Why government has no plans to intervene in mobile tariff hike announced by Reliance Jio, Airtel and Vodafone-Idea

The government reportedly has no intention to intervene in the recent mobile tariff hikes announced by Airtel, Reliance Jio and Vodafone-Idea. And it is no different with the country's telecom regulator TRAI (Telecom Regulatory Authority of India). Government officials told Economic Times (ET) that the government and TRAI do not plan to intervene in the recent decision of telecom companies to increase mobile plans tariff.The officials reportedly said that the telecom tariffs in India are still among the cheapest in the world.
"There is enough competition in the telecom sector and the situation is not critical that requires intervention of the authorities. Consumers may feel some pinch of the price rise, but the hike has happened after three years," one of the officials told ET, asking not to be named.
India's three private telecom service providers announced an increase in mobile tariffs last week. The new prices that are up by 11-25% come into effect this week (July 3 for Airtel and Reliance Jio users and Jul 4 for Vodafone-Idea users). "The analysis shows that the 13% (average) increase in tariff is moderate, and unlikely to have much of an impact on household expenditure. It also shows that even Jio's higher increase in tariffs and 5G monetisation are likely to be well absorbed by consumers," Axis Capital reportedly said in a note.
The telecom companies have increased the rates in a bid to raise their average revenue per user (ARPU). Tariff hikes by the top three telcos will help increase the ARPU by 15 per cent, and expand the operating profit by over 20 per cent in FY25, a domestic rating agency Care Ratings said in a report.
It termed the same as a "structural positive" for the telecom sector struggling on the Return on Capital Employed (ROCE) front because of the huge investments in 5G rollout, including spectrum purchases, it said.
TRAI to telecom companies: Improve the quality of services
The telecom sector regulator reportedly now expects the telecom companies to improve their quality of services for subscribers. "There is a policy of forbearance in telecom tariffs and telcos are free to fix the tariffs. But they have to provide a good quality of service to consumers," a senior TRAI official (Trai) told ET.
Recently, Trai strengthened rules around reporting of base tower stations, in a bid to fix accountability. Telecom operators are now required to provide granular details like site location, radiating frequency, backhaul connectivity, technology utilised like 2G, 3G, 4G, 5G and time of commissioning of a site. The companies were against the regulator's move to seek such granular data.