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Financial health of Indian telcos to impact 5G launch: CCI Report
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SME Times News Bureau | 25 Jan, 2021
The weak financial health of Indian telecom service providers will
continue to impact the prospects of acquiring new spectrum and the
subsequent launch of 5G network in the country, said a report by the
Competition Commission of India (CCI).
The 'Market study on the
telecom sector in India' noted that spectrum ownership creates a
competitive advantage for operators providing wireless access services
and access to a larger quantum of the contiguous spectrum can increase
operational efficiency.
"With the average spectrum holding for an
Indian operator lower (31 MHz) than the global average of 50 MHz, the
battered financial health will continue to impact operators' ability to
acquire new spectrum and the subsequent launch of 5G in India," it
said.
In terms of spectrum, the report observed that India has
evolved towards a market-based approach, through licensed auction,
though other regimes such as command and control models as well as
generic licensing or common use models continue to prevail in other
countries.
Since 2010, the Department of Telecommunications has
applied the auction-based method for spectrum allocation. Over the six
auctions held during the period 2010 to 2016, the government has
auctioned only subsets of the total frequencies and the average reserve
price in every subsequent auction has witnessed an upward revision.
In
the upcoming auctions, the regulator has proposed a steep cut in the
reserve price of the 700 MHz band, which saw no demand in the previous
auctions and has also recommended making the entire spectrum available
for auctions, it said.
The report also said that survival of all the three players is important for the market.
Technology-led
convergence has made services less distinguishable, raising new
challenges in defining relevant markets and establishing a level playing
field.
"With the rule of three to prevail for maintaining
competition in the industry (in light of the current financial distress
that the industry faces), any exit would mean a virtual duopoly," it
said.
In the long-term interest of competition and to reap
spillover benefits that telecom affords for other sectors, survival is
necessary, as per the CCI report.
"A strong and competitive
sector augurs well for the deployment of new technology such as 5G, a
weak sector will dull the incentives to innovate and compete."
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