With around 1,186.63 million telephone subscriber bases at the end of June 2019, India became the world’s second-largest telecommunications market. Since the past few years, the Indian telecom industry is experiencing some paradigm shifts from a voice-centric market to a data-centric market. The next growth opportunity for the telecom industry will be in the mobile internet sector. In this sector, there is likely the addition of more than 500 million new internet users over the next five years. The addition of this mass of new users is attributed to the given availability of affordable smart-phones and lower data cost across the country. However, the escalated competition in the industry with the entry of Reliance Jio around 2016 has put incumbent’s financials under stress and resulted in consolidation in the industry.
According to the present law, the phone call and data rates are not regulated the companies are free to set them as they want. So, In December 2019, the three private telecom operators in India including Jio, Bharti Airtel and Vodafone Idea has raised the mobile call and internet rates by up to 50%. These three operators collectively hold the 90% percent telecom industry of India. Although, it is said that the data tariffs in India are still 50 times lower as compared to any developed or emerging economies. This was the first major hike observed for the past five years in the Indian telecom industry. This has fueled the already going on tariff war in India. As in 2016 voice calls were made totally free by Reliance Jio and also a steep of 95% fall in data prices was offered. Due to Reliance Jio’s this move other telecom companies out of pressure to maintain their position in the market did the same and offered low data rates with almost free voice calls. And, this final move in December to raise mobile call and internet rates by the companies are rooted in the Supreme Court’s Judgment on October 2019. The judgment was regarding upholding the government’s method of calculating revenue share that it should get from the earnings of service providers.
Now, in order to put an end to these fluctuating tariff prices, in December 2019, the Cellular Operators Association of India (COAI) wrote a letter to the Trai (Telecom Regulatory Authority of India). The letter requested Trai to regulate the tariff prices saying Reliance Jio, Bharti Airtel and Vodafone Idea have also agreed to this. However, this procedure of data regulation was vehemently opposed by these players in the past. With the upside of Trai getting involved in the tariff war, it is also expected to have some downsides like this move is likely to end the regime of free calling and low-cost data.
