However, competition is reducing. Consumers have fewer service providers since the entry of Jio in 2016. Only three incumbents \u2013 Airtel, Vodafone Idea (VI) and BSNL \u2013 remain in the market. With the last two struggling to stay afloat, competition could decline further.

Competition in the equipment market is shrinking too. Operators face calls to include as well as exclude specific vendors. Vendors and telcos also fear that an India-specific standard for 5G could distort competition in their market.

Reduced competition could raise costs and delay network modernisation. The task for Telecom Regulatory Authority of India (TRAI) and the government is to incentivise new entry to the market and prevent needless exits, to sustain a competitive telecom market.

An option is to encourage resellers like VNOs (virtual network operators) who buy bulk capacity from telcos for resale to end users. India\u2019s VNOs have been crippled by high levies and restrictions on buying capacity from telcos. Easier terms for VNOs could be key to expanding the market for existing services but also, later, 5G-enabled niche services, including Internet of Things (IoT).

International regulators are promoting competition between players and technologies by simplifying access to unused high frequency spectrum. India could follow in their path with lighter regulation of E band and delicensing of V band spectrum, both of which support high speed data transfer.

The understandable opposition of incumbent telcos to new entrants can and should be mitigated by reducing their own regulatory burden. Telcos pay a globally unprecedented 29% of their revenues back to the government. They are victims of a design of spectrum auction that focuses more on government revenues than on the sector\u2019s economic potential. Lower regulatory costs for telcos will expand choice for consumers.

The government owned BSNL could deepen competition in the market. However, it cannot do so without freedom to take key business decisions like procuring its equipment. The recent proposal that it buy only from Indian telecom manufacturers will make BSNL less competitive, without promoting local producers. Guaranteed sales to government departments or companies can only reduce incentive to become competitive.

Indian companies deserve direct support to become globally competitive. This could include cheap capital, land, support for creating world-class Intellectual Property (IP). Becoming \u201catma-nirbhar\u201d or self-reliant is both desirable and possible. The Chinese telecom giant Huawei is barely 30 years old and competes aggressively with Ericsson and Nokia which are over 100 years older. It is a key player in India\u2019s market for 2G, 3G and 4G equipment.

There are calls to bar Huawei from competing in the 5G market, on grounds of national security. India cannot treat security lightly, but nor can it afford extraneous considerations in its decisions, given the ramifications for the sector. Huawei leads the world in 5G patents (20%) and commercially deployed 5G equipment.

A Huawei sponsored study by Oxford Economics, estimates that its exclusion could make 5G deployment costlier by 16 to 19%. The reduced competition in 5G space will worry India\u2019s cash-strapped telecom operators and their customers.

A different type of risk to competition comes from the India-specific 5G standard proposed by the Telecommunications Standards Development Society, India. TSDSI claims \u2013 and its opponents dispute \u2013 that the standard will accelerate broadband in India\u2019s rural areas.

Most telcos, technology and equipment vendors argue that it would raise costs, delay 5G deployment, and require travellers roaming internationally to acquire a local device. The standard has yet to be approved by 3GPP, the body that determines what technologies go into a standard. However, India\u2019s small (less than 10%) share in global telecom revenues might discourage players to invest in a new line, making the Indian market even less competitive.

India cannot afford to mismanage competition and for it to be a global player in telecom markets its companies will need to withstand robust global competition.","blog_img":"","posted_date":"2020-11-05 12:15:04","modified_date":"2020-11-05 12:16:07","featured":"0","status":"Y","seo_title":"Need to make Indian telecom industry competitive","seo_url":"need-to-make-indian-telecom-industry-competitive","url":"\/\/www.iser-br.com\/tele-talk\/need-to-make-indian-telecom-industry-competitive\/4613","url_seo":"need-to-make-indian-telecom-industry-competitive"}">