A quick review of the chain of events in the telecom sector in India wherein perception is that all policies are formulated to favor only one operator.
The Indian telecom industry has been crumbling since the 2G scam broke out. Interestingly, the case was finally concluded in 2017 by the Supreme court of India with no one to blame. The new entrant in the telco market with freebees has led to a price war. Indian telecom Operators ARPU (Average Revenue Per User) has halved. This development has made the Indian telecom industry reach the bottom of the list beating Uganda to claim the bottom spot. Indian Operators earn less than $2 per subscriber. The bigger question however is, did government in someway use the regulatory framework to facilitate this rise of the new entrant?
Here is a timeline of some notable TRAI regulatory decisions since 2010 -
2010: IBSPL makes an earnest money deposit of Rs 252.5 crore and won 20 Mhz of pan-India BWA spectrum. It had through the “covert and overt assistance of third-party or private bank” bid for Rs 12,847.77 crore and sold the company to a Reliance Industries Limited (RIL) entity on the day of completion of the auction. Note that BWA Spectrum was initially proposed for data only purpose with no option for VoIP.
2013: The CAG has suggested canceling nationwide broadband spectrum allocated to Infotel Broadband Services, now a Reliance Industries company, for allegedly rigging the auction and violating rules. Read Here.
2014: It’s worth noting that Cellular Operators Association of India (COAI) had also raised similar allegations in March 2013, claiming that telecom department had proposed these policy changes to give undue benefits to RIL and the unified license regime should not be used to provide a backdoor entry for BWA players to offer voice services. The Indian government, however, had dismissed these allegations later.
2015: The final report of the CAG submitted in Parliament on 8 May 2015 did not mention the calculations made in the draft report but merely stated that the DoT failed to plug loopholes in the rules. In addition, as per the liberal roll-out conditions stated in the NIA, 4G services were to be operationalized within five years of the effective date of the grant of the spectrum. The deadline of five years for the roll-out of services on the BWA/4G platform ended on 31 August 2015. RJio launched the network in Sep 2016.
2016: Trai Recommends Flat Spectrum Usage Charge In what could bring respite to Reliance Jio Infocomm, AG has said that spectrum usage charge for telecom providers such as Rjio cannot be increased from 1% to 4.5%.
According to Trai's regulations, free promotional plans cannot be offered by telcos for more than 90 days. Jio's promotional scheme was launched with 200 days of free service.
2017: The extant interconnect usage charges (IUC) regime in India’s telecom sector is one of the most important factors that ensure fair competition, consumer welfare, growth of users and the equitable distribution of revenues and costs among various service providers and their networks. TRAI published two separate documents, a consultation “note” on IP-based interconnection and a consultation “paper” on IUC which considers a change in the payments regime and potentially, a reduction or a complete doing away with the IUC on both traditional and IP-based networks.
TRAI slashed the IUC (interconnect usage charges) for mobile-to-mobile calls by 57 percent to 6 paise per minute.
2018: TRAI's new rules for predatory pricing stipulate that SMP is now defined on the basis of two factors instead of the previous four. Earlier the SMP was decided on subscriber base, turnover, network capacity, and traffic volume, but now it will be decided only on subscriber base and revenue. The incumbents also allege that Jio’s data volumes are much more than those of the incumbents, but TRAI has not included data traffic as a metric for assessing SMP.
2019: On September 19, 2017, India’s telecom regulator announced a new IUC regulatory regime. It said that the IUC would be reduced to zero in two phases. First, it reduced IUC to 6 paise from the earlier 14 paise per minute. In the second phase, which would start from January 2020, it would be reduced to zero paise and effectively abolished. TRAI rethinking a Zero IUC Regime.
Today, Vodafone-Idea is on the verge of being bankrupt. BSNL/MTNL is struggling to pay salaries and are under major restructuring. Airtel has indicated that it has doubts in continuing to be a going concern in the current market scenario. RIL, Jio's parent company has accumulated a gross debt of more than Rs 2.87 lakh crore.