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Deciphering the telecommunications crisis – editorials


The dramatic developments of Friday in court in the case involving the quotas of the telecommunications companies (telcos) to the telecommunications department are the last legal turn in a sector that has evolved in attacks, each caused by a radical change in the policy regime or legal intervention It is not about who is right and who is wrong. Generally, it is redundant to discuss right and wrong after the Supreme Court has ruled on an issue, but there are three far-reaching consequences of the ruling that insists that telecommunications companies pay the government around $ 1.47. lakh crore in past installments almost immediately.

One, it will probably result in the first great duopoly of India in a large industry that serves around one billion. One of the three major telecommunications companies in India, Vodafone Idea, will have difficulty raising the money it needs to pay and may well choose to “close the store,” as its president said some time ago. Much of the growth in the telecommunications business came about due to competition, and the sudden depletion of it could help surviving telecommunications companies in terms of pricing power (in short, prices may increase sharply) and harm consumers who will have fewer (or almost no) options. The telecommunications regulator and the antitrust agency must be at their best to ensure that this does not happen.

Two, it reduces the incentive for the industry as a whole to innovate or even worry about things like 5G, the next generation of telecommunications technology. That may mean that India is left behind as the world moves forward. If the data is new oil, India definitely cannot afford to ignore 5G. For starters, it is unlikely that there is much interest in the 5G spectrum auction.

Three, in the last two decades, thanks to the telecommunication boom, India’s teledensity has increased from single-digit levels to almost 90%. This has been accompanied by economic opportunities, the creation of millions of jobs and the emergence of companies based on mobile applications in retail, education, travel, media, entertainment and almost anything else. A crisis like the one facing the telecommunications industry could end up harming each of those industries. The government, especially the telecommunications ministry, has known about the case and its possible consequences for some time. It should have worked proactively to address the situation, even working to convince the court that it was open to a payment for 15-20 years (the window for most telecommunications spectrum auction payments). Instead, he chose not to do anything, preferring to look from the side while the case was taking place in court.

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