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Reliance Jio's Lyf phones become cornerstone of a campaign of digital domination

Reliance Jio still has to woo existing customers away from tenacious biggies like Airtel and scrappy middleweights like Idea. However, that aside, it seems to have all the pieces in place in a remarkably well-thought out and brilliantly executed strategy.
Written by Rajiv Rao, Contributing Writer

It is an extraordinary phenomenon that Reliance's Lyf 4G smartphone, in just one quarter this year, has seized a 7 percent market share (shipping 1.7 million phones), elbowing out local player Lava to assume the fifth spot in the recent category rankings. Lyf also shoved aside stalwarts Micromax and Lenovo to become the second-largest 4G LTE purveyor in the country, according to research outfit Counterpoint.

To get a sense of the Reliance juggernaut that is about to roll over its competitors in this El Dorado for phone makers, consider that this has happened before any kind of marketing and promotional activity, and well before Reliance begins to hand out SIM cards later on this year in what will undoubtedly be outrageously attractive package deals that lure customers to its recently constructed pan-Indian telecom network.

The only question that remains is whether all of this is good for Indians in the larger scheme of things. MD Mukesh Ambani, the richest man in India and an oil-to-retail-to-media magnate, will not only own the pipe through which media, entertainment, and news can be funnelled, but being the owner of one of the largest content houses in the country, he will be generating much of this content.

Spotting unique opportunities and taking great gambles is what the Ambanis are all about. Mukesh's father, Dhirubhai Ambani, lived in a one-room tenement in Bombay (now Mumbai) in the decade after independence in 1947. That fact is deeply ironic considering Mukesh recently built the most expensive private residence in India and possibly the world -- a soaring tower of opulence with a price tag of over $1 billion, overlooking an expanse of slums nestled below it.

The greatest example of the Ambani risk-taking appetite is enshrined in the now near mythic story of when the father Dhirubhai got an opportunity to work as a gas station attendant in the Yemen capital, Aden. As legend has it, Dhirubhai noticed that the local coins in Aden had a face value that was less than the worth of silver that went into making them. He purchased every coin that he could lay his hands on and made a small fortune by arbitraging the difference. Dhirubhai later went on to build an empire out of polyester yarn and textiles and in 2007, five years after his death, the collective value of the empire that he built was amongst the top five in the world. (You can read more about this fascinating tycoon's rise to fame and fortune in Hamish McDonald's superb biography "The Polyester Prince" that the Ambanis successfully managed to get banned in India.)

When Dhirubhai died, a bitter, public feud between elder son Mukesh and younger son Anil ensued. Anil received telecom arm Reliance Communications, while Mukesh got the retail franchise. Both went on to make other forays -- Mukesh in Oil and Gas and Anil in Power -- but it was Mukesh's plan to go into the fiercely contested telecom space a few years ago that has been the most audacious and risky Ambani family bet of all time, considering the field was already dominated by local and global behemoths such as Bharti Airtel and Vodafone.

While Mukesh's Reliance Jio built a formidable network with breathtaking speed in the
1800 MHz and 2300 MHz bands whose chief strengths lay in delivering data offerings, its one glaring weakness was Voice, thus forcing Mukesh to extend an olive branch to his younger brother. This allowed Mukesh's Jio to piggyback on Anil's R-Com-owned 800/850 MHz network that gives Jio much-needed towers and optic fiber infrastructure, and crucial 2G and 3G capabilities, perfect for voice and data together, instantly transforming Reliance into a pan-Indian 4G player. It forced dominant telecom player Bharti Airtel to scramble to match its newest and most formidable competitor. (Jio is also using newly-developed VoLTE to provide HD quality voice access.)

This is just the beginning of Mukesh Ambani's campaign to rule the digital world. Jio, for instance, has launched Jio Wallet, a service that hopes to dominate mobile recharges and eventually online shopping and give existing payment outfits like PayTM, which Chinese B2B goliath Alibaba has invested in, a serious run for its money. It has already hooked up with 50,000 online merchants and has an app for both iOS and Android platforms.

A few years ago, Ambani also gobbled up one of the largest media properties in India, Network 18, with popular franchises across news, entertainment, publishing, and digital, providing him with a vast trove of content to push through his pipe. The years have shown that this has been a brilliantly orchestrated, deliberate, patient campaign that is now beginning to reveal its outsized promise.

There is little doubt that consumers in India are going to be the main beneficiaries through imminent price wars, although Reliance still has the considerable challenge of wooing customers away from incumbents and battling the large but tenacious Bharti Airtel. However, the bigger and far more important question that lurks behind every one of these moves is whether allowing such a giant business entity to also own the generator and distributor of a chunk of the nation's content is also a good thing.

For instance, the Reliance-owned digital news site First Post (part of the acquired Network 18) was apparently asked to take down a recent article that was critical of Finance Minister Arun Jaitley, also a member of the ruling BJP party and a good friend of fellow-Gujarati Mukesh Ambani.

Whether cultural allegiance or political affinity had anything to do with this incident cannot be decisively proven. However, if this is any indication of the kind of challenges that a vertically integrated digital empire brings with it, Indians will now have to worry not so much about whether big brother Mukesh is watching or not, but whether he is shaping and influencing news that is being fed to the masses.

And distributing as many 4G LTE Lyf phones as possible is the first step in doing so.

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