The inordinate delay in Reliance Jio Infocomm Ltd’s commercial launch is giving incumbents time in preparing for the coming onslaught. They first incentivized data consumption by cutting rates only for non-peak hours with so-called night plans. This week, Bharti Airtel Ltd and Idea Cellular Ltd increased data benefits on some of their pre-paid data recharge packs. Vodafone India Ltd hasn’t bothered to respond yet.

These aren’t signs of an industry desperately adjusting to the reality of a new large entrant; instead, the moves by incumbents suggest a carefully calibrated strategy that is aimed at ultimately blunting the price advantage of Reliance Jio. Consider the latest changes in pricing. Most headlines screamed “Bharti, Idea cut data tariffs by 67%"; but this is far from the truth. To start with, these companies haven’t cut tariffs by 67%; they have increased data benefits by 67%. And that too, only in some packs.

It’s important to note that the majority of data subscribers use plans ranging from 500MB to 1.5GB, with the flagship plan being the 1GB plan. The latest changes in tariffs haven’t touched this plan at all. In other words, incumbents aren’t yet ready to sacrifice revenues and margins with their flagship plans. Idea Cellular has inched towards making its data services more affordable in this segment—its 2GB plan now comes at the cost of the earlier 1.5GB plan. But clearly, there’s no hurry to cut prices meaningfully in the most popular plans and drive volume growth.

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This column has pointed out earlier that growth in data volumes has dropped sharply in recent quarters. For the top three telcos, incremental data volumes fell to 14,680 terabytes in the March quarter, compared with an average of 31,230 terabytes in the preceding four quarters. In this backdrop, it’s imperative that incumbents cut tariffs meaningfully to attract new customers and drive consumption.

But it now looks like these significant changes in pricing will happen only after Reliance Jio launches. Evidently, incumbents don’t want to play all their cards upfront.

For now, they are teasing subscribers to increase data consumption by reducing the price of larger packs (exceeding 2GB). Considering that these companies are running under-utilised networks, these incentives don’t entail additional costs. As such, revenues and margins are pretty much protected.

But what this effective reduction in prices for larger packs does is that it further blunts the price advantage that Reliance Jio can offer when it eventually launches operations. Of course, there’s no limit to how low Reliance Jio can go with prices to win market share. Even so, with the every successive calibration in data tariffs, incumbents have managed to reduce the extent to which Reliance Jio can disrupt the market.

The writer does not own shares in the above-mentioned companies.

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