Have you ever wondered why your mobile phone bills are going up again? The major telecom companies have decided to increase their prepaid and postpaid plan prices by 11-25%, effective from 3rd or 4th July 2024. Let’s go through the reasons for the price hike by Jio, Airtel, & VI!
1. Improving Financial Health & Meeting ARPU Targets
Did you know that for big telecom companies like Airtel, Jio, and Vi, increasing their Average Revenue Per User (ARPU) is super important? ARPU is basically a measure of how much money they earn from each customer.
Airtel, for example, wants its ARPU to be over Rs.300 to keep the telecom sector healthy in India. Right now, as of Q4 FY23, Airtel’s ARPU is Rs.209, while Jio and Vi have Rs.181.70 and Rs.146 respectively.
Back in 2016, Jio shook up the market by offering really cheap data, which made internet access affordable for everyone but also meant telecom companies made less profit.
Now, after years of low prices, the telecom industry agrees that adjusting prices is necessary to keep their services running smoothly and to keep improving their networks and services for customers.
2. Monetizing 5G Services
If you think, setting up 5G is as smooth as the set-up of 3G or 4G, then you’re just partially correct. It’s a huge investment for telecom companies! They’ve spent over Rs.1.5 lakh crore on buying 5G spectrum and setting up all the necessary infrastructure.
Now, these recent price increases in tariffs are their way of starting to make money back on those massive investments in 5G technology.
Take Jio, for example. They’ve raised prices for 5G access, making unlimited 5G data plans more expensive. This change has actually caused a big 46% jump in tariffs for 5G users. It shows that Jio is focusing more on making money from their advanced 5G networks now.
So, these tariff hikes are all about turning those big 5G investments into profits. It’s like they’re laying the groundwork to pay off all that money they’ve put into building a faster and better internet for everyone.
3. Avoiding a Monopoly
A point to ponder here is- Jio, Airtel, and VI are all increasing their prices at the same time! It’s actually a move to keep things fair in India’s telecom world. Here’s the deal- if one company, like Jio, gets too big, it could end up controlling the whole market. And that wouldn’t be good for you as a consumer because it could mean fewer choices and maybe even higher prices in the long run.
So, by raising their prices together, these telecom giants are trying to create a balanced playing field. They want to make sure there’s healthy competition where everyone has a shot. This way, Airtel and Vi can keep growing and offering new services without being overshadowed by a super-dominant player.
In other words, if only one company had all the power—it could decide everything from prices to what kind of service you get.
By keeping the market competitive, these price hikes are actually aiming to protect your choices as a consumer. They want to make sure you have options and that different companies keep coming up with better deals and services to win your business.
So, next time you see a price increase, remember it’s all part of keeping the telecom world fair and competitive for you!
4. Regulatory Requirements and Future Investments
Last year did you hear about the Telecommunications Bill 2023? It brought in some tough new rules for telecom companies, especially around stopping SIM impersonation and other frauds. These regulations meant telecom companies had to really step up their game to protect their networks and meet those new standards.
Now, here’s why you might have seen your phone bill going up- meeting those stricter rules costs a lot of money. From setting up stronger security measures to training staff to handle those new challenges, it all added up. So, telecom companies often needed to adjust their prices to cover those extra costs and make sure they were following the law.
You can think of it like upgrading your home security system—you pay more upfront to keep your house safe from burglars. Similarly, those tariff adjustments were like investing in better security for your phone and data. It was about making sure your personal information stayed safe while using their services.
Overall, those regulatory changes pushed telecom companies to improve how they operated and protected your privacy.
5. Maintaining Investments for the Future
I hope you know how important it is for telecom companies to keep investing in expanding their networks and upgrading their technology, right? Well, these investments are super critical because they help meet the increasing demand from customers like you and keep up with all the new tech changes happening.
Just assume it is like building more roads when traffic gets heavier. Telecom companies are expanding their “roads” (networks) so more people can use them without slowdowns. Plus, they’re always introducing new technologies to make your experience even better, like faster internet speeds or more reliable connections for your devices.
So, when you see your phone bill going up due to tariff hikes, it’s not just about paying more—it’s about these companies using that money to make sure their networks cover more areas and work better. They use these funds to improve the quality of their services, so your calls are clearer, your internet is faster, and you have fewer dropped connections.
By the way, are you in favor of a price hike by Jio, Airtel, and VI? Please share your thoughts in the comments below!
