Will Rise in Data Prices Affect Growth of Digital Creators in India

The Indian telecom operators are trying to push consumers to pay more for the data they are consuming. This is because they are in huge debt, incurring big expenses, and are getting very less in return against their investments because the services are pretty cheap.

Highlights

  • Mobile data has been very affordable in India for the last few years.
  • Since the time Reliance Jio made its entry into the market, Indians have started consuming several times more data than what they used to.
  • The cost of 1GB of data has been cut down from Rs 250 (before 2016) to under Rs 10 now.

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Will Rise in Data Prices Affect Growth of Digital Creators in India

Mobile data has been very affordable in India for the last few years. Since the time Reliance Jio made its entry into the market, Indians have started consuming several times more data than what they used to. The cost of 1GB of data has been cut down from Rs 250 (before 2016) to under Rs 10 now. All the telecom operators have made voice calling truly unlimited with most of their plans and offer unlimited data as well. Because the data was affordable, the digital economy saw a boost in its growth. More and more people started creating digital content, and this also led to an increase in content consumption from platforms such as YouTube, Instagram and more. But would it be the same case if data starts getting expensive?




The Indian telecom operators are trying to push consumers to pay more for the data they are consuming. This is because they are in huge debt, incurring big expenses, and are getting very less in return against their investments because the services are pretty cheap. The industry average revenue per user (ARPU) per month figure is less than Rs 150 as per the latest report by the Department of Telecommunications (DoT). Individually, for the telcos, the ARPU is less than Rs 200. Airtel stands at Rs 190 for Q2 FY23, and Jio stands at Rs 178.2 for Q3 FY23. Vodafone Idea (Vi) is yet even to cross the Rs 150 figure.

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To boost the overall revenues, the telcos are looking to raise the tariffs, and with that, they would be able to increase their ARPU per month figures. Airtel has already started hiking tariffs in a phased manner. The telco has removed the base Rs 99 plan from 9 circles, and now the new entry-level option for Unlimited Voice plan in these circles is the Rs 155 plan.

As the data starts becoming expensive, there could be a shift in the consumption pattern. While the previous few tariff hikes have not really compelled users to consume less data, the next tariff hike could do it. Overall, data consumption has only gone up QoQ for all the telecom operators. But whether things would remain the same with future tariff hikes or not is the big question.

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Companies such as Meta would also want the data prices to be at a place where the consumers can continue with a healthy consumption pattern. Most of the digital content today is consumed on smartphones. Because of that, users don't necessarily need to watch the content in high quality, meaning lesser data consumption. Thus, even if the data prices go up, one-way users can keep consuming the same amount of data is by consuming it at low quality.

There's also the question of how expensive 5G is going to be. While the Indian telecom operators have not launched 5G plans yet, they will do that at some point. From what the industry executives have spoken about it, 5G tariffs are likely going to be priced near the 4G tariffs. This is to ensure that the uptake of 5G services is worth it for consumers. If users consume less data, that would mean lower returns on the investments that digital creators are making.

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