on Qualcomm’s 205 Mobile Platform, a chipset solution optimised for LTE feature phones. The 205 system-on-chip allows basic handsets to carry more specifications while offering long battery life. With support for video graphics array displays, three-megapixel cameras and a two-core CPU, the chipset doesn’t power cutting-edge devices, but allows phone makers to develop inexpensive phones with some features similar to those found in very low-end smartphones (see A Chipset to Bring 4G to Basics).

The handset has a 2.4-inch display with quarter video graphics array resolution, a 2,000 mAh battery, a flashlight, 512MB of RAM and 4GB of on-board storage. Perhaps the phone’s standout feature is its voice input capabilities allowing users to avoid using the small keys and screen to make some basic commands.

The JioPhone will begin shipping in August 2017 (already a waiting list has starting building) and it has an almost unusual pricing scheme: the hardware is based on a deposit scheme with users putting down 1,500 rupees (about $23) which is refunded in full after three years. The device comes with free voice services. For an additional $2.38 per month, users get 500 MB of data per day and access to a series of Jio-branded services including JioCinema, JioTV and JioBrowser. The operator is breaking in the audience to more advanced content services. There’s some clear long-term thinking here. However, the financial terms of acquiring the handset could be problematic. Many device users in India like to be able to change more frequently. This is the country that pioneered multi-SIM handsets in the mid-2000s. The long repayment period may put off many potential customers.

The operator expects to sell 200 million JioPhones, a substantial volume that would have repercussions in the highly competitive wireless environment in India. Having gained more than 100 million smartphone subscribers in less than a year, Jio has been such a disruptive force in India that competitors have been lobbying the government for a pricing floor, but regulators say they don’t currently see a need for this. The argument from operators such as Airtel and Vodafone isn’t completely without merit: Jio’s short-term disinterest in becoming a profitable operator means others have to price their services below a point of reasonable replenishment. It will be difficult to expand the network infrastructure at this pace.

If Jio reaches its goal of selling 200 million feature phones while still expanding its smartphone volume, it will cement its place as a top-four operator in a consolidated market. Furthermore, our latest global handset forecast projects that 50 percent of shipments in India in 2017 will be LTE-enabled, up from 28 percent in 2016 (see LTE to Dominate Phone Market As 5G Appears on the Horizon). If successful, the move by Jio could encourage this trend.

The operator is reminding the world that feature phones are still important and the basics still very much matter.