Why Reliance Jio Will End Up Getting Lot of Paid Users With Prime Membership

Mukesh Ambani led Reliance Jio today announced yet another special scheme for its subscribers. Only this time, they plan to charge their user base. While it is common belief that 100 million Jio users are mostly motivated by free data & calls offered, it seems Mukesh Ambani has planned a masterstroke to gradually convert these users to paying customers.

Jio would charge Rs 99 to offer a prime membership and then charge Rs 303 per month to continue offering unlimited calls & data to its users. That totals to Rs 3735 over 1 year. While that is a LOT of money if you compare to ARPU of Indian mobile users, the value that Jio is giving in exchange is non trivial.

It is not uncommon to pay Rs 700-1000 for 5GB of data today (this is despite discounts). If Jio offers 30GB of monthly data (1GB daily cap) for Rs 303, it is still several times cheaper than other operators. For anyone who has serious data usage, spending Rs 303 additional a month to have a 30GB data pack is a VERY good deal.

Jio already works well at most urban places and the network coverage is steadily improving. After moving to a paid model, the congestion would reduce as well, thus giving better 4G speeds. There is no reason why anyone who has legitimate internet use won’t keep a Jio SIM card handy. Of course, the mass public who can’t afford Rs 303 a month in the first place would vanish, but the fight is to get a leg into the high ARPU urban consumers (apart from growing the market). So Jio can expect a lot of good quality paying users.

Weather Rs 303 a month for 30GB of data is enough for Jio to cover costs or not is unknown. But will subscribers see value in it? YES.