Now 4G at 3G prices. Tariff war brews - Daily News & Analysis

Airtel has reduced its 4G database tariff plans by 31% in Bengaluru, Pune, Kolkata and Chandigarh. While regular data plans remain intact, Airtel has also introduced data plans at lower price points of Rs 450, Rs 650 and Rs 750, offering 4G speeds at rates similar to 3G. This is the second 4G price cut Airtel has effected in a year or so. Last year, it had slashed 4G rates by almost half. Airtel, India's largest telecom operator, has also slashed 3G data tariffs thrice in the last few months, and also reduced its 2G data tariffs by 90% recently. "Airtel is trying to drive volumes with this move as 3G is what has been driving revenues for the company in the last few quarters. Thus, offering 4G at 3G prices may partly help increase 4G adoption among Airtel customers," said Harit Shah of Nirmal Bang. Last week, rival telcos Idea and Vodafone also reduced 2G data tariffs by 90% and 80%, respectively, bringing certain 2G data plans on a par with 3G data pricing. While a data tariff war due to voice saturation and Reliance Jio Infocomm's imminent 4G entry are being touted as the reasons for the sudden data rate cuts, some see the industry headed for a flat data pricing regime across 2G, 3G and 4G bands. "2G data slashing is a gimmick, as it is only the additional top-up data rates that are being reduced, after a customer has exhausted his existing limit. When 4G picks up two years down the line, those tariffs could become similar to 3G across the board – which is the case globally as well. Even at a similar price point to 3G, 4G Arpus (average revenues per user) will still be more for operators on a per unit basis, due to higher speeds and thus, more consumption," said Rohan Dhamija of Analysys Mason. Analysys Mason predicts 3G users in India will rise to 272 million by 2017, from 35 million in 2012. Currently, 2G data users in the country are estimated to be around 100 million, while a recent media report pegs 4G users at around 15,000. "Reliance Jio has already suggested offering 4G plans at 2G data tariffs, and the recent data rate cuts are a way for telcos to position themselves for imminent competition," said Mahesh Uppal, director, Com First (India). "Metered access is a turn-off for data users and a disincentive to subscribe to the service. Hence, offering quality content and relatively flat pricing across 2G, 3G and 4G makes sense for telcos keen to develop data markets. Operators might offer fewer and wider slabs for data usage. Once data demand increases, they might still consider differential pricing, if necessary," said Uppal. Ankita Somani of Angel Broking said these tariff cuts may increase data adoption even in Tier II cities, where the next level of growth for telcos is expected to come from. via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFBKZqGeH-lKmALYwnoavajd-p6-w&url=http://www.dnaindia.com/money/1852617/report-now-4g-at-3g-prices-tariff-war-brews

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