After years of distinction, and step-child treatment, 2G is finally at par with 3G. Operators have realised that as long as 2G data rates remain low, the smart Indian user will never opt for high-speed Internet through 3G.

The result is that rates for both are now being brought at par, providing users the incentive to latch on to 3G networks for which operators have paid crores of rupees.

Idea Cellular, Vodafone India and Reliance Communications have been slashing data rates since June this year. Idea is offering 3G data tariffs now at par with 2G across all circles at 2paise/10KB. Vodafone has also cut 3G data rates for pay-as-you-go (prepaid) users to 2 paise/10KB, bringing it at par with 2G rates. Pay-as-you-go model is used by consumers who do not opt for a fixed monthly plan. These consumers comprise the majority of the user base of operators and are expected to trigger data boom in India.

For post-paid users, however, the 3G rates are even lesser at 300 MB for a Rs 100 plan. That works out to about 2 paise/60 KB, after which the 2 paise/10KB charges apply.

“Operators have created a huge capacity in 3G networks. The speeds are high and we want customer experience to improve. With that, downloads will go up and data traffic will increase, resulting in a win-win for both,” says Ambrish Jain, Deputy Managing Director at Idea Cellular.

Low prices

“The idea is to drive mobile Internet and this move will facilitate faster adoption and better usage. There is some degree of convergence (in data rates of 2G and 3G) that we are seeing. We are essentially working at different sets of users to facilitate greater amount of (data) consumption,” Vivek Mathur, Chief Commercial Officer at Vodafone India, said.

So far, there are only around 25 million 3G consumers in India, just about three per cent of total mobile base. The idea behind rate cuts is to get users hooked on to networks, let them experience high speeds and turn into heavy users. “The increases in volumes will more than make up for reduction in prices,” said Jain.

For operators, it is almost a necessity to dissolve the distinction between 2G and 3G. One, it will incentivise users to try out 3G services. And once they get hooked on to it, usage will increase and so will revenues. However, a more important reason is the need to free up the congested 2G spectrum for voice calls while moving data users to 3G.

Network Necessities

With limited bandwidth and clogged networks, operators are struggling to service 2G customers for voice calls. “For them, the best option is to shift existing subscribers, who use data, from 2G to 3G. And they are incentivising this through reducing the rates for 3G. This way, they will be able to enhance utilisation of both voice and data,” said Sivarama Krishnan, ED, risk advisory services, PricewaterhouseCoopers.

While 3G services were launched almost three years ago, it took a while for operators to realise that there can’t be a distinction between 2G and 3G data rates in the long run. “It is a question of preparedness. The networks in semi urban and rural areas also had to be readied to take on the increase in data traffic,” said Jain.

To ensure good experience, every site has to be connected to fibre. Otherwise downloads will not happen at fast speeds. “Now, the entire network is ready and distribution is in place. So we could go ahead with this,” Jain added.

As things stand now, operators are overjoyed at the possibility of increase in data usage with rate cuts. For consumers, this is definitely the best time to surf the Net on-the-move.

>rashmi.p@thehindu.co.in

(This is second in a three-part series on the changing telecom landscape in India)

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