5G networks are going to be the next revolution in the tech and telecom industry of India and around the world. Although the 5G tech hasn’t completely matured yet and is still in the phase where relevant use cases for India are being discovered/developed, there’s no doubt that it will change how people and machines communicate. But 5G requires a lot more backend support than 4G. The infrastructure needs to be very strong, and the telcos will have to invest a lot more into installing new towers so that even mmWave 5G can be successful. For all this to happen, the sector needs the backing of strong tariffs.
Tariff Hike Imminent for the Industry
While 5G is still almost a year away in India, tariff hikes are imminent. Tariff hikes will change things massively for the operators. All the operators have already started hiking tariffs in a passive manner. But it won’t be long before they get aggressive with it.
Telecom operators in the country have been suffering because of the low average revenue per user (ARPU). Low ARPU restricts their ability to invest more into research and development (R&D) for developing new technologies and services. Further, without tariff hikes, the operators can’t even have enough profits in the bank to comfortably pay statutory dues and invest in their networks at the same time.
At such a price-sensitive market like India, the concept of premium services is merely a hoax. The operators can’t really go out of their way to offer premium services for such low tariffs. If they do, they will be emptying their profits at an alarming rate.
The relief package has already come from the government. Now the only thing the sector needs is tariff hikes. Floor pricing is not important, but tariff hikes, even by 20%, will put the operators in a much better place and allow them to improve services along with investing in the 5G technology.