A step change in competition (entry of a powerful new competitor) typically leads to some typical responses by incumbents: prices drop and retail packaging changes. The reason is that a new attacker will tend to try and take market share by offering lower retail prices.
That clearly is the case in the Indian mobile market, as mobile operator Idea Cellular has effectively slashed the rates of its 4G, 3G mobile Internet packages by as much as 67 percent.
Bharti Airtel also announced effective price cuts of as much as 67 percent cut for mobile data products for its prepaid subscribers (most consumers are on prepaid accounts).
As often is the preferred method of introducing the lower prices, Idea Cellular has kept prices intact, but increased data allowances.
Idea Cellular targets heavy internet users who consume data packs of 2GB to 10 GB.
The amount of change in India mobile data prices is abrupt, but is not unusual in any formerly-controlled or monopoly market. Virtually always, prices in monopoly markets are high, and start to fall with the advent of competition.
The trend of near zero pricing has been seen not only in the access services business but in others as well, such as the retail payments business.
Cellular Operators Association of India Head Rajan Mathews will discuss developments in India’s mobile business at Spectrum Futures, Oct. 20, 2016.
