India’s hypercompetitive, low-cost communications industry has withstood many churns. Consumers have benefited from plunging tariffs, as companies raced to hoover up subscribers without fretting about bottomlines. The upshot: only three private players, Airtel, Vodafone-Idea and Reliance Jio, have survived from around a dozen three years ago, when Jio entered the market. Now, customers must brace for higher data tariffs. Consolidation was inevitable, technology will continue to change, but to keep competition alive, companies must remain profitable. This has become an endangered prospect. Average revenue per user dropped since Jio’s entry, steadily till the December 2018 quarter.

For Airtel and Vodafone-Idea, with many rural customers, voice services on 2G networks is a drag. These occupy prime real estate in 900 and 1800 megahertz (Mhz) frequencies, but are inefficient users of this spectrum. Ideally, these should be used for data including packet voice, but telecom companies will have to invest to convert rural 2G networks to 4G. Jio has no such legacy problems, for voice on its network is an application of data, but its network runs in 850, 1800 and 2300 Mhz ranges. The high-frequency band calls for high investment in gear to compensate for faster signal decay. Now, around 475 million people access the internet on mobiles, 20 times more than those using wired broadband. So, mobile data must be accessible to all, while making it worthwhile for companies to supply it.

For this happy outcome, an increase in data pricing is inevitable. All else, including paring costs to the bone, has been done, and crippling debt burdens telcos. If the price hike is neither too sudden nor too steep, Indians will be happy to pay a little extra to continue on the digital highway.