Source-This post on Mobile Tariff Hikes has been created based on the article “Airtel, Jio, Vodafone hike tariffs: Indians are paying more for less” published in “The Indian Express” on 22 August 2024.
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Context– Recent mobile tariff hikes of 10 to 27 percent by Jio have stirred discussion. Despite these increases, India remains one of the cheapest mobile markets globally, thanks to Jio’s 2016 price cuts that sparked a price war. Jio now controls over 40% of the market, with Airtel, Vodafone, and BSNL sharing the rest.
What are the issues with recent mobile tariff hikes?
1) Response to Tariff Changes -TRAI was criticized for not responding to Jio’s 2016 price drop, but it has now reviewed the recent tariff hikes and confirmed they are fair and transparent. Despite these increases, Jio is still profitable with a Rs 5,000 crore profit for FY24, while Vodafone lost over a million customers last month.
Read More- Vodafone Idea issue and the telecom sector in India
2) Consumer Lock-In Effects-Mobile number linkage with bank accounts and Aadhaar, along with OTP requirements for transactions, create strong lock-in effects. These factors contribute to the low elasticity of demand for mobile services, meaning that price changes are less likely to drive customers away.
3) Quality of Service Concerns– Price-sensitive consumers have few alternatives, leading to calls for BSNL to intervene. However, challenges with BSNL’s quality and track record make this intervention problematic.
Conclusion- Recent tariff increases may impact affordability but could improve service quality. Regulations must evolve to balance consumer interests with the industry’s needs, ensuring that India’s digital infrastructure can effectively support its expanding economy and diverse population.
Questions for practice
What are the issues with recent mobile tariff hikes?
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