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VoLTE feature phone: Too little to augment revenues for the operators

We are again at the same crossroad where Jio launched JioFone is a limited capability Smartphone riding over a FeaturePhone. This is essentially to fill up the gap where a user may not have heavy data use case as well as from affordability point of view will not be willing to spend somewhere between Rs 4,000 – 6,000 for a Smartphone that may still not be a good fit from experience point of view.

However, there is only one appeal for operators in a VoLTE FeaturePhone – it can bring its entire subscriber base on a single technology network and can initiate switching off the 2G networks. This will somehow align the investments with the revenue potentials. Currently, operators are investing heavily on 4G network capabilities but over 70% of their revenues are still coming from the voice services. This is a mismatch that a VoLTE FeaturePhone can help overcome and finally we may get to see convergence at the core as well as access infrastructure.

The big question that remains is whether VoLTE FeaturePhones can help operators bring revenues or improve their ever-eroding financial health. Barring Jio, the newest in the league, there does not seem to be too much for the telecom operators in a VoLTE FeaturePhone. Jio has now over 125 million subscribers and out of the existing over 350 million data subscribers; the primary segment of users whom 4G services could be the next upgrade. Though these 125 million are not unique to Jio but it has in just a year’s span of commercial launch been able to get whatever could have been possible out of the existing data users in the country.

From disruption point of view, India has again exemplified the uniqueness of the market characteristics where the dynamics are so divergent that something hybrid fills the gap. Remembering those early days of Smartphone when Nokia was ‘projecting’ its Asha series as a Smartphone while the wave anchored by Samsung was driving on Android and users were clearly experiencing what a Smartphone was.

The next step for Jio of course is to have a large subscriber base of the remaining 400 million or so voice only users in the country. Handset affordability and the use case for data being two primary concerns would not have allowed Jio to break into this extremely narrowly margined income segment. So, from Jio’s point of view, JioFone would be the tool to scale up the subscriber base to settle close to 250 million user base.

Despite JioFone likely to prove the case for a VoLTE FeaturePhone by fattening the subscriber base, it would not add up anything substantial to an operator’s revenue including that of Jio. For Jio to make JioFone a success by tapping in the voice centric users, it shall have to evolve a hybrid bundling, again first of its kind in India, where very affordable price plans would have to be linked with JioFone users only. This again should be disruptive, something like Re 1 a day for unlimited calls. So, from a pure revenue perspective, JioFone is not going to facilitate revenue earning for Jio in any manner.
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