India’s newest telecoms company, Reliance Jio, credited for driving down data prices, has followed its competitors and increased rates. Vodafone Idea and Airtel, the other two dominant players in the market, have already raised prices after announcing huge second-quarter losses.
The situation was partly blamed on Reliance Jio, which had slashed data prices, forcing them to follow suit. This resulted in India ending up with the cheapest mobile data in the world, reports BBC.
“Jio raising rates is significant because this young operator is the price leader and disruptor. If it were to not raise tariffs, the other two major operators would have had very little wiggle room in raising their prices, if they wanted to stay competitive with Jio. With all three major operators raising prices, I’d expect to see a real increase,” technology expert Prasanto K Roy told reporters.
Economist Vivek Kaul said increasing prices also made sense for Jio.
“Their low-price strategy has played its part in getting subscribers. Now they need to start generating cash to be a viable business,” he told reporters.
The new tariff rates are not clear at this point, but experts believe it is unlikely that these price increases will drastically affect India’s data prices, especially given that it is an extremely price-sensitive market.
“What all the operators really want to do is to increase average revenue per user (ARPU) and not necessarily squeeze more out of every call or gigabyte. So I’d expect to see tweaks in the packages that would encourage more consumption, and thus more monthly spend,” Mr Roy said.
“The Indian mobile user spends less than $2 (£1.55) monthly, among the lowest in the world, which is unsustainable given the high costs and license and spectrum fees that telecoms companies bear.”
A license fee is what telecoms companies pay the government in order to operate.
“Prices going up is not necessarily a bad thing – it would, in fact, be a good thing, because that is the only way to have some competition in this market,” Mr Kaul earlier told the reporters.
“This needs to happen for telecoms to survive and thrive in India.”