So, the 2G auction was a huge flop. Government could not even generate one fourth of what they had expected . And now, a second jolt is expected in the form of tariff hikes.
The cause of hike is pretty simple:
Increased expenditure for companies –> expenses passed down to the customers
Most of the players in the telecom segment chose to stay away from the auction and the one to use this opportunity to the fullest was Vodafone, bagging 14 circles.
The reason for such a low participation was that the base price was disproportionately high. Telecom segment, though initially was growing at a real fast pace, has seen considerable dip in the consumer base in recent times (especially Reliance).
The competition in this segment is so fierce, that the war has now entered a new domain – Consumer Satisfaction. No longer do you see ads which endorse pricing, because pricing factor has reached a saturation level. And since newer technologies are on the rise (broadband, not really new but yet to capture mass market) As a result, telecom companies are reeling under debts.
Now that a few carriers will try and trickle down their expenses to their customers, a reverse price war is expected. But this ‘war’ will be an ‘invisible’ one for us.
Neither will per minute voice call charges go up, nor will the sms charges. All those freebies that we availed so far, the extra free minutes, those cuts on roaming charges will either be trimmed or completely shaved. SMS packs, internet packs will get costlier. Even if your particular carrier hasn’t participated or didn’t spend much, this chance will be duly cashed in by one and all.
But this hike won’t affect the balance sheets of the companies directly; it will in fact loosen the pressure and help them to focus on the newer technologies. If that happens, then finally broadband services will pace up and hopefully 3G, LTE and 4G will follow (within the next 5 years).
It is a well known fact that ARPU’s in India are lowest in the world, that too by a very large margin. And according to me, a slight hike will actually be good for everyone – it will allow telecom companies to offer consumer better services and more features rather than just worrying about their bottom line and cutting corners!
Would love to hear your views on this!