Are citizens benefitting from the Indian telecom stress?

Sunil Mittal, chairman of Bharti Airtel, has recently thrown attention to India’s telecom market, which is suffering through a great problem.
The Indian telecom industry is as such now that if proper actions are not taken, maybe only Airtel and Jio will survive as competing operators. This comes after rumours of the possible exit of Vodafone Ideas due to financial stress have made rounds.

Further, BSNL and MTNL, the government-owned operators are also becoming irrelevant in today’s time. If the situation is not taken into control only Reliance Jio and Airtel will be there in the market creating a duopoly and therefore, there is an urgent need to look into the telecom industry.

India’s telecom industry has been a victim of hyper-competition and monopoly

The telecom industry of India has seen the ups and downs of both monopoly and hyper-competition. For instance, twenty years ago, BSNL and MTNL, the government-owned operators, were highly in demand but now they have become irrelevant to a large extent. Further, ten years ago, there were many competing operators and now the telecom industry only revolves around four players.

The Indian telecom stress that has resulted from the low competition can have a negative impact on the citizens. Healthy competition ensures low prices of the services, improved technology and services. With low competition, monopoly will arise and this will put these profits at risk for the citizens.

The number game in analyzing network capacity

India has a long way to go when it comes to expanding its network capacity. Globally, India ranks second for the number of people who are connected to the internet and it is placed only after China. However, this number does not give the true picture of the network capacity of the country. For instance, despite being in second place, more than half of the population of India do not have internet connectivity. Similarly, even though India boasts of high data usage, the per capita or device data usage is low in reality. The high-speed 4G mobile network that allows smooth chatting on platforms like Chatiw is impressive, but the fixed network is still extremely poor. Pandemic in India sadly brought these drawbacks to the surface and thankfully, the Ministers of Communications are in action to improve the situation. During the pandemic, everyone from professionals to kids studying in schools were dependent on internet connectivity for carrying out their daily lives.

The exit of Vodafone Idea will be painful

Vodafone Idea was hit the hardest after the Supreme Court’s judgment on the AGR issue back in 2019. Currently, Vodafone Idea has a liability of whooping INR 21,533 crore. The interest and penalty have exceeded the actual disputed principal amount, bringing Vodafone Idea into tremendous stress. The exit of Vodafone India will be painful as it has been applauded for being the fastest network service provider consecutively for three years by Ookla, which measures the Internet metrics. The high-speed internet provided by Vodafone Idea allows the users to browse websites like Chatib for engaging in real-time conversation without any latency.

What’s the possible situation?

A way to prevent monopoly in the telecom industry might include a combination of MTNL, Vodafone Idea and BSNL. If the telecom providers join hands for a strategic partnership, the telecom space might support healthy competition again. Further, the government can help Vodafone Idea through some creative actions. For instance, in Australia, 30 years back, the government only allowed the first private operator’s entry after it agreed to take over the government satellite company that was making losses.

Can a new player enter the telecom industry?

Since there are no regulatory barriers in the telecom industry, anyone can enter the telecom market of India. However, establishing itself as a major telecom player would be tough as there are plenty of commercial factors that need to be considered. For instance, a new player will need to make large investments, set up networks, and fetch the existing customers and, finally, have to grow by signing up new consumers. Ultimately, the fate of the telecom industry along with the citizens lies in the hands of the government and regulators who have plenty of situations to take control of the crisis. However, the question is will they take the necessary actions for the same?