A $12 phone is opening doors for rural India to get on the internet
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A $12 phone is opening doors for rural India to get on the internet

Despite the world’s shift to 5G or even 6G internet speeds, rural India is still stuck in the 2G era.

Reliance Jio’s new $12 phone could change all that.

With the launch of its new internet-enabled phone with a 4G mobile network, Reliance Industries, the telecommunications arm of Indian conglomerate Reliance Industries, has made internet access more accessible to more people. It is a type of non-smartphone with a small nontouch display and a push-button keypad.

By offering non-smartphone users a cheaper alternative to switching from 2G to 4G networks, Reliance Jio hopes to reduce the mobile connectivity gap between rural and urban India. 

Reliance Jio’s Chairman Akash Ambani said in a press release that 250 million Indian mobile phone users remain trapped in a 2G era, unaware of basic internet features as the world prepares for a 5G revolution. 

Virtual reality and driverless cars are two technologies that require 5G networks to offer high-speed data.

Known as Jio Bharat, the new phone is aimed at first-time internet users who can simply rely on the basic functions without being confused by the endless amount of applications available on smartphones, according to Varun Mishra, senior analyst at Counterpoint Research. 

Mishra said that India is already the world’s second-largest smartphone market and is likely to add 300 million new internet users, making it the fastest country to offer internet access to the unconnected. 

According to Mishra, this device offers users for the first time access to key Jio services such as digital payments, content, and more.  However, the size of the screen can limit the experience a bit, but it is still a good option for first-timers.”

Customer retention 

In the telco service space, Jio has a distinct advantage over Vodafone Idea, which is owned by Aditya Birla Group and operated by Vodafone Group. 

In addition to selling the phone at an extremely low price, Jio also offers very affordable monthly plans, which is causing other telcos to lose customers. 

In addition to offering customers seven times more data than other telcos, Reliance Jio says their monthly plans are 30% cheaper than other telcos. 

As per Reliance Jio’s press statement, users will get unlimited voice calls and 14 gigabytes of data for $1.50, compared with almost $3 for other voice calls and just 2 gigabytes for other operators. 

According to International Data Corporation’s Navkendar Singh, Jio’s strategy is to attract more users to sign up with them even though they only offer 4G and 5G mobile services. 

According to Mishra, 250 million people in India use feature phones, many of which are 2G and are used solely for making voice calls.

In a phone interview with CNBC, Singh said Jio attracts consumers and displaces “legacy operators” by offering “palatable” prices. 

As far as we can tell, Jio’s main objective is to get more customers on its platform and network, so they can cross-sell Jio’s services. Customers can also use Jio’s payment and streaming services. 

Reliance Jio also hopes that Jio Bharat buyers will eventually upgrade to more advanced devices down the road. 

At the moment, Jio receives revenue of about $1.50 to $2 a month, and when customers upgrade their phones in three or four years, they will choose more advanced feature phones or low-cost smartphones,” he said. 

Price war with other telcos? 

CNBC’s analysts also said that despite Jio’s cost-friendly plans, other telco companies are unlikely to drop their prices significantly. 

A tussle has taken place between Jio and other telcos in India, according to Nikhil Batra, IDC’s research director. 

[Other telcos] will have a tough time increasing customer stickiness by lowering prices across the board, Batra said.