If Vodafone’s recent request was not enough to surprise you, Reliance Jio price hike request has will only make the situation worse for telecom customers in India – if that gets accepted by the authorities.
Recent changes in the Indian telecom industry have revealed that some of the biggest players in the sector have encountered losses that seem to be progressing with time.
Vodafone Idea, Airtel, and Reliance Jio have all sought for extensions on the payment of their adjusted gross revenue. Additionally, to make up for incurred losses, all companies have gradually been increasing the prices of their data plans. In light of this strategy, Vodafone Idea, and, now, Reliance Jio has submitted requests to the government to increase floor prices of mobile data.
Earlier this week, Vodafone Idea requested for the floor price of mobile data to be Rs. 35 per GB. This would be a steep hike as compared to its current prices that range from Rs. 3 – Rs. 4 per GB.
In a similar vein, Reliance Jio has solicited their own proposed floor price from the TRAI. The hike seems to be less dramatic than Vodafone’s demands, at Rs. 20 per GB.
Along with the hike, Jio also wishes for a uniform floor price, irrespective of one’s plan.
Jio’s strategy of increasing tariffs is a gradual one, where the company plans to introduce hikes every 6 – 9 months, so as not to shock its customers and ensure maximum retention possible.
Drastic Hikes Becoming a Trend
In the coming months, mobile data will become considerably expensive compared to the past few years.
In December, the big 3 telecom operators increased the prices of their plans.
Airtel’s daily tariff increased from Rs. 0.50 to Rs. 2.22, thus making plans more expensive by Rs. 140 at least and Rs. 190 at most. However, Airtel gave its users the option to hold off on adopting the new plans for a 1 year period.
Vodafone Idea’s plans offer no such buffer period, possibly due to the company’s deep state of crisis, with losses amounting to Rs. 50,000 crore in the previous quarterly.
Both companies’ plans have increased by an estimated 50%, according to Business Insider.
On the other hand, Jio’s plans increased by 40% but offered a 3-fold increase in benefits.
Does the Telecom Crisis Have a Culprit?
The Indian Telecom industry has an approximate 1,151.44 million users. with 370 million users Reliance Jio dominates the Indian telecom industry in India. Both Reliance Jio and Vodafone Idea, together, account for little over 60% of the telecom subscriber base in India.
The industry was a duopoly until 2016, with Bharti Airtel and Vodafone Idea being the biggest competitors. However, the telecom sector’s landscape changed radically with the launch of Jio 4G in 2016.
Jio 4G offered free calling and generous data allowances at a very cheap price. Owing to this, the company acquired an enormous 16 million subscribers in its first operational month.
To keep up with the competition, Airtel and Vodafone responded by decreasing the prices of their data plans.
While this has led to the accumulation of severe losses over the years for the other two companies, Reliance Jio has fared better even in crisis, with the lowest AGR of Rs. 13, 000 crore.
However, previous acquisitions and having spent a long time in one of the world’s cheapest data markets are also contributors to the current crisis the former big 2 are in.
As of now, the situation looks dire for the Indian telecom industry. The government is now involved in monitoring and possibly alleviating the situation, but has not offered any relief measures yet. The request from Jio, after Vodafone, would only add up pressure on the authority to revisit their strategies and could end up making mobile subscribers in India paying at least 4X more.
