The price of mobile data in India is plummeting.
Some of India’s leading telecom operators—Bharti Airtel, Vodafone India, and Idea Cellular—recently slashed their mobile data rates by as much as 90%. Under the new schemes, customers can access the internet over 2G connections for as low as 1 paisa (less than 1 US cent) per 10 kilobytes. What’s driving the dramatic price war?
1. A massive market for smartphones
India is already the world’s third largest smartphone market, after China and the US. The number of Indians with smartphones grew 163% in the first quarter of 2013 from the same period a year ago, but there’s plenty more room for growth. Only 9% of the country’s 900 million mobile phone users have switched to smartphones.
2. Mobile data isn’t yet heavily used
Voice calls still generate the bulk of carrier revenues. Indian operators like Bharti get just 5% or so of their total revenue from data services, compared with 32% at China Mobile. The share of data in overall revenue for India carriers is expected to soar to 20% by 2017, according to Fitch Ratings.