Both Airtel and Vodafone Idea have announced a 25 per cent increase in mobile prepaid tariffs over the last two days indicating that the party for Indian telecom consumers is over.

While mobile services were expensive in the initial days of wireless telecom services in the late 1990s, India’s mobile users enjoyed the cheapest tariffs in the world from 2002 onwards when Reliance Infocomm launched affordable services using CDMA technology.

Also read: Airtel prepaid plans to cost 20% more from Nov 26

Overnight, mobile tariffs dropped from ₹8 a minute to about ₹1. Subsequently, more operators entered the market and by 2008, mobile users were paying less than 50 paise for a minute call. The market was booming with operators adding 10-15 million new users every month making India a nation with 1 billion mobile connections. In a market where fixed-line telephone was hard to get, cheap mobile phone services came as a big boon to people.

But then two events changed the telecom landscape. First came the 2G spectrum scam which led to the cancellation of all telecom licences issued in 2008. There was massive value destruction as over 8 operators had to shut down their network, lay off employees, and write down billions of dollars in investments. The level of competition went down drastically from 8-9 operators in each circle to just 4. But the biggest fallout of the scam was that it forced the Government to start auctioning spectrum instead of allocating it on subscriber-based…

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