Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

Can India avoid a telecom duopoly?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Threat of duopoly in telecom sector

The Indian telecom sector faces the prospect of duopoly due to the impending exit of Vodafone-Idea. This has several implications.

India’s telecom sector: From monopoly to hyper-competition

  • India’s telecom market has seen monopoly as well as hyper-competition.
  • Twenty-five years ago, the government alone could provide services.
  • Ten years later, there were nearly a dozen competing operators. Most service areas now have four players.
  • However, the possible exit of the financially-stressed Vodafone Idea would leave only two dominant players-Airtel and Jio in the telecom sector.
  • A looming duopoly, or the exit of a global telecommunications major, are both worrying.
  • They deserve a careful and creative response.

Why it matters

  • Competition has delivered relatively low prices, advanced technologies, and an acceptable quality of services.
  • There is a long way to go in expanding access as well as network capacity.
  • For example, India is ranked second globally—after China—in the number of people connected to the internet.
  • However, it is also first in the number of people unconnected.
  • Over 50% of Indians are not connected to the internet, despite giant strides in network reach and capacity. India tops aggregate mobile data usage.
  • However, its per capita or device data usage is low.
  • It has an impressive 4G mobile network, however, its fixed network—wireline or optical fibre—is sparse and often poor.
  • 5G deployment has yet to start and will be expensive.
  • Filling the gaps in infrastructure and access will require large investments and competition.
  • The exit of the Vodafone-Idea will hurt both objectives.
  • The closure of Vodafone Idea is an arguably greater concern than the fading role of BSNL and MTNL.
  • The government companies are yet to deploy 4G and have become progressively less competitive.
  • Vodafone Idea, on the other hand, still accounts for about a quarter of subscriptions and revenues and can boast of a quality network.

Way out

1) Strategic partnership with BSNL-MTNL

  • A possible way out could be to combine the resources of the MTNL and BSNL and Vodafone Idea through a strategic partnership.
  • Creative government action can save Vodafone Idea as well as improve the competitiveness of BSNL and MTNL.
  • It could help secure government dues, investments, and jobs.

2) Develop resale market

  • Global experience suggests that well-entrenched incumbents have massive advantages.
  • New players are daunted by the large investments.
  • However, regulators and policymakers have other options to expand choice for telecom consumers.
  • Their counterparts in mature regulatory regimes—e.g., in the European Union—have helped develop extensive markets for resale. 
  • Recognising the limited influence of smaller players, regulators mandate that the incumbent offer wholesale prices to resellers who then expand choice for end-users.
  • A key barrier to resale is India’s licence fee regime which requires licence-holders to share a proportion of their revenues with the government.

Conclusion

It would be tragic if India’s telecom-access market was to be reduced to only two competing operators, as we have a long way to go. The government needs to consider the implications of the situation arising due to the exit of one of the major players in the sector.


Source:

https://www.financialexpress.com/opinion/failing-to-connect-can-india-avoid-a-telecom-duopoly/2281486/

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