The Looming Danger Of Monopolisation In The Telecom Industry

The Indian education system has always taught us how securing the first rank in school is so important. Be it sports, arts, computers or anything, parents always want their kids to be the best in the field. But healthy competition is needed to avoid monopolisation of one.

In a similar vein, recent orders by the Department of Telecommunications (DoT) to Vodafone idea, Airtel and Tata to pay a total of Rs 1.47 lakh crores shows how monopoly of billionaire Mukesh Ambani backed low-cost upstart Reliance Jio has scathed the older players.

Experts believe that the big blow from this could cause Vodafone Idea to go bankrupt, which posted the biggest quarterly loss ever in India’s corporate history in the second quarter of 2019.

The company’s top management has already made it clear that the company is in trouble, and could consider shutting down the India operations. The company posted a net loss of Rs 6,439 crore in the quarter ending December 31, 2019, up from the Rs 5,005 crore loss posted in the same period in 2018.

Being bankrupt not only shuts down one company but leads to a humongous loss of jobs, a rise in non-performing loans creating pressure on banks; hence, kicking off an imbalance in the sector.

Being bankrupt not only shuts down one company but leads to a humongous loss of jobs, a rise in non-performing loans creating pressure on banks; hence, kicking off an imbalance in the sector.

Here, I do not need to remind the struggle banks and employees have to face when Jet Airways announced insolvency last year, becoming the second major airline to undergo halt after Vijay Mallya’s Kingfisher Airlines went bankrupt in 2012.

It is also uncertain at the moment that if one company shuts down, do the other players in the sector have the capacity to accommodate its subscribers?

Rival Bharti Airtel has also been under contentious talks, with its founder Sunil Mittal repeatedly accusing Reliance Jio Infocomm. Ltd. of anti-competitive behaviour for its promotional offers.

Not just this, but the employees union of the very state-owned operator – BSNL – has alleged the government of favouring the Ambani-led firm.

Other operators like Telenor, Aircel, Tata Docomo, Reliance Communications, MTS, Videocon, and Hutch have already been pushed out of the market.

If you look below the surface, a bruising price war unleashed since the 2016 launch of Jio triggering a tariff fight and the recent court verdict has disrupted the industry. With this, customers might have to soon face another hike in the charge for services if severance continues.

Therefore, it is the duty of the government to ensure the existence of a healthy competition leading to a robust sector ultimately contributing to the economy of the nation.

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