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