3G revolution or Data trap? – The truth behind Reliance 3G data at 2G rates

India’s largest dual technology telecom operator Reliance communications recently unveiled 3 very attractive 3G data packs for new and existing prepaid and postpaid subscribers in all 13 circles in which it holds 3G licenses. Reliance dubbed this offer as 3G data at 2G rates...

These new packs have become the talk of the town, as data enthusiasts from all over are rejoicing over Reliance’s philanthropy and being the only operator working in the favour of the subscribers. However all that glitters is not gold and there are always two sides to a coin, so from a telecom analyst’s point of view I dug a little deeper to find out the true intentions of Reliance behind this move.

The first 3G auctions in India were held in 2010 and it’s been 3 years since then and yet 3G has not received mass adoption, the reason for this being that Indian market is highly price sensitive, the only way to lure a customer to shift from 2G to 3G is to make 3G cheaper than 2G, which is exactly what Reliance did, increased the rate of 1GB 2G data to Rs.127 and decreased rate of 1GB 3G data to Rs.123. This move came at a time when the 3G handset market has reached full maturity and entry level 3G capable android phones are available for as low as Rs.6000 making it even easier for subscribers to upgrade.

Reliance is using these low tariffs as a bait to get 2G subscribers hooked on to its 3G network with the instantly loading web pages and the zero buffering in streaming videos. Once the subscriber has the taste of 3G it is virtually impossible to go back to 2G. At these high speeds the average data consumption per user will increase and they will eventually upgrade to higher denominations of 3G data packs, adding to the ARPU of Reliance.

Now let us focus on what changes Reliance has made behind the scenes with its existing 3G data packs, which has for obvious reasons not been publicized on their website or anywhere else, as reliance intended to make a silent change which no one would notice in the wake of their new 3G at 2G rates campaign.

Here is a list of FUP based unlimited 3G data packs that reliance was offering before this campaign.

And here is a list of the revised tariffs of the same plans being offered by reliance after the campaign

(Source- myservices.relianceada.com)
As we can see, 5GB unlimited pack has been hiked from Rs.800 to Rs.850, 10GB pack has been hiked from Rs.1099 to Rs.1399 and 15GB pack has been hiked from Rs.1300 to Rs.1750. This clearly shows that Reliance is trying to get new 3G subscribers onto its network with low tariffs and then later exploit them with hiking tariffs once they have fallen into the ‘Data Trap’.
Also check out the ‘long validity’ 3G packs of 90 and 180 days validity in the table below which have been withdrawn by reliance after their new campaign (source- myservices.relianceada.com and *333).

The Rs.3000 pack offered 30GB data for 6 months bringing the per GB rate to Rs.100, the reason for withdrawing these long term packs is to force the subscribers to take monthly packs which will again add to their ARPU generated from data.