'Data revenue is skewed largely in favour of 2G today'

Anupkumar Gangadharan, analyst, Telecoms Research, Ovum

BANGALORE, INDIA: Data revenue/market scenario in India is skewed in favour of 2G. Some of the reasons for the slow uptake of 3G, other than the price factor, could be low consumer awareness, lack of sufficient spectrum, inadequate network coverage and lack of a comprehensive 3G ecosystem.

With 3G subscribers accounting for less than five per cent of the total mobile subscriber base in India, we believe 2G data revenue still forms the majority of mobile data revenues in India for all telcos. Given the slow uptake in 3G services despite huge price cuts in recent past, we do not expect a significant change in operators' 2G-3G data revenue mix in the short term. However, we need to bear in mind that the total data revenue for operators are also not significant and is still account for 16-17 per cent of the total mobile revenues.

Recently we have seen that Airtel increased its 2G data tariffs by nearly 25 per cent (for 1GB plan). Players like Vodafone and Idea may follow suit. One obvious advantage we see from this price hike is ease in margin pressure.

This move will also help the operator to narrow down gap between 2G and 3G data tariffs, which will in turn encourage greater 3G uptake, especially in wake of the fact that speed-wise browsing charges with 3G is already lower than that with 2G.

We believe more of such increase in tariffs could follow based on the degree of success achieved this time round.