At a time when Indian Telecom Operators are dropping 3G prices, Airtel, Vodafone and Idea Cellular [A-Vo-Id] have bucked the trend and are instead raising 2G data prices offering pathetic data speed and have refused to move an inch on 3G data pricing.
A-Vo-Id Cartel have increased 2G data tariffs (1GB @ Rs150-155 from ~Rs125 earlier). This is the 2nd increase in 2G data tariffs by incumbent operators (in Jan 2013, they were raised to ~Rs125 for 1GB from ~Rs100 earlier). This increase in 2G data tariffs indicates that hyper-competition in data is unlikely, and is in-line with A-Vo-Id cartel strategy to bridge the gap between 2G and 3G data tariffs (1GB @Rs250 at 3G speed) and in turn upgrade data customers to 3G.
Does this Move Provoke TRAI Intervention ?
It is because of such bad move by A-Vo-Id Group the TRAI will be left with no option but to intervene and regulate the tariffs, an overall negative for the industry. Being mature companies this move is really bad on their part and that too acting in coherence will only strengthen the ongoing case against them in 3G Intra-Circle roaming agreements which will lengthen the litigation cycle from TDSAT to High Court to Supreme Court.
We have already shown that 3G uptake has been slower than expected given the challenges involved, including handset pricing and the lack of user awareness/education and a rich ecosystem. We expect the mobile phone to eventually emerge as the primary data/internet access device in India. However, growing off a small base, 3G Data is unlikely to be a key contributor to overall revenue in the next 2 years.