Bharti Airtel, Vodafone and Idea have cut data tariffs for 2G services in circles where they do not have a licence for 3G services. This is nothing but an attempt to retain subscribers, following the Delhi High Court order and DoT notification barring them from offering 3G services in circles where they do not have a licence
Three top telecom services providers—Bharti Airtel, Vodafone India and Idea Cellular—once again showed their camaraderie by reducing data tariff on 2G by as much as 90%. Although this was not totally unexpected from these “three partners”, they seem to have failed to address the concerns over tariff for 3G services. As an afterthought, Airtel decided to reduce tariff for its 4G services in four cities by 30%. However, 4G is a different ballgame altogether and more about it later.
What is interesting in the telcos decision to slash rates for 2G data, this is applicable in almost all the circles where Airtel, Vodafone and Idea do not have a 3G license in their individual capacity. Idea cut data tariff by 90% in eight circles, Tamil Nadu and Chennai, Karnataka, Kolkata, West Bengal, Assam, North East, Bihar and Orissa. In all these circles, Idea does not have 3G license. Vodafone also did the same thing. It reduced 2G data tariff in Karnataka, UP west, MP & Chhattisgarh, where it cannot offer 3G services.
Similarly, Airtel reduced 2G data tariff by 90% in nine circles, Uttar Pradesh (UP) east, Haryana, Madhya Pradesh (MP), Maharashtra, Kerala, Gujarat, Kolkata, Punjab and Orissa. The Sunil Mittal-led company does not have a license for 3G in all these circles. In Maharashtra and Kolkata, Bharti Airtel has 4G license under the broadband and wireless access (BWA) license.
But these are smart operators. Therefore, what they did was to come together. First, in order to reduce operating costs, Bharti Airtel, Vodafone and Idea Cellular consolidated infrastructure and resources. Together they own Indus Tower, which has a portfolio of over one lakh towers. While Bharti Airtel and Vodafone hold 42% each in Indus Tower, Aditya Birla Telecom (the owner of Idea Cellular brand) owns a 16% stake in the tower company.
The second part of the collaboration was to sign a roaming pact for 3G services. In July 2011, Bharti Airtel, Vodafone and Idea Cellular entered into agreements with one another to offer 3G mobile services in circles in which they did not succeed in getting spectrum in the auction held last year. Bharti and Vodafone have won licences in 13 circles while idea has won 11 circles.
This matter went to the courts, when the Department of Telecom (DoT) raised objections on the roaming pact for 3G services. In an internal note, the DoT had clarified that a unified access service licence (UASL) cannot offer 3G services, declare a tariff plan or acquire customers in a circle where it has not been allocated 3G spectrum. Under the licence conditions, a licence providing services has to have its own network, the DoT said.
However, Cellular Operators Association of India (COAI)—the lobby of GSM operators—contended that a UASL is technology neutral access service license which allows the provision of all type of access services.
Earlier in April 2013, Delhi High Court set aside its single judge order, which allowed Bharti Airtel to continue providing 3G inter-circle roaming facilities with other service providers. The next day, while the government asked Airtel, Vodafone and Idea to stop 3G roaming services outside their licence areas, DoT slapped Rs550 crore penalties on Vodafone and Rs300 crore on Idea for violating 3G service norms.
This also means, these operators cannot offer 3G outside their circle and will have to cater to their subscribers through 2G only. That too when mobile users, especially smartphone users from the young generation are demanding higher data speeds. So, in order to keep its subscribers intact Airtel, Vodafone and Idea have reduced data tariff rates of their existing (2G) services.
A report published by Nielsen and Informate Mobile Intelligence in May 2011 found out that India’s growing population of smartphone users were spending more time on entertainment and internet-based content than on voice calling and text messages. According to the study, average smartphone user spends 2.5 hours a day using their phones with 72% of their time spent on activities such as gaming, entertainment, apps and internet related content while only 28% of their time is now used for voice calls and text messaging.
While the telecom operators have tried their last resources for keeping subscriber count intact in circles where they cannot offer 3G service, it looks an uphill task. Especially, while almost all telcos are struggling to increase revenues through 3G services, the Mukesh Ambani-led conglomerate is nearing to the impending launch of its 4G services.
Earlier, speaking at the annual general meeting (AGM) of Reliance Industries (RIL), Mukesh Ambani said, “Our vision for India is that broadband and digital services will no longer be a luxury item—a scarce commodity—to be rationed amongst the privileged few. Together with our partners, we have charted an ambitious plan for the next 12 months, and we at Reliance Jio foresee making rapid progress over this period towards launching our services across India”.
Reliance Jio Infocomm is the only company to have nationwide permits for 4G broadband services. However, instead of announcing the impending launch date for RJio, Ambani, the richest man in India, merely said, “Our impatience to reach our goal demands a sense of urgency, but not careless haste.”
This provided an opportunity to Airtel, which is one of the companies to have won BWA (4G) licence in select circles, like Maharashtra and Karnataka. On Monday, Airtel announced new plans for its 4G service in Pune, Bengaluru, Kolkata and Chandigarh. These plans starting from Rs450 per month, offer data quota at rents similar to 3G tariffs, the company said in a release.
It was expected that winning 3G spectrum blocks in their key circles will help the players retain their market positions, reduce congestion in traffic through use of additional spectrum and thereby enhance the quality of their services. However, this is not happening and subscribers, especially the smartphone using younger generations want more speed. In this context it would be interesting to see, how these incumbent operators survive post the launch of Reliance Jio's 4G services.
This reduction in 2G traiff is completely misleading. The operators offer 1 or 2 GB of data on 2G at Rs 100 per month only for past many years. However, this same data, if not subscribed through the package in pre/postapid, used to cost 10 paise/10 KB which means you are paying approx 10,000 rs for 1 GB of data which the same company is selling for 100 Rs. Even after 80 or 90% reduction, this charge is still very high and very few people use this service. All this serves is to make headlines, nothing more.
This reduction in 2G traiff is completely misleading. The operators offer 1 or 2 GB of data on 2G at Rs 100 per month only for past many years. However, this same data, if not subscribed through the package in pre/postapid, used to cost 10 paise/10 KB which means you are paying approx 10,000 rs for 1 GB of data which the same company is selling for 100 Rs. Even after 80 or 90% reduction, this charge is still very high and very few people use this service. All this serves is to make headlines, nothing more.