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India mobile operators launch price war over data rates

With India already having some of the lowest tariffs in the world for both voice and data, competition is about to pick up as 3G rates have been slashed to 2G rates, benefiting subscribers all over.
Written by Nitin Puri, Contributor on

What's with the sudden rush in slashing data plans in India? In June of this year, Reliance Communications was the first to offer 3G data rates for the price of 2G, and their rates remain the lowest in the industry. Now, Idea has also reduced 3G data rates to the same price as 2G, in the hope to allure more subscribers. Vodafone made a similar move just a few weeks ago.

The convergence of 3G and 2G pricing was bound to happen, noted The Times of India. 3G is considered a premium service, thus expected to yield to higher returns for Indian mobile operators than 2G. However, given its slowed than expected uptake, Indian mobile operators are now hoping lower prices will drive higher 3G consumption. Generally speaking, revenues for 3G services have not been what was expected, so Indian mobile operators are looking to receive all revenue possible, in order to increase their profit.

Furthermore, with technology evolution, the pricing for 3G was bound to come down, especially as 4G services are available in limited regions, and only by Bharti Airtel. India is about seven years behind when it comes to 4G implementation, so the update of 3G data services, expected to be exponential, is taking much longer than what was expected even three years ago.

So I wonder if Indian subscribers really have an appetite or demand for high speed data services in the first place? If that were the case, I'm sure 4G would be available in more regions, and by more operators, but that hasn't happened yet. What I have seen is the spike in use of apps such as WhatsApp and general social media usage on devices. But In terms of downloading and streaming, it's still not that popular as I once thought it was, and perhaps this is just another incentive by the Indian mobile operators to push Indian consumers in that direction. 

Eventually, 4G will have to be rolled out, but the question is when? Right now, Bharti Airtel has a monopoly and from what I've seen, not all devices are 4G ready either. Are Indian consumers ready to shell out more money for new devices, just to access 4G services? Perhaps this is another hidden reason why 3G data rates have been slashed: give subscribers a taste of what’s out there and when the time is right, they'll switch both devices and from 3G to 4G.

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