Indian users pay mobile tariffs that are among the lowest in the world. That might change as operators raise data rates to support huge spectrum payout costs.
All major operators, such as Idea, Airtel, and Vodafone, had bid for additional spectrum in the March auctions. Among them, Idea needs to pay Rs 30,306 crore, which is the highest. Bharti Airtel is next with Rs 29,130 crore in spectrum payouts. In all, companies paid 1.1 lakh crore.
Such operators who bid colossal amounts will now raise tariffs to pay for it. Airtel has cut discounts on data packs for prepaid customers, and Idea has raised rates for data as well. Using high-data applications such as Skype, or YouTube, will now be that much costlier.
Airtel's new plan for 3G data is Rs 255 for 1GB and 28 days validity. Earlier it used to cost Rs 249 for 30 days. If you are on 2G, as are most people in India, you will have to pay Rs 199 for 1.25 GB of data with 28 days of validity. Before the change, you would have got 2 GB of data with 30 days of validity at the same price. Idea has doubled data rates for prepaid customers.
The move was expected from the time the auctions took place. “The increased financial burden will lead to the industry’s cost structure being changed drastically,” said Rajan S. Mathews, director general, Cellular Operators Association of India, an industry group, had said in this report. “Hence, the operators will not be left with much choice but to increase the tariffs so as to meet the financial commitments to the government.”
Some analysts had expected that the companies would do away with discounts on voice calls first, but that proved to be more difficult in a country where competition in the voice-call category is intense. "Incumbents have paid through their noses to buy expensive spectrum in March, and so raising data tariffs is absolutely inevitable, especially at a time when (average revenue per user) ARPU is static," said Hemant Joshi, partner at Deloitte Haskins & Sells LLP.