Vodafone Hints At Tariff Rise, 2G Prices Will Be Raised Again

As if the last tariff rise in 2G data packs and call charges (ranging between 20-45%) wasn’t enough, you may have to pay even more for your service going forward, according to Vodafone India’s MD and CEO Martin Pieters. Earlier, Bharti Airtel’s Sanjay Kapoor had hinted at an impending rise in tariffs once the spectrum auctions are dealt with.

Tariff Rise

India is known for its low tariffs, but that is due to the highly competitive market here. The incumbents like Airtel, Vodafone and Idea aren’t really known for their low tariffs, whereas Aircel, Tata Docomo and Reliance compete on low prices.

The tariff war reduced call rates from as high as Rs. 2/min to 1 paise/second, and it’s been one of the most popular tariffs. However, the AVoId cartel has been on a price-hiking spree recently, increasing the price of 2G data packs by

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30-45%. What earlier costed Rs. 98 was increased to Rs. 125, and now to Rs. 155, for example (1 GB 2G data for 30 days, Airtel, Andhra Pradesh). While 3G data packs were priced exorbitantly earlier, they’ve been at Rs. 255 for a similar pack as the one I mentioned above for quite some time now.

We started 6-7 times high tariff rate when we opened up 3G network. It is now back to 1.5 to 1.6 times of 2G data rates. It over time will come together. But it can’t come over time just by lowering 3G tariff, it needs to also see increase of 2G tariffs. Once it is equal, it doesn’t matter to customers anymore.

Pieters comments may come as no surprise, however. According to him, they cannot bring down 3G prices furthermore, and the only way forward will be to match 2G and 3G prices by increasing the 2G prices to the level of 3G. Compare this to Aircel and Reliance among others, who have matched 2G and 3G prices by bringing down 3G prices to the levels of 2G. Exactly opposite to the AVoID cartel.