Telecom Sector - RJio Monopoly Issue

What is the issue?

In the telecom sector, the entry Jio has always triggered excitement among consumers and disruption among incumbents.

What is happening now?

• Reliance’s aggressive pricing plan has forced incumbent operators to drop data tariffs by 20-30%.
• It has led to nearly 6% decline in industry revenues.
• This declining revenues are forcing another round of consolidation.
• From as many as 10 operators in each circle a few years ago, there are only about 5 operators now.
• Market leader Bharti Airtel has been beefing up its spectrum holding by acquiring airwaves from smaller operators such as Telenor.
• The second and third largest players — Vodafone and Idea Cellular — are in the process of merging their operations.

What could be done?

• According to CRISIL, the latest move by Reliance to give bundled 4G-ready handsets practically for free has the potential to increase mobile broadband users fourfold.
• It may wipe out many of the financially weaker incumbent operators.
• However, the tariff schemes unveiled by RJio are unlikely to cause major disruption.
• The free feature phone offer comes with a condition that the user will be locked into the RJio network for three years.
• Previous attempts to lock in Indian subscribers have not worked.
• Also, Jio’s lower-priced packs of Rs 23 and Rs 53, being offered along with the free phone, are unlikely to be very popular, given that their validity is restricted to few days.
• So, the demands for a regulatory intervention on allegations of predatory pricing by RJio should not be entertained.
• But questions of whether a single company owning the hardware and software can give rise to a content monopoly cannot be brushed aside.
• Whether one entity owning the medium, the message and the means of consumption is healthy is something for policymakers to think over.

Source: Business Line