Data prices to rationalise over next six months: COAI

Once the demand picks up and the networks start getting maximised, then pricing is the only way you can manage your capacity, says COAI Director General

Deep data price cuts being offered by telecom players are not sustainable, said Cellular Operators Association of India (COAI) Director General Rajan Mathews on Friday. 

With dynamics of Indian telecom industry changing rapidly, data prices are expected to rationalise over next six months, said Mathews, while speaking with reporters on the sidelines of an industry summit on small cells in Mumbai. 

Last week, the industry saw multiple operators reducing data prices for both third and fourth generation (3G/4G) internet packs by as much as 67%. Airtel is now giving more benefits in the same set of data packs, effectively reducing prices by up to 67% for prepaid customers. Catching up with the market leader Bharti Airtel, Idea Cellular also followed suit by offering 67% reduction in 3G/4G internet packs for both postpaid and prepaid customers.

"The operators have priced it very low. Since telcos have already invested in the capacity, so they want it to pick it up. But in the long term, as the more customers come and the volume picks up, they are going to have to come back to more rational and reasonable prices," said Mathews. "At most it (reduced pricing) can last upto to six months to a year, as and when the demand picks up. When the prices are low, the users pick up. But once the demand picks up and the networks start getting maximised, then pricing is the only way you can manage your capacity. Otherwise you will have same congestion. The only way to rationalise that is the price hike."

"The spectrum is so expensive, that after the auction, telecom companies may not be able give such deep discounts and affordability. The companies have to at least earn enough to at least pay back the government, spectrum usage charge. There is a flaw, beyond which you can't. I think we are almost there, so we will have to get back to more rational prices," he added.

Anil Tulsi, who head the Strategy Planning for Reliance Communication, said the chain of events that are happening right now in the telecom industry will determine the "right prices" for data.

"The churn that has been happening right now with operators cutting prices heavily before the launch of Reliance Jio, apart from upcoming spectrum auction, will bring out the right (3G/4G) data prices," he said. "The dynamics of the industry is changing, and after the auction how much money is left with the companies will determine what the prices will be going forward."

Meanwhile, Sudhir Gupta, secretary, Telecom Regulatory Authority of India, if the prices go up, consumers will not be able to afford it considering the growing demand and consumption of data.

"Once the data speed increases, the consumption by users will also increase," said Gupta. "Then the data tariffs will have to come down, otherwise consumers will not be able to afford it."