The study was undertaken by Payal Malik.

The liberalization was done in 2000, and there has been a large increase in the total number of subscribers. Mobile increases expediently from 2004, this is partly due to the TRAI allocating CDMA subscribers into the mobile category as opposed to fixed.

Year on year growth scores show that the mobile sector is growing as well.

Rohan: It is useful to get the CAGR scores for comparison as well.

Within the mobile sector Bharti is still leading with a market share of 23.74%, reliance comes in second place with 17.54% and Vodafone/ Hutchinson in thrid with 16.90%.

The incumbent defines all interventions in the policy making process.

Market for the fixed operators show that BSNL still continues to operate with 83% of the market, with MTNL only having 9%. This legacy of BSNL has a great bearing on the broadband sector as copper technology dominates. The copper technology has not proven to be a useful substitute.Other operators have not entered the market because netwoek roll out is expensive and prefer to move into the mobile sector.

Rohan: What is the company ‘Hathaway’ providing?

Payal: Its probably providing only broadband.

Helani: Is the local loop unbundled?

Payal: No, so Hathaway is probably using a wireless technology.

Helani: who is using ADSL?

Payal: BSNL, MTNL, and all the private operators. As the prohibition on laying copper by anyone other than the incumbent was liften in 2005. As so now private operators can lay copper, optical fibre for providing broadband services.

When comparing HHI figures, there is a significant increase in competition in the mobile sector between 2003 and 2007. Even in the poor states the competition is increasing as operators move from the rich, urban markets.

Internet and Broadband: There has been a steady growth in the number of internet and broadband subscribers between 2004 and 2007. However, there is a large difference between the number of internet and broadband subscribers. This shows that many people are accessing the internet through mobile using 2G technologies. India does not have 3G technology as yet. And so the unbundling of the local loop is necassary to make the broadband market grow.

However, this has resulted in the private opertators laying out their own networks because they cannot access the backbone being used by BSNL, so this has a positive effect on infrastructure.

Helani: Does TRAI’s figures for wireless subscribers include the mobile internet users?

Payal: yes, the 2G users.

There has been a large number of policy initiatives between 1999 and 2005. Unified licensing was allowed to remedy a problem with previous policies and allowed for any technology to be used to provide mobile telephony.

The roaming tariffs were reduced from 22 to 56% in 2006.

Rohan: Is it when a user goes to another state and uses the same network? or when the user goes to another state and uses a competitors network?
Payal: Both…

Rohan: If im inside my own circle can i roam on another network? or do i have to use my own network?
Payal: no you cannot. You have to use your own network within your circle.

Survey
Most of the survey was through email responses. However, there were problems of confidentiality especially in regard to operators. They wanted non-disclosure agreements etc.

Helani: Did it matter to the mode of the survey? email, online etc..
Payal: Most operators did not respond to emails, and the operators were surveyed at an industry association event. Operators agreed to complete hard copies without putting their name.

Helani: We should not ask them to give their name, address and email address.

The study showed that the questionnaire should not be given the option not to answer parts of the survey as there were entire sections that were left blank. This was especially a problem with fixed and broadband sectors where there are a few operators.

There were 42 respondents in all with 14 in each category. Category 3 were least affected and so were the easiest to responses from while the operators were the most challenging.

Overall results: Broadband (2.4) performs poorly when compared with mobile (2.9) and fixed (2.8).

Payal: We should leave the scores to 2 decimal points.

Rohan: I disagree, as this is a crude measurement device and the importance of decimal points are low.

In both mobile and fixed tariff regulation receives the best scores, with both scoring 3.9 each. The lowest scores were received by the access to resources category. The scores for the fixed sector has improved from 2.8 in (2006) to 2.9 (2007) and in mobile from 2.9 (2006) to 3.0 (2007).

In both mobile and fixed tariff regulation recieves the best scores, with both scoring 3.9 each. The lowest scores were recieved by the access to resources category. The scores for the fixed sector has improved from 2.8 in (2006) to 2.9 (2007) and in mobile from 2.9 (2006) to 3.0 (2007).

Access to scarce resources: There are major issues in the allocation of spectrum. This includes controversies and inter miniterial battles. There have been rigidities in the broadband sector cause by the local loop not being unbundled.
A 3G spectrum allocation policy has been announced but it contains some anomalities.

Interconnection:

Tariff regulation: This area performed the best. There have been many amendments to the TTO 99. However, broadband tariffs are percieved to be very high.

Rohan: Is it tariff regulation or forebearance?
Payal: Forbearance

In both mobile and fixed tariff regulation recieves the best scores, with both scoring 3.9 each. The lowest scores were recieved by the access to resources category. The scores for the fixed sector has improved from 2.8 in (2006) to 2.9 (2007) and in mobile from 2.9 (2006) to 3.0 (2007).

Market entry: The scores for this category are as follows. Fixed: 2.7, Mobile 3.1 and Broadband got 2.8. There is free entry; no cap on license. There is no explicit guidelines for MVNOs. Government’s approval to the use of dual technology. Most of the operators could not begin their operations due to the non-availability of the spectrum
BSNL is still dominating BB though in the metros choice of two or three operators

Access to scarce resources: There are major issues in the allocation of spectrum. This includes controversies and inter miniterial battles. There have been rigidities in the broadband sector cause by the local loop not being unbundled.
A 3G spectrum allocation policy has been announced but it contains some anomalities.

Interconnection:The sectors recived the following scores; Fixed: 2.7, Mobile 2.8 and Broadband 2.8. The IUC regime of 2003 specified the interconnect charges clearly and paved the way for a calling party pays (CPP) regime . Also termination charges made uniform for all types calls – cellular mobile, fixed and WLL (M)
TRAI has expressed its inability to force any operator to honour the interconnection agreement. There seems to be an improvement in the score: telecom operators welcoming the phasing out of ADC

Tariff regulation: This area performed the best. There have been many amendments to the TTO 99. However, broadband tariffs are percieved to be very high.

Rohan: Is it tariff regulation or forebearance?
Payal: Forbearance

Anti-competitive practice: the score for the mobile sector has seen the largest deterioration. Excisting operators should not be able to prelude entry to the new ones. There seem to be many new operators that are willing to come into the market. So the test of competition should be contestability or ease of entry into the industry as the current imcumbent is creating barriers to entry. The competition authority has made observations on this problem but it doesn not have the necassary powers to carry out an intervention to address this issue.

USO: There has been a remarkable improvement in the USO policy. In march 07, a least cost subsidy auctions for infrastructure companies was offered for setting up infrastructure for mobile telephony.Increases in rural teledensity has been a priority for private operators.

Quality of Service: There has been frequent call drops, poor connectivity amongst others. But the survey does not score too low in this category with 2.8 in fixed and 2.9 in mobile. The low ARPU model isnt sustainable as it shows that the operators are cutting back on their investments.

Conclusions: India seems to have followed a ‘text book’ liberalisation. But there have been market failures, such as the monopolistic power of the incumbent, and issues of market entry.  This needs to be addressed by using proper regulatory instruments such as infrastucture sharing. TRAI has recently recommended that, licensing conditions should be amended to allow service providers to share their backhaul.It should ensure fair play, generate competition and discourage any form of cartelization. Overall, the market seems to be doing a good job.