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Over the past two decades, the Telecom sector in India has emerged as a highly competitive and lucrative sector. In the initial phase of the sector’s growth, telecom operators were seen competing for increasing their teledensities. However, with the advent of next-gen telecom platforms such as 3G and 4G, the dimensions of competition amongst the telecom players have taken a different turn.
The strategy now seems to be that of offering innovative applications such as music/movie downloads, video chats etc. which can be bundled on to the networks and delivered to the subscribers on their hi-tech mobile handsets.
Given this fast progressing scenario, for a successful run in the telecom industry, obtaining spectrum licenses were identified to be the key. It is with this background that the competition concerns in the telecom sector will be analyzed.
Competition Concerns
The telecom sector, although highly competitive, is not one which is free from competition concerns – there are advantages for some dominant players and disadvantages to the smaller players. Before looking into the competition issues, it is important to note that the aim of Competition Law is not to discourage dominance. It is only when dominance is abused that the law hammer down such dominance. Thus, while fair competition is protected and encouraged, unfair competition will be punished. This being the case, let’s see the moves made by the major players of India – In this regard, it is important to note who were the successful bidders in the 2010 spectrum auction:
3G – Airtel, Aircel, Idea, Reliance Communications, S Tel, Tata Teleservices, Vodafone India.
Broadband Wireless/BWA – RIL, Qualcomm, Airtel, Aircel, Tikona Digital, and Augere.
Out of the total sixteen Unified Access Service (UAS) Licensees, each operating in few circles / states1- Vodafone Essar, Bharti Airtel, Aircel & Reliance Communications have operations in most parts of the country.
Our Analysis
In these circumstances, the prospects for Competitive pressures across various services are clearly enhanced. RJI with a pan-India license could emerge as the market leader and game changer in the 4G services it offers. The 3G players are operating in circles across the country with a tightrope walk. Every circle/state has 4-5 operators. In this context, it is likely to be a tight oligopoly rather than a monopoly. The emerging concern is whether a small number of existing operators would find it to their advantage, acting either unilaterally or collusively, to hoard spectrum or to engage in the contracting of the unneeded spectrum, as a means of creating a barrier to entry for newcomers or rivals who want to expand”.
Telcos that lost out in the race for 3G airwaves may explore the mobile virtual network operator (MVNO) route or franchisee deals with 3G operators. Experts say even operators who won the 3G airwaves will be compelled to enter into such deals to ensure a pan-India rollout of their 3G services.
However, taking a cue from other jurisdictions might be of relevance. In EU, Mobile Network Operators have exercised joint dominance (exhibited tacit collusion) by refusing to enter into the mobile virtual network operator MVNO agreements. As more spectrums become tradable and subject to varied usage and as restrictions on technology diminish, blocking entry or expansion becomes more expensive. All the above may hinder e_ective competition in the telecom sector.
Some Competition Issues of Telcos Decided By CCI
Airtel & Vodafone for Apple’s iPhone
The complaint filed by an individual – Airtel and Vodafone abused their dominant market positions to get exclusive selling rights for an undisclosed number of years in vertical agreements with Apple – iPhones sold by Vodafone and Airtel were compulsorily locked – would work only on their respective networks and none other.
CCI’s Finding – Apple Inc, Apple India, Vodafone and Bharat Airtel not dominant in their respective relevant market – No operator has more than 35 percent market share in an otherwise competitive mobile network service market. No restriction on consumers to use the network services of Vodafone and Airtel.
Therefore, No appreciable adverse effect on competition in the market of smart-phones and/or mobile service could be established.