 "Data tariffs too high in India, says Analysys Mason report")
Data tariffs are high in India, which possibly explains why mobile operators are not able to take penetration beyond the 30 per cent levels. Data tariffs in India are currently at Rs 250 per GB, which is expensive when adjusted for per capita incomes.
According to a report on mobile broadband by Analysys Mason, India’s data tariffs (price of 1 GB pack) - as percentage of gross national income (GNI) per capita - are currently 2.6 per cent, whereas on an average the developed economies’ data tariffs - as percentage of GNI per capita - currently stand at 0.4-0.5 per cent. What this suggests is that a 75-80 per cent drop in tariffs looks very likely over the next couple of years.
The evolution of mobile broadband ecosystem will depend not just on data tariffs, but also the development of content and device ecosystem. Analysys Mason envisages a situation where data tariffs will come down to levels seen in developed markets, which would be 0.42 per cent of per capita income, from the current level of 2.6 per cent of per capita income. This implies a 75 per cent drop in tariffs to establish a FY20 average data revenue per GB of Rs 57.
Analysys Mason’s report also talks about the voice business increasingly getting commoditised in developed markets, as mobile broadband penetration levels increase and over-the-top applications cannibalise the voice business. Internationally, in many markets, voice revenues have come down to 25 per cent of mobile revenues. The report expects the voice business to undergo similar transformation in India too and, by 2020, will account for 10 per cent of average revenue per user (ARPU) as mobile broadband continues to evolve.
While data tariffs could slide, Analysys Mason does not expect ARPUs to decline from current levels of Rs 170. With tariffs declining, usage would go up to 10 GB. Coupled with 10 per cent voice revenues, the total ARPU would increase to Rs 645 in 2020. Consumer expenditure on telecom services and equipment in India is currently lower than international benchmarks, which could possibly be because mobile broadband ecosystem has not completely evolved.
Over the past few weeks, incumbent operators like Bharti, Idea and Vodafone have come up with innovative data packs and have even dropped prices. In a recent report, Credit Suisse said: “We felt such a lack of low-ticket monthly data plans along with relatively high data tariffs was one of the key reasons for data penetration stagnating.”