India's top three telecom providers – Bharti Airtel, Vodafone Idea, and Reliance Jio have revised the tariffs for their monthly and bi-monthly prepaid recharge packs, raising them by 40-50 percent by incorporating a “Fair Usage Policy (FUP)” on “off-net” calls.
FUP ensures that a small percentage of customers who are heavy users do not fill up the available bandwidth offered by telecom operators and internet providers, thereby ruining the overall experience for others on the same network.
Although the new rates will impact consumer spending in India, up to $6.28 billion (Rs. 45,000 crore), industry experts believe that this step by the telecom players was “inevitable”.
Will telecom price hike impact consumer spending?— Varinder Bansal 🇮🇳 (@varinder_bansal) December 2, 2019
30% price hike means 45k crore additional expenses by consumers.
Dejavu 2000 - 2005 when consumers cut back on FMCG purchases to fund EMI payments.
“The increase in tariffs was inevitable. This may push customers to amend their usage and gun for a now cheaper, lower data allowance plans compared to the plans that would offer over 1GB data per day along with unlimited calling to same or other networks – which now have become costlier", Thomas George, managing editor and president of CyberMedia Research told Sputnik on Monday.
Up to now, for minimal charges between price ranges as low as $0.97 (Rs. 19) and $13 (Rs. 1,000), Indian telecoms were providing services like roaming-free unlimited domestic calls to all internal networks, 4G internet and hundreds and thousands of free messages.
But now, since the prices of most prepaid packs have gone up, Indians are hurting.
Consumers have saved well as they did not spend good enough in last three years on mobile recharges— Ravi Prakash (@RPA_SUNLIGHT) December 2, 2019
It's time to pay back
Reliance Jio showing colour..40% increase in price..where is telecom regulator..Sr citizens milked by govt..RBI reducing interest rates..taking away slice of only income..interest..doctors fee gone up..food prices up ..Sr citizens be exempted by govt by this telecom hike..— jglal (@jglal1) December 1, 2019
Massive price hike by telecom companies.. which business will affected ? Social media marketing will be expensive. Business of Paytm , Google pay, ola , Zomato etc will be affected. Blogger and youtubers will get less views... many more businesses related to internet.— PARTH (@weparikhparth) December 1, 2019
telecom price hike and still other networks usage call extra charge. double whammy— Aashuutoshh (@ashutosh283) December 2, 2019
By implementing GST, where consumer use to pay 15% as service tax earlier, after GST it’s become 18% & now It’s unfair to increase t tariffs even after big tax relief has been given by t Govt.— Shardul Patil (@Shardul46421543) December 2, 2019
It’s a direct burden on t consumers
Someone really needs to look into it.@ZeeBusiness
“Government and Telecos would like to see the public reaction to price-hikes to observe new adoption trends for any further increase or decrease in price hikes in the coming days", George said.
Starting 3 December, Airtel, Vodafone Idea, and Reliance Jio will charge users newer, hiked prepaid prices.
While Vodafone Idea make up the largest telecom network in India with over 375 million users, Reliance Jio, which is the third largest telecom operator in the world has over 355 million subscribers.
Bharti Airtel has nearly 150 million users in India.
"These tariff increases will partially take care of telecos’ stress. Government may wait and watch before taking any further steps to ease telecos’ troubles. Its going to be clearly a three-player play in the industry enabled by moderation of adjusted gross revenue (AGR) dues, reduced royalty, and interconnect usage charge (IUC) maintenance at current levels. These actions could be further supported by efforts around recapitalisation through asset sale making the telecom business more viable", George added.