Higher tariffs must not derail digital India

New tariff rates mark the first significant increase by telecom companies since November 2021, telecom firms have justified the hike by stating that such a move was essential for a financially sustainable business model.
Image used for representational purposes.
Image used for representational purposes.

Three major telecom companies—Reliance Jio, Bharti Airtel, and Vodafone Idea—have decided to increase call and data tariff by up to 10-25% across prepaid and postpaid plans. New rates will come into force from the first week of July. This marks the first significant tariff increase by telecom companies since November 2021.

The telecom firms have justified the hike by stating that such a move was essential for a financially sustainable business model. They have also argued that without the hike, it would be difficult for them to invest in network upgrades and 5G rollout. However, the move may come as a jolt to masses, who are increasingly becoming dependent on cheaper internet for everything from payments to entertainment.

India boasts of having one of the world’s cheapest data costs—1GB data costs less than $0.2—with only a couple of other countries providing such cheap internet services. But a 10-25% surge in tariffs at one go might change this scenario. Nonetheless, it is a big jump for a data-hungry country that consumes 24 GB data per person per month. The household consumption survey report says that the share of consumer services, which includes telephone charges, internet etc in household consumption expenditure, has gone up from less than 4% in 2011-12 to over 5% in 2022-23, showing a surge in data usage.

India has taken big strides in becoming a powerhouse in the digital economy, and this has been possible because of cheaper data usage (even if there is a flip side to this). The latest TRAI report shows India has around 930 million broadband users, and 95% of those use these three telecom companies for data services. The power of internet users can be gauged from the way UPI payment system has become a household name.

The success of UPI has prompted the Indian government to expand its footprint in more digital public goods. Whether it is financial services, online shopping or even delivery of medical and educational services, India is setting new benchmarks for the world. All this has been possible due to cheaper data usage. The digital India dream could receive a setback if telecom services get costlier.

Therefore, the government must recognise internet and data services as essential goods and ensure they remain affordable. For that, it has to also ensure that the telecom sector remains competitive with three-four major players. Amidst all this, revival of state-owned BSNL makes immense sense.

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The New Indian Express
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