In the first week of July, new and increased call and data tariff rates of three major telecom companies—Reliance Jio, Bharti Airtel, and Vodafone Idea—came into force. These new rates saw an increase by up to 10-25% across prepaid and postpaid plans. The said decision, which has garnered major criticism by the political opposition and the citizenry, has been justified by the telecom firms by stating that such a move was essential for a financially sustainable business model. They said firms have also argued that without the hike, it would be difficult for them to invest in network upgrades and 5G rollout. It essential to note that this marks the first tariff increase by telecom companies since November 2021. However, the increase is so significant that it came as a jolt to masses, who are increasingly becoming dependent on internet for everything from payments to entertainment.
The latest Telecom Regulatory Authority of India (TRAI) report shows India has around 930 million broadband users, and 95% of those use these three telecom companies for data services. As per the survey, the household consumption survey states that the share of consumer services, which includes telephone charges, internet etc. in household consumption expenditure, has gone up from less than 4% in 2011-12 to over 5% in 2022-23, showing a surge in data usage. In regards to these three big names that have increased their prices, the TRAI report depicts that out of the total 930 million broadband users in India, and around 95% of them use these three telecom companies for data services.
It is essential to highlight here that by providing cheaper data has India be able to ensure a move towards establishing itself as a powerhouse in the digital economy. With these changes, India will no longer be able to boast of having one of the world’s cheapest data costs, wherein 1GB data used to costs less than Rs. 20, a price that only a couple of other countries provide.
The news of increase in tariffs had hit in the month of June. After Bharti Airtel had announced a 10-21 per cent hike in prepaid and postpaid mobile tariffs, a day after larger rival Reliance Jio announced an increase in rates. Later that day, loss-making telecom operator Vodafone Idea (Vi) also announced its plan to raise mobile tariffs by 11-24 per cent from July 4.
As per reports, effective July 3, 2024, Reliance Jio has increased its cell phone user’s charges from 12 per cent to 27 per cent and the average increase is 20 per cent while effective July 3, 2024, Airtel has increased its cell phone user’s charges from 11 per cent to 21 per cent with the average increase being 15 per cent. Additionally, effective July 4, 2024, Vodafone Idea has increased its cell phone user’s charges from 10 per cent to 24 per cent with the average increase being 16 per cent. The issue whether, after the increase in the rates, digital services will remain affordable for all has been raised again and again by many.
Criticism by the opposition:
After the decision regarding the hike in tariffs came out, the Congress party clamped down at the government for allowing three private firms to simultaneously increase mobile service tariffs, and accused the union government of “fleecing” 109 crore cell phone users. They questioned the government on the regulation that government in such situations, asking how can the firms be permitted to unilaterally increase rates without any oversight. As per Congress general secretary Randeep Surjewala, this unilateral decision that will have an impact on many was a part of Modi 3.0 where the thriving of “crony capitalism” continued.
At a press conference at the AICC headquarters, Surjewala said “The Narendra Modi government is fleecing 109 crore cell phone users by sanctioning profiteering by private cell companies”.
Surjewala alleged that cell phone market in India had been working as an ‘oligopoly’, with Reliance Jio having almost 48 crore cell phone users, Airtel having 39 crore cell phone users, and Vodafone Idea having about 22.37 crore cell phone users. He further said that “Effective July 3, the three private cell phone companies, i.e. Reliance Jio, Bharti Airtel and Vodafone Idea, have increased their tariffs by an average of 15 per cent. The three private cell phone companies have a market share of 91.6 per cent, or 109 crore cell phone users out of a total of 119 crore cell phone users as on December 31, 2023.”
At the conference, Surjewala also cited the TRAI report to highlight that a total additional yearly payment from the pockets of the common man and woman of India seeking connectivity after increase in tariffs will be around Rs 34,824 crore per year. This data was for the 109 crore cell phone users of these three private cell phone companies.
As per the report of Hindustan Times, Surjewala stated that “Two things stand out. Firstly, the date of announcement of increase of tariffs, appears to be clearly in consultation with each other by the three private cell phone companies. Secondly, the date of effective implementation of increased tariffs is the same.”
Surjewala also accused the Modi government and TRAI to have abdicated their duty and responsibility towards 109 cell phone users. “Wasn’t the increase in cell phone prices withheld till the conclusion of the Parliament elections as the Modi government would have been questioned on the justification for burdening 109 crore cell phone users and fleecing them of an extra Rs 34,824 crore?”
He raised questions regarding the studies and research that were conducted before this decision was taken by the private companies by asking “Did the Modi government or TRAI conduct any study on need of CAPEX or impact on profitability by purchase of spectrum through auction after taking into account the previous set of concessions on AGR payable under Telecom Policy, 1999 or deferring of “Spectrum Auction Instalments” by Modi 2.0 on November 20, 2019 or other related factors.”
He raised further questions by asking “How can all Private Cellphone Companies increase their average tariffs by the same range of 15 per cent-16 per cent, despite the fact that their profitability, investment and CAPEX requirements are completely different? Why is the Modi government is then turning a blind eye to the same?”
Surjewala concluded his conference by alleging that the union government have been functioning as a sleeping trustee, rather than protecting the rights of its citizens. “Isn’t it correct that the Supreme Court of India, in “Delhi Science Forum versus Union of India” clearly stated that ‘the central government and the Telecom Regulatory Authority have not to behave like sleeping trustees, but have to function as active trustees for the public good?”
No intention to interfere: union government
After the attack of the opposition and in the face of criticism, a response was given by the union government wherein they had clarified that neither the government, nor the telecom regulator have any intention to intervene in telcos’ decision to increase prices. They had also clarified that even with the present changes, the tariffs in India are still among the cheapest in the world. As per a report of the Economic Times, the authorities rather want the companies to ramp up their focus on quality of services. “There is enough competition in the telecom sector and the situation is not critical that requires intervention of the authorities. Consumers may feel some pinch of the price rise, but the hike has happened after three years,” one of the officials had anonymously told ET.
After the press conference by Surjewala, the Department of Telecommunication (DoT) had responded by saying that the rates are determined by market forces where the government “does not intervene”. Calling the Congress’ claim related to the tariff hike “misleading”, the DoT also said that the Telecommunications Service Providers had raised tariffs after more than two years, during which time they had invested heavily in rolling out 5G services. The ministry also clarified that rates are regulated by the TRAI.
“While protecting the interests of subscribers, for orderly growth of the telecommunication sector, which includes investments in the latest technologies like 5G, 6G, IoT/M2M [internet of things/machine to machine] for Industry 4.0 etc., the financial viability of the sector is important,” the ministry of communications said in its statement.
The complete statement can be read here:
https://pib.gov.in/PressReleseDetail.aspx?PRID=2031169
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