All three private sector telecom companies – Bharti Airtel, Reliance Jio and Vodafone Idea — have revised their tariffs upwards by 11 to 25 per cent. At a time when the masses are feeling the pressure of an inflationary price spiral, this telecom tariff hike will add fuel to the fire as it is expected to add 0.20 per cent to core inflation. The public, which is feeling the pinch of price inflation in food, fuel and other life necessities, will now have to face the additional burden of the telecom tariff hike. The only silver lining is that the tariff hike will not be so burdensome for most consumers.

In 2019, when telecom companies had resorted to tariff hikes, the average price hike was 20 to 45 per cent. When the rates were further hiked in 2021, the average tariff hike was 20 to 25 per cent. This time the average price hike is 11 to 25 per cent – not a major pain point for consumers.

It is worth noting that telecom rates in India are among the lowest in the world. Today, in India unlimited voice calls and 18 GB of data are available to mobile subscribers at an average price of just $ 1.89 per month, whereas a similar package costs anywhere between $ 2-5 overseas.

It is also an unavoidable fact that telecom companies require capital for new technologies in order to keep in step with the technological advancements recorded by the West. Hence, a moderate price rise this time was essential. Little wonder that neither the government nor regulatory authority TRAI have thought it fit to intervene in the tariff hike decision of the ‘Big 3’ and have allowed the mobile services to continue to operate through the market forces of demand and supply. The government has rightly maintained that it does not want to intervene in free market decisions as the functionality is under the domain of TRAI and tariffs are under forbearance.

However the government will have to remain alert about the activities of the industry players. As the size and nature of the industry has led to a situation of oligopoly, the three private sector companies can easily join hands in the future to create a cartel and go on hiking tariffs every two years or so. In order to capture the market, latecomer Reliance Jio had adopted an unhealthy pricing policy which killed several competitors, and only Bharti Airtel could take on the Jio competition and survive. The third, Vodafone Idea, stays afloat only because of the help and support of the government. What happened in the case of certain industries like cement can also happen in the telecom sector, where there are only three major players in the private sector.

As far as the telecom players are concerned, they will have to improve their services. At present, subscribers face problems like call dropping, and unavailability of calls through unverifiable reasons like ‘out of coverage area’. Now that the government and subscribers have accepted the tariff hikes, it is the reciprocal duty of the industry to improve its services.