Unlimited 5G plans are proving to be yet another dilutive strategy for Indian telecom operators’ ARPUs.
A top industry executive told businessline that low-paying data-guzzling users are purposefully opting into unlimited 5G plans to avoid paying for data booster plans. Data booster plans are a significant source of revenue for the operators.
Since Reliane Jio’s entry into the telecommunications market, the Indian telecom industry has been following a race to-the-bottom pricing strategy. The same can be said about the new 5G services. In a bid to capture market share, Indian telcos Reliance Jio and Bharti Airtel started to offer unlimited data on all 5G tariff plans above a certain prepaid and postpaid price point. This pricing strategy has been adopted even though these telecom operators will not be offering 5G services on a higher and differentiated tariff anytime soon – especially as no 5G specific use cases have enticed customers to pay a differential for 5G so far.
Reliance Jio was the first to move to this pricing strategy after it launched 5G services in October. Airtel subsequently followed to not lose market share to Reliance. At the moment, all of the 5G tariff plans in India offer unlimited data. So, according to sources, users in certain markets are opting into a 5G tariff plan not for the high speeds offered on 5G, but rather attracted by unlimited data on these plans.
“Even though telcos offer vast amounts of data on 4G plans, a huge section of customers still go past the limit, because of the sheer amount of video content consumed in the India market,” the source said. In this case, data booster packs offered by telcos were a significant source of revenue for these telcos. However, users are now opting for unlimited 5G data plans instead.
There is no visibility on when telcos take a price hike on 5G plans. For Jio and Airtel, most of the capex for 5G is complete even though experts note that 5G network is not ubiquitous and seamless to be a reliable network for users to opt into.
What is holding back monetisation as well as enthusiasm for 5G with customers is the lack of use cases. This issue is unlikely to resolve anytime soon.
Published on December 4, 2023
