Mittal was at the launch event of a book written by Bharti Enterprises executive Akhil Gupta when he made these remarks calling 16 GB data consumption per month while paying Rs 160 a tragedy for the industry.
"You either consume 1.6 GB of capacity per month either at this price point or you may prepare to pay a lot more. We are not wanting USD 50-60 like the US or Europe but certainly USD 2 for 16 GB a month is not sustainable," Mittal stated at the event.
He also revealed that the average revenue per user (ARPU) is expected to go over Rs 200 in six months when it comes to digital content consumption but the company needs it to be Rs 300. ARPU is the revenue generated per user.
"We need a Rs 300 ARPU in which you will still have a lower end at Rs 100 a month with a decent amount of data. But if your consumption is largely around watching TV, movies, entertainment and depriving other vital special services networks, then you need to pay for that," he added.
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Airtel had recorded an increase in its ARPU to Rs 157 in the first quarter which ended on June 30, 2020. The increase was result of the tariff hike by Bharti Airtel in December 2019.
Mittal also talked about more investment in technology by saying that while telecom operators have served the country during these testing times, the industry needs to invest in better infrastructure with respect to 5G, more optical fibres, submarine cables etc.
"Businesses which are not in telecom, also need to adopt digital. You should see solid ARPUs building up in the next 5-6 months for the industry to be sustainable. We are down to 2-3 players now. India is a very price conscious market. In six months time we should be crossing the mark of ₹200 for sure and ₹250 would be ideal," he said.
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Is The Period Of Cheap Data Over?
As disheartening as it may be, these statements do suggest a return to the old when users would be conscious to spend 1 or 2 GB data per month as opposed to receiving 1 GB data per day. Already increasing tarrifs especially with postpaid plans that additionally carry taxes leading to an additional spend of Rs 70 to 80 per month seemed steep enough. The free subcriptions bundled with data packages are also being gradually discontinued hurting the consumers further and with the changes being talked about one may have to be prepared to brace the pre-Jio period.
As already well known, Jio with its free one year subscription and then relatively affordable data rates pushed its competitors to lower their price points, provide lucrative offers and even led to some teleco merging in an attempt to survive the new aggressive market conditions.
However even then as surreal as it seemed there were alarms raised over how long will it last. How many companies can truly afford to keep their consumer base happy with low prices while being pressured to repay their mounting dues? Will it create a monoply or duoply, in which case there are again possibilities of rates being increased due to lack of real competition.
The core issue in all this is how will our data hungry masses who are so hooked to a certain level of content consumption for a few years now, go back to being extremely thrifty about their internet consumption. Also, how will it affect video streaming platforms who have been prime beneficiaries of the new low cost data era? Look like the coming days will answer these multiple concerns.
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