Re-thinking Indian Telecom

Continued from earlier post- Indian Telecom: Under seige

Focus in Indian Telecom now needs to shift from infrastructure creation and network rollout towards reuse of resources and innovation. The concept of tower sharing that began four to five years ago was a great milestone. It showed operators realising there is more value in sharing assets than in keeping them to one’s self. Therefore, Instead of penalising operators for sharing scarce resources, as the drive against “illegal 3G roaming” indicates, the regulator should encourage all forms of asset sharing, including spectrum, provided consumers aren’t being short-changed.

The legislators also need a MVNO policy to allow MVNOs(virtual operators who lease the infrastructure from other operators) into the market eco-system. This enables idle assets become economically productive platforms for consumer innovation. Once this freedom is established, the wholesale market will naturally begin to evolve. Players like Lightsquared, a company that is building a $7 billion wholesale-only 4G network across the USA, could make eminent sense in broadband-hungry India.

Wholesale should be very seriously encouraged. In fact, for BSNL it could be a brilliant option, given its huge strength in infrastructure but almost nothing on the retail side.

The government needs to Encourage mergers and acquistions, by doing away with all restrictions on spectrum held and increasing the combined market share level in consultation with the Competition Commission of India (CCI). Playing the regulator by imposing artificial constraints on mergers, prevents a free play of market forces. When it comes to mergers, fears of cartelisation or monopolisation are almost always overblown.

The concept of regulators determining the number of operators is itself outdated. Regulating the telecom sector requires certain expertise which a government ministry cannot be expected to have. Today we have technological and economic solutions like spectrum and network sharing which should dictate the sectoral dynamics. In fact, the concept of an operator being an end-to-end entity needs to be rethought. They can be just a customer facing entity. Regulators should become innovative and forward looking, and behave like economists. Unfortunately, many dont think and cannot understand and comprehend their basic tasks and responsibilities. Regulators today are still stuck in the pre-91 Hindu-rate-of-growth babudom dominated decision taking authoritarian culture. The market and the economy has evolved multifold and should be treated as a play of multiple market forces where the rule of regulator is to set a level playing field and safeguard customer interest against cartelization.