Reliance “JIO” is basically “MARO” for Rural Telecom

 

 

By Mohd Umair khan

STD_ISD_PCO_India

 

Got the limelight in the AGM of the Reliance Industries limited where Mukesh Ambani devoted majority of time in his address to the shareholders to it. Bulk of discount schemes containing the offer of ‘Free Voice Call’ is dominating the discussions of general public. Student offer though not a unique thing but portrayed uniquely in the presentation of the Managing Director of Reliance Industries with the sentence – ‘Connecting 30,000 schools and colleges With WiFi and high speed internet’, but upto when didn’t mentioned.
As per TRAI report of June 2013, urban India has reached a teledensity of 146%, whereas the teledensity in rural India stands only at 42%. For achieving the ambitions of the Digital India initiatives which go on the principle of inclusion, every villager of India must have the availability of basic telecommunication. But the question arises that who is going to provide that? The answer would be The Govt. of India, but through which agency? Probably through Bharat Sanchar Nigam Limited (BSNL). Whether BSNL is itself capable to do that or Whether BSNL is compatible with this ever increasing Competition and the Price War (particularly after the R-Jio’s low price announcement).

BSNL, during the year 2014-15, incurred a loss of Rs.8234.09 Crores [Previous year 7,019.76Crore].With that huge loss it is unlikely and uneconomical that it play a crucial role in the remote part of the country as far as telecom is concerned. MukeshAmbani includes in his presentation a sentence on the subject of Digital India that- ‘Data is the oxygen of digital life, Data demand is growing exponentially, Jio will meet this demand for india, Jio will realize the Digital India’. But with this much of low price will it be feasible for Jio to invest in remote rural areas? Remoteness is not that big a challenge but only because it demands a hefty amount of investment with no or really less chance of a return. Since R-Jio and other private players are profit maximizers so they don’t have any incentive to go to a remote area where no initial infrastructure is available and provide the locals with the services concern.

It’s a no new phenomenon but a traditional economic rule that Govt. must intervene at point where market fails to or not deliberately,  provide basic services to the people. R-Jio is initiating a price war that is detrimental for (already) loss makers like BSNL, doesn’t matter that Govt.’s financial injections make it run.

By MohdUmair khan
(An Undergraduate student at Deptt. Of Economics, Aligarh Muslim University and can be reached at mohdumairkhan396@gmail.com )

 

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