Rational with telco tariffs pe tariffs

Telecom revenues are sluggish as market leaders Reliance Jio and Bharti Airtel spread their 5G networks without raising tariffs as aggressively. This is squeezing Vodafone Idea, whose financials do not allow it to keep up in the 5G rollout race, and in the process it is losing subscribers to Jio and Airtel. Complaints of predatory pricing have been made - not for the first time in the rather chequered history of India's telecom industry - without much by way of solution to inevitable market consolidation. The industry has acquired its capacity to invest in the latest generation cellular networks after the government sweetened terms for spectrum payments and sharing revenue. But these measures do not offer adequate protection against the emergence of a duopoly. Deeper structural changes, such as charging less for spectrum or reducing the government's revenue share, are complicated by the settled position after intense litigation.

India's telecom industry will continue on a perilous course between high fees for radio frequencies and cheap bandwidth for subscribers. The pressure on both ends will, however, be less than they were a decade ago as data consumption increases and companies draw lessons from frenzied bidding for spectrum. Consolidation is the lesser effect of state intervention. The greater one is the debilitating effect on the economy of the government's insistence on realising telecom revenue upfront. The benefits of quicker network rollout and its effects on tax revenue weigh in favour of rational spectrum prices and telecom tariffs. The industry would police itself better under those circumstances.

Telecom is acquiring an economic role as vital as energy, and the government should draw its conclusions from price distortions in the electricity industry that has hobbled private investment. Solutions need to be sought within the judicial constraints on pricing natural resources to allow the industry to grow on its own. Free pricing provides the sole assurance.