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Vodafone Idea starts to lobby for minimum pricing

Vodafone Idea has written a letter to the Indian Government which suggests it is pushing for minimum pricing to ensure a healthy and sustainable telco industry.

As it stands, the competition conundrum in India heading towards a perilous conclusion. With Vodafone threatening to abandon its pursuit of digital riches in the country, a defacto market duopoly is increasingly becoming a realistic outcome. This would be far from a perfect position.

According to The Economic Times, Vodafone Idea has demanded the introduction of a minimum cost for data tariffs in the country. The proposed plan would see prices set at a minimum of 35 Indian Rupees (c.$0.48) which would be more than double the average cost per GB in the country as it stands. Vodafone Idea is also asking for free phone calls to be banned.

While Indian consumers might be disturbed by the prospect of a price hike, especially considering there was already one three months ago, it is perhaps a necessary step to ensure competition is preserved in the country.

The introduction of Reliance Jio in 2016 was seemingly an effort to stimulate progress in a lethargic telco industry, hence the Government assistance which was offered to the firm. But it arguably went too far, taking prices far below want would be deemed sustainable for the competition which have to deal with legacy networks, products and business processes.

Looking at the concept of competition, it is generally accepted that 3-4 telcos are required to ensure the consumer is protected through suitable competition. This unofficial rule has resulted in many acquisitions being denied in Europe, or at least there being major concessions being offered to create a replacement. The same scenario is currently being played out in the US with T-Mobile and Sprint merging, but with Dish emerging as a replace fourth player.

However, India as a country is a different case. With a population of 1.3 billion, many of whom will live in areas where the digital divide is incomprehensible to those in more developed digital markets, perhaps Indian authorities should be doing more to encourage more investment and competition. Three MNOs does not look to be a sustainable position right now, and the prospect of dropping to two would worry many.

Vodafone has threatened to pull out of its joint venture with Idea Cellular due to the $7 billion spectrum licence bill it is facing, though it does seem to be searching for ways to make the situation work. The proposal to introduce a minimum price for data could add more security for the firm which is desperately attempting to avoid bankrupting itself in search of the rainbow’s end.


9 comments

  1. Avatar Arvind 28/02/2020 @ 12:22 pm

    Good move by vodafone idea – our country definitely requires 3 players and vodafone idea requires support – to get things in control rather than letting it more worsen.

  2. Avatar Debabrata Banerjee 29/02/2020 @ 2:35 am

    No competition no healthy growth. Voda ,Airtel ,Jio needs more players for more competition.

  3. Avatar Ganesh Chandramouli 29/02/2020 @ 8:58 am

    I am an Idea user.The network is very bad and of late there have been a lot of “call drops”.
    Given the current situation of their network and milking the customer with no additional towers,are they justified for a largess?

  4. Avatar MAYUR 29/02/2020 @ 5:32 pm

    Why should a common man pay for their mistakes? Why didn’t they pay fees in 1990’s and another question is what did they do with the money which they earned by looting Indians with price tag of ₹250 per GB. Did they use that money in England for their luxurious life styles ? They should pay for their mistakes. Bring it from any country don’t care. It is our money and should be used for benifit of India. No rate hike and no call charges should be set.

  5. Avatar Goldy Nagpal 29/02/2020 @ 6:00 pm

    Vodafone idea Ltd is best company of the world he is provid very good services

  6. Avatar Sanjeev Goel 29/02/2020 @ 6:05 pm

    The Indian Govt has to play a crucial role at this juncture as exit of 3rd major Telco which is backed by their examplary values & bussiness ethics , in the country . if so happens , shall not be warranted considering the gaint population of 1.3 billions thus need for the robust network access and infrastructure in the country. Vodafone Idea move to stress the need for fixing minimum floor price for Data as well as calls should be taken in good perspective and should augur well for the sustenance of the telcos in the near future so as also as long term effects in the country. In any case ,if the duopoly of the telcos emerges in the country , customers will have to embrace higher tarrifs as a aftermath besides marred by a possible inadequate Network services . Govt should come out for the rescue of the prominent Telco Vodafone Idea in all the probability taking long term view.

  7. Avatar Aneesh 01/03/2020 @ 7:59 am

    Ok but i change my network

  8. Avatar Rajesh 01/03/2020 @ 11:10 am

    Finaly the bloody gujju bastered cheater ambani is inching towards monopoly and game begins now for indians to be ready to pay high tariff to reliance let him enjoy and stand empire on our money.This is a pure game by Govt also.

  9. Avatar Prafulla Haribhau Borude 02/03/2020 @ 10:47 am

    Idea network is very bad. Vodafone idea should be closed.

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