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Event update: Media - JioFiber commercial launch – Nothing disruptive about it!

Reliance Jio Infocomm (Jio Fiber) has announced tariff plans for its fixed broadband offering. Although the plans on offer are slightly better than current incumbent offerings (in terms of monthly price and services provided), we believe that this is not sufficiently disruptive enough for customers to jump ship from their existing arrangements (churn for broadband players like Hathway, Den, ACT, Airtel, etc. should not rise meaningfully). In addition, slower last-mile capex should mean that Jio Fiber’s scale up won’t be as rapid as it was seen in the case of Jio Mobile. No bundling of Cable TV with these tariff plans should be a relief for existing MSO/DTH players. Bundled OTT apps (annual subscriptions included) would permit catch-up TV viewing and some live content (app dependant) but on the lower end plans, this should also not be sufficient enough to encourage cord-cutting. Also ‘First Day First Show’ (FDFS) movie offerings are available only on higher priced monthly plans, where off-take should be on the lower side (positive for multiplexes).

Overall, we believe that these pricing plans are good for all existing incumbents as they won’t see the same fate as wireless telephone providers did when Jio was launched in September 2016. We have Outperformer ratings on Zee Ent. and Sun TV Network and Neutral ratings on PVR and Dish TV.

Jio Fiber Offerings

Entry plan starts at Rs699 (Rs825 with taxes) and would provide 100 GB/month (plus 50 GB for six months) at 100 Mbps. There are six plans in total with upper end plans priced at Rs2,499/3,999/8,499 with higher fair usage limits and speeds. Additional services include free telephone calls (for all), and access to OTT apps (depending on plans selected). Entry level prices and fair data usage are comparable to what peers provide, although speeds provided are on the higher side.

Our Observations – Not a watershed moment currently

• Interesting product, but prices not disruptive enough: Jio Fiber offerings include free telephone calls, access to OTT apps (dependent on plans), and gaming platform access. However, given that incumbents offerings start at similar levels with comparable speeds, additional offerings provided by Jio Fiber may not be enough for customers to make the switch. Higher priced plans also come with access to virtual reality access, FDFS, and annual subscriptions to bundled apps, but we believe this would be targeted towards a very niche set of clients. As a result, the plans on offer should not increase churn meaningfully for existing fixed broadband players like ACT, Hathway, Airtel, etc.
• Fixed broadband data prices higher than wireless: At Rs 825/month, Jio Fiber’s data prices stand at ~Rs5.5/GB which is higher than wireless data prices of ~Rs3.2/GB (Rs399 plan for 84 days with 1.5GB daily allowance). This is an anomaly as globally, wireless data prices tend to be higher. Over a period of time, we expect this difference to reduce through price changes (broadband price cuts or wireless data price hikes) or through tweaking in data allowances.
• No cable TV bundles – OTT offerings not enough to encourage cord cutting: Although all plans include a 4K set-top box (for TV broadcast), no plans include cable TV viewing. This should come as a relief for existing MSO/DTH players as it was earlier feared that Jio Fiber would come bundled with cable TV services too. Bundled OTT offerings (which could provide catch-up TV and/or live content) may not be sufficient enough for customers (who opt for Jio Fiber) to cut the cord immediately. Cable TV plans would be an interesting monitorable, if and whenever it is being launched.

·      FDFS only part of premium plans; No impact for exhibitors: Jio Fiber has restricted the usage of FDFS only for its higher priced plans (Rs2,499/Rs3,999/Rs8,499). Although the kind of content that would be available as part of this platform remains to be seen and is up for debate, restricting this to higher priced plans would mean that footfalls for exhibitors would not be affected as the off-take for such high priced plans would be on the lower side.