Airtel's 4G at 3G price: Beginning of yet another telecom price war? - Firstpost

One more price war is brewing in the Indian telecom sector with companies such as Bharti Airtel, Vodafone and Idea Cellular aggressively cutting data prices. CNBC-TV18 reports that Bharti Airtel has cut 4G data charges in four circles which included Kolkata, Pune, Bangalore and Chandigarh. An Economic Times report notes that Bharti's move is an aggressive bid to boost mass appetite for fourth-generation wireless broadband services and also make the road difficult for future entrants. Reuters "Under the revised data tariff plan, entry-level customers will be allowed 2GB, 3GB and 4GB of free data usage at faster 4G speeds at 3G data charges of 450, 650 and 750 a month respectively. But they won't have access to Bharti's 4G entertainment library services, which will be reserved for customers on higher data plans, from 999 and above," the ET report said. The 4G price cut comes barely a week after it cut 2G data charges by nearly 90 percent to shore up data usage and spur revenue streams. Vodafone also reduced its 2G data charges by 80 percent in three circles. A top Bharti executive told ET, "Airtel will offer 4G speeds at 3G price-points to make fourth generation wireless broadband services more affordable and stiffen the challenge for new competition." The biggest future challenger of Bharti Airtel's 4G broadband is Reliance Jio broadband 4G services which is expected to roll out next year. Bharti Airtel's move to reduce 4G data rates may fuel industry worries of a price war in a still-crowded telecoms sector that has recently started seeing stability after years of cut-throat competition and regulatory uncertainty. More so, because Ambani's 4G mantra is also "affordability". "Broadband and digital services will no longer be a luxury item – a scarce commodity – to be rationed amongst the privileged few," Ambani, the world's 22nd richest person according to Forbes magazine, told shareholders earlier this month. But with lower rates will more people start using mobile internet?  India's cellular market is the world's second largest by users after China, with users surging from just over 5 million in 2002 to nearly 870 million now. However, less than 5 percent of mobile phone owners use their device for high speed 3G data. But Airtel's offer of 4G data services at the price of 3G may not actually translate into higher data usage, but just help expand its modest 4G subscriber base. Also, cheap data rates may force the telecom companies to play an expensive mass volume game – a bruising strategy that has battered margins for India's incumbent mobile carriers. A decade ago a phone company run by Ambani sharply cut call prices and sold handsets for an initial payment of just $10. It infact, it transformed the mobile phone industry. His re-entry into the 4G data services raises the possibility of another price war in a sector where carriers including Bharti and Vodafone have only recently started seeing price stability. With Bharti Airtel already starting to prepare for RIL's entry into the market, this may be the beginning of a telecom pricing war. With inputs from Reuters via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGsHMgIHXMqFdQg1lZmhFXb4WtfPw&url=http://www.firstpost.com/business/airtels-4g-at-3g-price-beginning-of-yet-another-telecom-price-war-899811.html?utm_source=hp-footer

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