Leaving aside the fact that Jio seems to be an Uber-like play and the prices aren’t sustainable, there are several other problems with your argument. In the west, the cost of building and maintaining telecom networks is dominated by labor costs. Jio is paying Indian wages to lay and splice backhaul fiber, or to fix a downed line, not US or German wages. And even in the US or Germany, this isn’t minimum wage work—it requires skilled, often unionized labor. Another big expensive for a cellular provider is tower leases. Jio is paying for leases based on Indian property prices. Jio is paying Indian wages for network operations engineers. Etc. All else being equal, the cellular equipment will cost the same, but that’s not equal either. Jio is deploying LTE a decade into its lifecycle. Western carriers deployed LTE when it came out, when equipment was far more expensive, and now are moving onto 5G. It’s clear Jio is also skimping on backhaul capacity, which is another huge expense.

Telecom infrastructure is like any other infrastructure—vastly more expensive to build in the west, and in the US in particular. New Dehli’s new subway sections were built for about $70 million per km. Typical in Europe is $200-500 million. New York spent $1.7 billion per km on its newest subway sections.

>Jio is paying Indian wages to lay and splice backhaul fiber,

Dude. Charter Communications posted 10 billion dollars net income for 2017. They have under 100,000 employees. They could raise each of their employees' wages by $100K and still have money left over at the end of the year. It ain't the wages.

There's several things wrong with that statement.

1) Charter didn't really make $10 billion in profit last year. That figure is the result of a one-time accounting change: https://www.prnewswire.com/news-releases/charter-announces-f.... This happened to many companies last year--when the corporate tax rate was lowered, they had to re-valuate any tax assets or liabilities using the new rate: https://www.marketwatch.com/story/with-deferred-liabilities-.... That resulted in big one-time gains or losses depending on whether the company had deferred tax assets or deferred tax liabilities. Microsoft booked a $6.3 billion loss in Q2 of this year for similar reasons. That doesn't mean Microsoft is losing money hand over fist!

2) It's more useful to look at Charter's income from operations (page 31 of their 2017 annual report: http://ir.charter.com/phoenix.zhtml?c=112298&p=irol-reportsa...). That has ranged from $3 to 4 billion over the last few years on about $40 billion in revenue. That means that if Charter merely tried to break even, it could lower customer prices by about 10%.

3) Also useful is the breakdown of expenses, which starts at page 37 of the annual report. Out of $40 billion in revenues, $26 billion was spent on operating expenses. Of that, $10.6 billion is the cost of buying video programming, while the rest is maintenance, support, overhead, etc. That $15 billion-ish is dominated by labor costs. Then there is another $10 billion in depreciation, which is the annual decrease in the value of the actual network. The cost of building the network is not counted as an expense, but is instead booked as a capital asset. Each year, the accounting of income accounts for the decreasing value of that asset. That depreciation also reflects primarily labor costs (i.e. the labor costs incurred in building the asset).

4) Much of the plant maintenance and construction is handled by contractors, who wouldn't be counted in the 100,000 employees.

>>All else being equal, the cellular equipment will cost the same

I'm not sure where I read this. But I remember reading several years back, Airtel doesn't buy telecom equipment, it actually leases it, and pays for it as it goes. Which is why the prices were so low even for a new tech rollout like 4G.

Not sure if Jio has the same model.

>>Telecom infrastructure is like any other infrastructure—vastly more expensive to build in the west

Apart from land acquisition costs. India doesn't buy TBMs(Tunnel Boring Machines), from what I know. TBM's are a very capital expensive investment. But pace of building things is very slow in India compared to any such project in the west.

Having said that India does do frugal engineering well.

Not sure where you got such wrong information by tunnel boring machines. They are widely used and are cheap (don't believe 1 billion$ per mile some businessman sells you). Both Delhi and Mumbai have used tunnel boring machines. Indian metro cost 30-100 million dollars per mile based on property prices, number of stations, and ratio of underground/overground. Don't know the breakdown, but have read that the major costs are stations. Tbm themselves are expendable. That is why Delhi and Mumbai ordered 19 and 17 tbm for a single phase and a single line.

http://delhimetrorail.com/press_reldetails.aspx?id=aIUb8nwzH...

https://indianexpress.com/article/cities/mumbai/mumbai-metro...

>>Not sure where you got such wrong information by tunnel boring machines.

I'm not saying they don't use it. I'm saying they don't buy it. They lease it. Bangalore Metro's snail pace is largely due to inability to afford renting more TBM's.

TBM's are not cheap. Not for the budget projects like Bangalore(and other cities get) metro gets. Delhi and Mumbai are a different deal, as government spends money through a fire hose there. In fact South India pays most of the taxes and gets little in return, compared to North, which gets >1 rupee for every rupee it contributes to the exchequer.

South Indian cities are not that lucky.

One of the feedbacks that went into further phases for Bangalore Metro was to get more TBMs. They only used like 4 for the first phase, and even there one broke down and it took like months to get it fixed.

Airtel did used to buy equipment indirectly, by paying dollars per capacity (erlang model) and letting the vendor figure out what that involved regarding equipment. But they moved away from this a few years ago to a more traditional model of just buying equipment, along with making some other major changes to the way they buy IT services as well.

I used to do some work at Airtel but I cross checked what I posted here against publicly available information, for example from https://www.zdnet.com/article/airtel-chops-ibm-contract-in-h...

Labor costs sound like a weak excuse. Sure I don't expect the same price, but with 1.5gb/day( which realistically speaking is the only thing that matters) I'm paying 180 times more per gb of data.

Until you realize what labor costs are (or deployment density is) in the West compared to those countries?

Also, price is a function of what the return value and need to have capital to invest with, not just the minimum cost to operate once things are set in place.