The Six Fix: Conservatism or Timorousness?

Abstract:     
India can justifiably claim to be a success story in so far as the telecom sector is concerned. The exponential growth of this sector over the course of the last two decades has been amazing. To that extent the policy regime has to be complemented. However, there are serious reservations in respect of the manner of implementation of the policy and the translation of this intent into practice. This has been all the more so in the recent past.

The clamor for promulgation of a revised policy to address these concerns has been growing over time.The discussions on the broad contours of the National Telecom Policy, 2011 are in progress, facilitated in no small measure by the openness of the Ministry to accommodating the legitimate concerns of the relevant stake holders. One of the issues at hand is the approach to the question of Mergers and Acquisition (M&A) regulations in the sector. There is a feeling in some quarters that the Telecom Regulatory Authority of India (TRAI) approach is unduly restrictive and does not augur well for the overall efficiency of the sector. It is argued that TRAI is being driven more by considerations of preventing windfall gains to some operators though the reasoning for the same has been couched in terms of potential competitive concerns. This paper argues that such an approach as advocated by TRAI is not called for at least on the grounds of competitive concerns. It also advocates that the new telecom policy in India should be guided by efficient and optimal use of spectrum, thereby accelerating investments in areas with low penetration levels of mobile services.

Number of Pages in PDF File: 11

Keywords: telecom, mergers and acquisition, regulation, competition law, India

JEL Classification: L41, L43, L51, L96

working papers series