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India telecoms price war for data services

Things in India are now getting serious amongst the competing networks, as each of them have slashed the costs of their data services in order to drive new customers and growth. With the pending implementation of 4G and adoption of 3G, networks are keen to ensure the prices for each service are separated, creating a “superior” service feel for their premium products.

As of July 1st 2013, DoCoMo will be reducing the prices of both their 2G and 3G services by 90%. This has been in response to Bharti Airtel’s move to cut the rates on their 4G service and Vodafone reducing 2G service rates by 80% from 10p per KB of data to just 2p.

Analyst for Gartner, Kamlesh Bhartia commented “The idea is to start getting some momentum on the data side and building some top line growth with respect to data. They expect that 3G data will pick up and they want to create price differentiation between 2G and 3G, which is then positioned as a slightly more premium offering – until LTE [4G] comes along that is”.

These moves have started to occur in light of reports that the growth in voice traffic is slowing. As of March 31st 2013, voice traffic only grew by 9%. This is compared to 15% and 24% in the previous two years. As this market starts to plateau, the networks are seeking alternative services to sign customers up to – with data being amongst the fastest growing uses worldwide.

The winners of the price war for the time being will be the customers who sign up to these services, however do expect prices hikes at the end of the year in regards to data usage.