[op-ed snap] Game of tones

Context: Ongoing consolidation in India’s overcrowded telecommunications industry


  1. The current wave of mergers and acquisitions, started in November 2015 with Reliance Communications’ agreement to acquire Sistema’s Indian wireless business
  2. It has gained considerable momentum over the last 15 months with several more announcements
  3. Confirmation of ongoing merger negotiations have been made

Reliance Jio:

  1. Commercial start of services from the latest entrant, Reliance Jio, has been coterminous with the latest round of consolidation
  2. Some of its competitors have referred to as Jio’s “predatory” approach to pricing
  3. The effect is that the industry has found itself buffeted on the one hand by a sharp decline in earnings
  4. On the other hand, there is high cost of servicing the debt that had helped incumbent operators to bid for and acquire the much-needed wireless spectrum at the government’s auction of airwaves
  5. It is this financial bind that the industry finds itself in that Sunil Mittal, Bharti Airtel founder and chairman, alluded to at the Mobile World Congress in Barcelona
  6. He said that the return on capital deployed had dipped to low single-digit levels, making investment in the business unviable
  7. Investors would be better off putting their money in a bank and playing golf

Shrinking of telecom market:

  1. In 2011, as many as 12 private players jostled cheek by jowl with the two state-run telephone operators, BSNL and MTNL, as they vied for a share of the country’s 893.8 million wireless subscribers
  2. And while the market had expanded to almost 1.13 billion subscribers as of December 2016, the number of non-state mobile services providers had shrunk to 10, inclusive of Reliance Jio
  3. Seven of the nine are either in the process of being acquired or merged, or in talks to negotiate a deal
  4. The industry is now finally poised to coalesce into four large private sector entities, a welcome development both from the industry and government perspective

Expecting good health:

  1. Size alone may not guarantee the enlarged companies’ good health
  2. Especially given the ongoing fierce battle for market share
  3. That the seriousness of the situation has not been lost on the Telecom Commission is best underscored by the fact that it has asked the Telecom Regulatory Authority of India to ensure orderly growth in the sector
  4. A bruising and protracted price war, while certainly good for the consumers, is bound to extract a heavy price on the service providers’ financials, notwithstanding the deep pockets that the merged entities may command
  5. This in turn risks further eroding the revenue the Centre earns from licence fees and spectrum usage charges, a fact cited by the Telecom Commission in its latest missive to TRAI


UPSC may or may not question on the telecom sector of the country, but the information in this op-ed is important for an IAS aspirant.

SC clears plan to verify mobile phone users through Aadhaar

The Supreme Court approved the government‘s plan to record the identification details of mobile subscribers through an e-KYC mechanism linked to Aadhaar in a bid to enhance national security and prevent fake users


The details of this news and the basics about TRAI, TDSAT have been covered here.

‘Predatory pricing’ of new entrants like Reliance Jio is hurting telcos: Airtel

  1. What? Bharti Airtel Ltd. said “predatory pricing” by a new entrant in India’s mobile-phone services market is hurting the industry
  2. Bharti Airtel, the country’s largest carrier posted a 55% drop in profit
  3. The interconnection charges which carriers pay each other are “well below cost
  4. This has led to an unprecedented year-on-year revenue decline for the industry, pressure on margins and a serious impact on the financial health of the sector

Note4students: Know about ‘predatory pricing’ in b2b.


Predatory pricing:

  1. It is the act of setting prices low
  2. Purpose: To eliminate the competition
  3. It is illegal under anti-trust laws, as it makes markets more vulnerable to a monopoly
  4. Companies may engage in a variety of activities that intend to drive out competitors, such as create barriers to entry for new competitors or unethical production methods to minimize costs
  5. A sign of predatory pricing can occur when the price of a product gradually becomes lower, which can happen during a price war
  6. This is difficult to prove because it can be seen as a price competition and not a deliberate act
  7. Short term: A price war can be beneficial for consumers because of the lower prices
  8. Long term: Not beneficial as the company that wins a price war, effectively putting its competitor out of business, will have a monopoly where it can set whatever price it wants

Use Aadhaar e-KYC to verify mobile users: TRAI

  1. What? The Telecom Regulatory Authority of India (TRAI) has recommended the use of Aadhaar-based e-KYC for verification of existing mobile subscribers
  2. Why? Aadhaar linked e-KYC service provides a robust mechanism to verify the identity of a person electronically and instantaneously from the source itself, based on the biometrics of a person
  3. Thus, it takes care of the issues relating to fake or forged identity proof and manual entry into the system etc
  4. The use of Aadhaar-based e-KYC should also be permitted for outstation customers
  5. However, this process should be optional to the service providers as well as mobile subscribers
  6. As e-KYC verification could not be made mandatory, a scheme could be formulated to encourage the existing subscribers to undergo the e-KYC process
  7. Present issues: The existing paper-based KYC is not robust enough and the possibility of significant number of working SIMs, which may have been acquired on fake/forged identity, cannot be fully ruled out
  8. The owner of such fake identity would not even be aware that SIMs are working in his/her name
  9. Security challenge: TRAI had received several cases from state police departments where it had been found that hundreds of SIM cards have been obtained using fake documents
  10. The existence of such SIM cards poses a real security challenge


Just know about it. It can form one of the solutions for answers in security issues. Also know about TRAI from prelims perspective. See b2b for this.


Telecom Regulatory Authority of India:

  1. The entry of private service providers brought with it the inevitable need for independent regulation
  2. The Telecom Regulatory Authority of India (TRAI) was, thus, established with effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997
  3. Aim: To regulate telecom services, including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government
  4. Mission: To create and nurture conditions for growth of telecommunications in the country in a manner and at a pace which will enable India to play a leading role in emerging global information society
  5. Objective: To provide a fair and transparent policy environment which promotes a level playing field and facilitates fair competition
  6. In pursuance of above objective TRAI has issued from time to time a large number of regulations, orders and directives to deal with issues coming before it and provided the required direction to the evolution of Indian telecom market from a Government owned monopoly to a multi operator multi service open competitive market
  7. Disputes: The TRAI Act was amended by an ordinance, effective from 24 January 2000, establishing a Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT)
  8. Why? To take over the adjudicatory and disputes functions from TRAI
  9. TDSAT was set up to adjudicate any dispute between a licensor and a licensee, between two or more service providers, between a service provider and a group of consumers, and to hear and dispose of appeals against any direction, decision or order of TRAI

TRAI wants Jio rivals to pay Rs. 3,050 crore fine

  1. The Telecom Regulatory Authority of India recommended a hefty penalty of Rs. 3,050 crore on top three telcos – Airtel, Vodafone and Idea
  2. The fine is for violating their license agreement and denial of interconnection to new player Reliance Jio
  3. TRAI stated that these violations are against public interest

TRAI seeks views on use of public Wi-Fi networks

  1. News: The Telecom Regulatory Authority of India (TRAI) issued a consultation paper, seeking views on the use of public Wi-Fi networks for expansion of broadband in the country
  2. Aim: Likely to result in faster Internet speeds, while reducing data costs by up to 90% for consumers
  3. TRAI pointed out that the state of Wi-Fi hotspots was not encouraging in India, significantly lower compared to countries like France, US, and UK

TRAI dedicated to quality service delivery

  1. TRAI is looking at various options to ensure that telecom operators work to improve service quality, including reviewing call drop parameter which is set at 2%
  2. It rolled out a dedicated website for publishing result of test drive that it conducts
  3. To make it easier for consumers to file a compliant against telemarketers, TRAI also unveiled ‘DND Services’ mobile application
  4. TRAI has developed a mobile App for easy registration of Unsolicited Commercial Complaints (UCC) to the service providers
  5. Currently, consumers can log complain about messages and calls from telemarketers through toll free number 1909

TRAI seeks more power

  1. The Telecom Regulatory Authority of India (TRAI) has approached the government seeking powers to impose penalty in order to ensure quality of service from telecom operators
  2. Background: This follows the Supreme Court quashing the TRAI’s regulation to impose penalty on operators for call drops, calling it ‘arbitrary’

SC quashes TRAI’s call drop rules

  1. Context: SC has given order to remove TRAI’s call drop regulation
  2. SC: Regulation is arbitrary, intention is to penalize service provider rather than ensure quality service
  3. Assumption apparent in Telecom Consumers Protection (Ninth Amendment) Regulations, 2015 is incorrect
  4. Assumption: Every call drop is deficiency of service provided by service provider
  5. SC asked parliament to frame law on the lines of U.S. Administrative Procedure Act

Cabinet nod for liberalisation of spectrum at TRAI prices

  1. What: TRAI recoomended prices will be taken as provisional prices wherever administratively (not auctioned) allocated spectrum is available
  2. Balance: after actual auction, the balance will be taken
  3. Why: because market determined price is not available at that moment
  4. Benefits: it would yield the exchequer Rs.1,300 crore and would also lead to better utilisation of spectrum

Adopt open source for connectivity: TRAI

Any technology that is deployed for connectivity must be interoperable, says TRAI chief

  1. The telecom regulator hinted that technology-driven connectivity ventures such as Google and Facebook would be acceptable, only if they followed an open source framework
  2. Facebook is working on a venture that deploys drones in remote and rural areas to provide Internet connectivity
  3. Google’s Project Loon envisages the use of helium-filled balloons to provide data connectivity in remote regions
  4. Each balloon can provide connectivity to a ground area about 40 km in diameter using a wireless communications technology called 4G
  5. The two are trying these approaches as alternative models to reach data connectivity aerially to users

TRAI rules in favour of Net neutrality

TRAI may review these regulations after a period of 2 years.

  1. No service provider can offer or charge discriminatory tariffs for data services on the basis of content
  2. This effectively prohibiting Facebook’s Free Basics and Airtel Zero platform by Airtel in their current form
  3. Reduced tariff for accessing or providing emergency services, or at times of public emergency has been permitted
  4. Financial disincentives for contravention of the regulation have also been specified

TRAI for PPP model for Bharat Net Project

The regulator says Central and State govts. can be anchor clients of the project.

  1. Bharat Net seeks to connect all of India’s households, particularly in rural areas, through broadband by 2017, forming the backbone of the government’s ambitious Digital India programme.
  2. At present, a special purpose vehicle, Bharat Broadband Network Ltd (BBNL), under the telecom ministry is handling the roll out of optical fibre network.
  3. A PPP model that aligns private incentives with long-term service delivery in the vein of the Build-Own-Operate Transfer/Build-Operate-Transfer models of implementation.
  4. The regulator has also suggested that contract period should be of 25 years, which can be further extended.
  5. The funding should be done to bridge the loss incurred due to higher operational expenses and lower commercial accruals.

The trouble with spectrum pricing

The regulator’s recommendation holds risks for an industry that serves a crucial socio-economic objective.

  1. TRAI recommended very high reserve price for auction of spectrum in 700 MHZ band.
  2. This band has high performance efficiency and utility in improving and expanding high-speed wireless broadband services across rural areas.
  3. But high pricing of a public asset may end up having the exact opposite effect:.
  4. It could make a scarce resource so expensive that its meaningful utilisation is compromised, thus unable to serve the larger public good.
  5. Very high per unit price realisation, while possibly helping meet immediate fiscal needs, would only bleed the industry of resources.
  6. High price of spectrum would also affect private investment in network expansion and infrastructure.
  7. The financial viability of the industry is crucial both for private investment and for the government to earn recurring revenues.

Trai wants auction of all available spectrum

The move is likely to put additional burden on telecom firms already stretched after spending on 4G and the 2015 spectrum auction.

  1. India’s telecom regulator has suggested the government auction Rs.6 trillion worth of airwaves, more than five times the value of spectrum sold in the previous auction.
  2. A move that may, if accepted, increase the burden on the already overstretched finances of the telecom operators.
  3. The Trai has recommended auctioning of all the available spectrum, including airwaves in the 700-megahertz (MHz) band.
  4. The Trai recommendations are part of a pricing exercise that the regulator conducts prior to every auction.
  5. To determine the minimum price at which the airwaves should be sold.

DoT to seek regulator’s views on spectrum reforms

  1. The Department of Telecom will seek TRAI’s views on the liberalisation of 800 MHz spectrum in circles where a market determined price is not available.
  2. The govt. has already issued guidelines to liberalise the administratively allotted 2G spectrum.
  3. This allowed operators to offer latest mobile services, including 4G, using the same radio waves.
  4. The govt. will levy latest auction determined price on the spectrum to be liberalised.

Call drops: TRAI plans to impose fines

TRAI’s service quality parameters includes call drop, availability of mobile towers, time taken for a call to connect, network congestion, voice quality and network related issues.

  1. TRAI raised the penalty on telecom operators to up to Rs. 2 lakh for poor mobile service quality.
  2. The penalty would apply if the operators are unable to meet the benchmark set for the quality of service in 2 or more subsequent quarters.
  3. The penalty will kick-in if call drops in a quarter average more than 2% of the total traffic in a telecom circle.
  4. Consumer-related issues include complaint redressal, refund of wrongly charged money, access to call centre. etc.

Cabinet nods for spectrum trading guidelines

  1. It will allow telecom companies to buy and sell spectrum.
  2. This is expected to help address the problem of shortage of spectrum, leading to better quality of services for mobile phone users.
  3. Government allowing companies to share airwaves in the same band so as to reduce call drops.
  4. Presently, spectrum can be acquired by companies only through government auctions.
  5. It gives ‘right of use’ to operators through auction. That right of use can be traded between two service providers.


Call drops: TRAI gives 15 days to operators

  1. Recent TRAI audit suggest that almost all operators have failed to comply with quality of service parameters.
  2. TRAI has asked operators to take immediate measures to address the issue.
  3. Their performance would be reviewed in 15 days to measure progress achieved.

:( We are working on most probable questions. Do check back this section.

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