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Let the data wars begin! PDF Print E-mail
Tuesday, 19 July 2016 00:54
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Slow data usage, not just RJio, necessitated this

Though the slashing of effective internet data tariffs by market leaders such asBharti Airtel and Idea Cellular are being seen as a response to Reliance Jio Infocomm’s impending entry – comparisons with RJio’s Monsoon Hungama are rife! – given the sluggish growth in the use of broadband mobile internet, this probably had to be done anyway. Indeed, the way in which effective rates have been cut also reinforce the view that this is part of a broader repositioning of the industry, to get consumers to commit to a minimum tariff plan each month. A look at the offers makes this clear. A 3GB pack from Airtel that costs Rs 655 now offers 5GB of data. While this is a 67% benefit, a customer wanting to use just 3GB of data has the option of moving to the Rs 455 pack which now offers 3GB of data instead of 2GB – the effective gain, though, is 31%; the same holds true of Idea. The idea is to encourage users to consume more broadband and, over a period of time as they get used to consuming more video – because of better 4G download speeds – they will start paying for bigger data packs.

In the case of Bharti Airtel, while the number of broadband customers was rising sequentially by over 22% in the June 2014 quarter, this fell to under 15% in the March 2016 quarter; growth in MBs consumed on the entire network nearly halved from 18.3% to 9.6% and growth in data used per consumer fell even more sharply from 7% to 2%. There are quarterly variations and it is possible June 2016 may see a pick up, but the larger trend is of slowing growth. While telcos don’t give data for 4G separately, the Trai had said recently that, of the 300 mn wireless internet users, just 92 mn were on 3G networks and a mere 1 mn were on 4G.

Obviously, in the long run, whether more data is given for the same price or whether the same data is offered for a lower price, the impact on the topline/bottomline is similar. But as long as the telcos’ data pipes are relatively free – and this applies to the new 4G networks right now – it makes more sense to offer consumers more data for the same price. In any case, over the long-run – this may have to be done quicker if RJio starts offering voice calls free with a data pack of a certain size – as in developed countries, Indian consumers will also probably buy data packs that give them a certain bandwidth which can then be used for either voice or browsing/streaming/downloading.

 

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