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Mobile Data Tariffs Prohibitively Expensive Now; Telcos Overcharging By Atleast 3X: Report

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Mobile Data Tariffs Mobile Internet

If the advent of Reliance Jio in India was not enough, a study claims that Indians have been overpaying for their internet services. Or to rephrase that, service providers have been overcharging the consumers in India by over 75% and services aren’t even improving.

According to a study by Analysys Mason, “India’s current data tariff (based on current average revenue per GB of Rs 228) is significantly higher than that of relevant developed and developing countries, when adjusted for the per-capita incomes to normalize for affordability levels.”

To give you perspective, a country like India where per-capita incomes are lower than that of the United States, certain services like bus tickets, metro rides, cab rides and even food for that matter are cheaper. However, basic internet services are priced high even though the facilities aren’t better than those in the developed nations.

Even if we compare our internet services to the ones in developed countries, the prices are quite steep and there is a scope of reducing the tariffs by 75%. Either the prices can be reduced by 75% or the data quota can be increased relatively.

Our analysis concludes that a 75 per cent cut in data tariffs (average revenue per GB of Rs 57) alone could increase the user base to 645-667 million SIMs, and the level of monthly data usage to around 4.2-4.3 GB per SIM in 2019-20,” the Analysys Mason study says, in the given scenario.

Is this study an eye opener?

I don’t think this study would have mattered this much had it been released last year at the same time. However, now that there are price wars between different service providers like Airtel, Reliance Jio, Idea Cellular and Vodafone, this report makes a lot of sense.

The report claims that we are overpaying for the services we are getting by factor of 3, but why are we getting substandard services for the high prices? Don’t we deserve nominal fee for the 4G internet services in India?

Airtel, Vodafone and Idea Cellular have already slashed the rates for their data packs by up to 67% because of entry of Jio 4G services in India, and it was only after Jio that these companies realized they have been fooling the customers. A plan that should cost Rs. 50 for 1GB per month currently costs about Rs. 200 in India, and these telcos have the resources to slash the prices further.

The number of internet users in India is expected to grow to 600 million by 2020 with more stress upon video viewing and multimedia. The telcos don’t realise that the growth will quickly outrun their projections even if they slash the tariffs.

Even if Reliance Jio isn’t doing the best job it could, it atleast has instilled fear into the hearts of these telecom giants. The telecommunication industry needed such a disruption and hopefully this will lead to more competitive pricing and clear justification of tariffs for the consumers.

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