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It’s War: Airtel slashes 4G tariff one day before Reliance Jio’s rumored launch

airtel-4g-tariff-cut1It’s 4G war, and Bharti Airtel — India’s largest telecom operator — is not about to let new kid of the block Reliance Jio run away with its lunch.

After steadfastly refusing to cut its 4G plan prices below 3G levels, the Sunil Mittal-led firm has finally decided to throw in the towel and slashed the prices of 4G data in select circles — a day before Jio is expected is reported to start selling SIM cards to the public.

Under the new scheme, Airtel is offering 10 GB of LTE 4G data for Rs 847, down from its earlier tariff of Rs 1,347 — a discount of 37%. It continues to sell the Rs 1,347 recharge as well, which will still give you only 10 GB.

Earlier, the company was giving just 4 or 5 GB (depending on the circle) of 3G or 4G data for Rs 850, and the allocation has now been doubled. You can also do a LTE recharge of 655 and get 6 GB allocation — double the earlier quantity.

airtel-4g-tariff-cutIn fact, even if you do a 5 GB 3G recharge for Rs 851, you now get 4 GB of 3G data plus 4 GB of LTE.

Similarly, if you recharge for Rs 655 for 3 GB of 3G data, you get an extra 3GB of 4G data free.

When Airtel launched its fourth generation services, it was pricing them more or less at the same level as 3G.

Further details of the new scheme are given in the chart on top. Please note that prices have been cut only in certain circles. UPDATE: User feedback indicates that the company has not launched the new tariff in most circles.

A GOOD IDEA

The cut follows those of Idea Cellular, which is offering even lower prices.

While Bharti’s cheapest 4G recharge is 10 GB for Rs 847 (or Rs 85 per GB), Idea is offering 20 GB for Rs 1346, or Rs 65 per GB.

The offers have come in the wake of reports that Reliance Jio will do an invite-based launch of its 4G service in 500 cities across India tomorrow.

Jio is expected to offer even cheaper tariff. According to our sources, the company is planning to offer a MiFi device and 10 GB of data for just around Rs 700.

Though details of subsequent recharges are not available, industry veterans believe that the company will price 10 GB of data at just Rs 499 — dealing a big blow to operators like Airtel and Vodafone.

Vodafone, for example, charges three times as much — Rs 1,505 — for the same amount of data on its LTE service.

Bringing down prices to match that of RJio will result in a big hit to the profit margins of the big three companies.

In addition, the Reliance Industries company also has coverage in thousands of cities and towns in India, while the biggest of the traditional operators – Bharti – is offering its fourth-generation service in only around 300.

However, Bharti is planning to add around 12,000 LTE base stations between January and March this year, which should help it expand its network to another 300 cities, assuming 40 towers per town on average.

BONANZA FOR CONSUMERS

Irrespective of who wins and who loses in the 4G war, the rapid decline in prices is good news for India’s Internet-starved customers.

India has one of the worst Internet infrastructure in the word because private companies were not allowed to operate landline phones till recently. As a result, landlines required years of waiting as the government-owned monopoly, BSNL, expanded its network at a snail’s pace.

This was also a problem in voice sector, but that was addressed by the entry of private companies twenty years ago. Private firms used wireless technology to address the voice challenge and were able to connect nearly everyone in the country in a matter of 10-15 years.

However, they were not able to do the same with Internet because of two reasons — delays in the allocation of spectrum by the government, and lack of high-bandwidth technologies.

While the spectrum auctions of 2010, 2014 and 2015 addressed the spectrum issue, the rapid development of 4G wireless technology helped overcome the second problem.

India has voice tariffs that are one-tenth those of countries like the USA, and going by recent developments, data is set to follow in the footsteps of voice.

In the US, wireless data costs between $10 (Rs 650) per GB to $20 per GB. Google, for example, charges $10 per GB in the US. With the price cuts, India’s wireless data price has now come down to Rs 60 to Rs 120 per GB — or about one tenth that of the US. With Jio’s launch, it could decline further to Rs 50.

The reason for the low cost of wireless communication in India has to do with the low network costs. There are 400 Indians in each square km of the country, while there are only 33 Americans in each square km. As a result, a single telecom tower of the same power and specifications can cover 12 times more people in India on average compared to the US.

Also read: Why Airtel should cut prices before, not after Jio’s launch.[socialpoll id=”2312647″]

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