Corona virus changed our lives drastically. Especially for Students who were supposed to graduate and attend their graduation ceremony this year. However due to Covid-19 pandemic and the contagious nature of this virus, social distancing and staying indoors became the new norm in the last few months.
The graduation day is often a moment of pride for students who are passing out as well as their parents and teachers.
However, as Indians we always create an alternative to every problem by keeping positive spirits in life. The Indian Institute of Technology Bombay (IIT-B) is one such example of our way around impossible situations. This prestigious institute of Technology, held a ‘Virtual Convocation’ for its final year graduating students.
The VR-based convocation was a win-win for all, as without putting anybody’s health at risk, they received a sense of achievement while graduating from one of India’s finest institute. Digital avatar of each graduate student was personalized as they received their certificates and medals from the personalized avatars of the Director, Chief guest, etc.
As we admire this creative idea, the technology behind a successful and inspirational event has to be applauded. Technology and its associated sectors has changed our lives drastically- just like the pandemic- but in a different way.
Starting from Mobile phones, internet, digitalization to virtual classes and work from home online everything around us is directly or indirectly affected by tech-industries and fin-techs.
Let us take a brief look on what’s happening in this dynamic ever-green Universe of Digitalisation:
The Privatization of Payment Space.
The introduction of digital payments in Asia aimed to fulfil intersecting goals: boosting retail sales, improving financial inclusion and facilitating remittances. These needs have prompted the event – and success – of varied online banking solutions and mobile wallets.
Along with the Social media platforms, online payments are also gaining prominence in countries like India as the maximum population consists of tech-savvy youth. Cash use is declining amid the rise of ecommerce. Financial inclusion needs are growing, and consumer preferences are shifting to digital channels. These trends may require central banks to step in where the private sector dominates to supply digital money.
National Payments Corporation of India (NPCI) manages retail payments and settlement systems in India. It is a non-profit organisation mainly for the welfare of the public. NPCI is owned by a consortium of leading bank institutions both public and private.
NPCI maintains digital payment channels such as the Unified payment interface (UPI), National Financial switch (NFS), Immediate payment service (IMPS), Bharat Bill payments, Fastag,etc. Of all retail payments, over 60% is controlled by the NCPI.
However, in recent events, the Central bank (RBI) has opened the retail payments management market for private players to set up an NCPI-like umbrella company.
As they are ‘privates’ they will be ‘for profit’ organisations. Approved entities will be given powers similar to that of NPCI. Foreign Direct Investment will also be allowed with additional scrutiny.
Apart from foreign Fin-techs, domestic firms like – Reliance, TATA, Paytm, BSE and NSE have expressed interest.
A Paradigm shift in the Telecommunication Industry:
Supreme Court reserved its order on the timeline of payment of the Adjusted Gross Revenue (AGR) due by telecom companies.
Due to higher competition and alternative choices companies are struggling to hold their presence in the market. Telecoms have requested for an extension of 15 years of time to repay their dues.
Liquidated companies like- Rcom, Aircel, Sistema, Videocon, etc. Have crores of dues pending.
AGR is the usage and licensing fee that telecoms are charged by the Department of Telecommunication (DoT). The dispute as about what particulars to include in the calculation of AGR.
Top 3 AGR dues (in Rs. Thousand crores):
1- Vodafone-Idea – due = Rs. 50 thousand crores
2- Airtel- due = Rs. 25.8 thousand crores
3- Tata Teleservices – due = Rs. 12.6 thousand crores
With such a big amount charged to telecoms, many feared that the era of cheap data and calling services in India might be over. To not lose the trust they have built among customers these telecoms started premium plans exclusively for Indians.
Recent Dispute of Premium Plans:
Vodafone Idea and Airtel offered premium plans RedX and Platinum respectively.
Reliance Jio lodged a complaint claiming that providing better services to one set of customers would ‘undoubtedly deteriorate service quality to another set of customers’.
In July, TRAI ordered telecom giants to block these plans with immediate effect on the grounds of- Disruption of service and misleading advertisement of faster speed.
Companies replied that they are using ‘advanced technologies’ to help the premium customers get better service and faster speeds without impacting other users.
In addition, telecom operators say that they need flexibility on tariff plans if Government is not ready to decide floor price.
At present, the global average for 1GB data is $8.53, whereas average price of 1GB data in India is $0.09.- one of the cheapest and affordable data across the globe.
Reliance Jio strikes when the iron is hot:
Airtel, Vodafone lose over 94 lakh subscribers in May and Jio gains 36 lakh new ones in the same period: TRAI
India witnessed the transformation in digital ecosystem after the entry of Reliance Jio in 2015.
Reliance Jio single-handedly moved India from the 155th position in Data consumption to number 1 position. Internet will be the new necessity of humans was known to Mukesh Ambani in the year 2010 itself. Hence e started to shift his revenue on oil industry to telecom sector.
Jio Launched its incredibly cheap mobile date- Rs. 225/GB in 2016.
In the year 2019, the data was given for less than Rs.13 per GB.
The average data usage of each subscriber per month:
Before Jio: 240 MB
After Jio: 11.7 GB
Instead of wasting time and money on 2G and 3G, Jio invested crores in 4G technology which compared to its competitors is 2 times way ahead. Today we get one GB internet data at as less as Rs.4 because of this 4G technology.
The speed of Jio internet ranks at 40 TB which is 10x to what Airtel/Vodafone’s 2G and 3g are offering.
Jio entered into the market when we used to wait for days to our sim cards to activate, but their sim activated in less than 30 mins and if you had an Aadhar card you could avail as much as 8 different sim cards.
Jio created an entry barrier for other companies by providing free data for three months. This spending on modern technology now enabled them to easily acquire 5G, 6G and more powerful data speed.
Launch of the Reliance Jio 5G Internet:
Just when we are all relying on internet from attending classes to working from home, Jio announced the launch of 5G Data speed internet. In a country where we are still using the basic 2G data, Mukesh Ambani promises to phase it out. While other telecom companies are struggling to pay their dues and keep up with the modern changes in internet, Jio is gaining more subscribers day by day.
Jio 5G will premiere for consumers in 2021, and will be sourced to other nations as well, noted Ambani while adding that the company would use 100 per cent local technologies and solutions. Jio 5G will set a precedent for “Aatma Nirbhar Bharat” and all of its services are entirely “Made in India”.
But how will it function in the international markets? This is where the entry of big investors in Reliance Jio come in action, even before the announcement of 5G.
Jio rakes in massive Rs 1.04 lakh crores from investors – FB, Google and more.
Reliance Industries- digital platform Jio, has raked in 10 investments in the past seven weeks. All these investments are recent, significantly at a time when the world is grappling with COVID-19 and businesses are taking a severe hit as they reflect confidence in Indian businesses.
Facebook investment: The social media giant announced an investment of Rs 43,574 crore in Reliance Jio accounting for a 9.99% stake in the company’s platforms.
Google Investment: Global technology giant Google would invest Rs 33,737 crore for a 7.73 per cent stake in Jio Platforms, the subsidiary which houses its telecom and digital operations.
Silver Lake: The American private equity (PE) giant will pick a 1.15% stake in Reliance Jio with an investment of Rs 5,656 crore in its platforms.
Vista Equity: The US-based private equity firm will pick a 2.32 per cent stake in RIL’s Jio platforms for Rs 11,367 crore.
Mubadala: The Abu Dhabi-based sovereign investor announced an equity infusion of Rs 9,093 in Reliance Jio on Friday in exchange for a 1.85% stake within the telecom arm of RIL.
Some of the other investors in Jio include- General Atlantic, KKR, L Catterton, etc.
Saudi Arabia’s Public Investment Fund looks to invest up to $1 billion in Jio’s Fibre assets.
Why are these international companies investing in INDIA’S JIO? First, it’s a part of Reliance Industries LTD, the largest company in India. Second, Jio is the market leader and making profits. It makes abundant business sense to invest in Jio and make profits before the company gets listed on the stock market a few years from now. Lastly, Indian economic market is the largest consumer market in the world.
Jio’s parent Reliance is acquiring stake in Every Sector:
Telecom: Reliance Jio is the largest Telecom company in India in terms of market share of over 34.335 in a record time and also it is now a known fact that without Jio there is no digital India.
Retail & E-commerce: Reliance retail is the largest retailer in India in terms of revenue and it owns reliance digital, trends, mart, jio mart, AJIO, netmeds, fresh, etc. Jio mart has become the largest grocery platform in just a 1 month of release.
Oil & Gas: Reliance petroleum is India’s largest private oil and gas company. It has contributed more than 45% revenue of Reliance industries. Now reliance industries are using technology to create fuel using plastic waste and by recycling CO2.
Digital Media: Reliance industries is also one of largest media network. It owns Network18, colors TV, E-tv. It also owns MoneyControl, Forbes India and the ticket booking platform BookMyShow.
E-Learning: Reliance has acquired EMBIBE, Byjus rival, a AI based Education platform and also launched video conferencing platform JioMeet which gained huge traction in lockdown.
Toys Retail: Hamley’s has been acquired 100% by Reliance – it is one of the oldest and largest toy store in the world. It is going to get huge revenue after PM Modi called for boycott of China made toys.
Digital Streaming: Reliance owns Saavn which is now renamed as Jio saavn, Jio tv plus and an app like tiktok called Triller.
Jio wants to spice up the adoption of the many of its consumer facing apps in terms of active users. Reliance Jio may also enter niche markets if needed to win the digital consumer market. Moreover, the company is looking to deploy a combination of subscription and digital advertising revenues by leveraging the monetisation of the apps.
Telecom Industry to face the threat of Monopoly with Jio’s 5G:
A stern demand by the government will end up initiating liquidating proceedings against both Airtel and Vodafone Idea, as both now have frail balance sheets in light of this massive new debt.
This essentially would go away behind Reliance Jio because the sole player in India’s telecom sector, being the sole reliable provider option for India’s population of 1.33 Billion people.
If such a hypothetical-yet-not-too-far-fetched-now scenario comes to exist, telephony services in the world’s second-most populous country will be controlled by one single private business, which would have swollen to about 10 times the USA’s telecom sector.
Reliance Jio could thus find yourself during a situation where it could dictate prices in any direction by any margin, because it deems fit and reasonable.
Sure, competitors could always arrive at the scene and attempt to wrestle control away from this mega-telco, but do you remember the telecom operators like Aircel and few others that existed back in 2016? Jio was just getting started back then.
Monopolies in digital space are good or bad for industry of India:
India now has only two other national telecom firms: Vodafone Idea – which has struggled to remain a going concern – and Bharti Airtel, which still holds a massive amount of debt. Meanwhile, Jio has not only become the country’s biggest telecom player, it has now tied up with some of the world’s biggest companies.
That should be a source of concern for those worried about monopolistic behaviour in India, particularly within the digital space where holding companies accountable becomes even harder.
It was not long ago that Mukesh Ambani was warning the country about global corporations engaging in “data colonisation”. Now that Ambani has been co-opted by the very corporations he was warning against, it is crucial that Indian authorities keep a close eye on the path that Jio takes and its effect on the Indian market.
While it may be a sign of confidence in Indian industry that the world’s largest companies are willing to put money into an Indian company, it is incumbent on the authorities to ensure that these massive deals do not take place at the cost of competition and choice for Indian consumers. If Jio’s success in spreading the internet across India ends with it turning into a price-gouging data-grabbing monopolist, will that really be in the country’s best interests?
Often people talk about disadvantages of monopoly, but there are some industry sectors which benefit from monopolistic markets.
Electricity distribution: To distribute electricity to each range in a rustic , it’s most effective to possess a monopoly provider.
Public transportation: Avoids duplication and enables efficient timetabling.
Pharmaceutical drugs : The promise of a patent on a drug is sufficient to encourage firms to invest in developing new drugs.
Nuclear power generation: An industry with very high fixed cost and need to set very high safety standards. It shouldn’t need competition between different power plants to get best outcome.
It is now a fact that Indian conglomerate Reliance Industries is using its newly anticipated telecom monopoly to expand into other sectors of the Indian economy in partnership with multinational companies including Google, Facebook and Microsoft.
While economists and other industries sweat in fear of a monopoly, Reliance Jio has now would be coming up with a cable landing station in West Bengal that would increase the state’s connectivity with European and Asian countries and attract investment
The west Bengal Government has given Reliance Jio a positive nod to build sub-sea cable gateway for Rs.1000 crore.
Submarine cables provide international telecommunication links between countries and these cables terminate during a country through cable landing stations.
The Bottom Line
Since the dawn of industrial revolution, industrialisation and advancement in technology has been a constant factor in the way societies and businessnes function. This era is no different. With the advent of newer technologies come social issues such as rise of monopolies but at the end of the day, market competition will defintely spring back as that’s the natural flow of commerce. What the future holds for rise of monopolistic business practices in India remains to be a matter of speculation which shall come to fruition in the decades to follow.