Competition: Telecom

The introduction of the Telecom Regulatory Authority of India Act, 1997, established TRAI as the independent regulator for the telecom sector, with Section 11(1)(iv) asserting that it can facilitate competition and promote efficiency in telecommunication services. TRAI has introduced several competition policies over the years, including guidelines on mobile number portability, which enhanced consumer choice and competition, and the introduction of the IUC regime, which impacted the pricing strategies of telecom operators. The National Telecom Policy (NTP) of 1994 was a significant milestone, allowing private players to enter the market and compete with government-owned entities. The NTP 1999 further liberalized the sector by introducing a revenue-sharing model instead of the fixed-license fee regime, which significantly reduced entry barriers and encouraged competition.  

Court judgments have played a critical role in shaping competition in India’s telecom sector. The Supreme Court’s decision in the 2G spectrum case (2012) was a landmark ruling that led to the cancellation of 122 telecom licenses due to irregularities in their allocation. In 2012, TRAI decided to continue a policy of forbearance on data pricing, allowing telecom service providers (TSPs) to set prices while obligating them to report the same to TRAI. This decision was reaffirmed in 2017 after discussions with TSPs. In 2019, TRAI released a consultation paper on setting floor prices for telecom services. Despite stakeholder consultations, TRAI has upheld its forbearance policy and has not set a floor price for telecom services. 

The Competition Commission of India (CCI) dismissed the case in 2013 filed against Bharti Airtel Limited, Vodafone India Limited, and Idea Cellular Limited. The complaint alleged that these telecom operators engaged in anti-competitive practices by colluding to provide 3G services in circles where they did not have spectrum licenses through intra-circle roaming (ICR) agreements. Two significant cases involved the CCI’s investigation into the practice of predatory pricing by Reliance Jio. However, the CCI ruled in favor of Reliance Jio in both cases in 2017, stating that its pricing strategy was pro-competitive and benefited consumers by lowering prices across the board.  

One of the notable cases in the Indian telecom sector was the investigation into cartelization by telecom operators like Bharti Airtel, Vodafone, and Idea Cellular in 2019. These leading operators were accused of colluding to keep tariffs high and prevent new entrants from gaining a foothold in the market. The Commission dismissed the case as they did not find any evidence to support the allegations of collusion or price-fixing among the telecom operators. 

M&A activities in India’s telecom sector have had a profound impact on competition. The merger of Vodafone India and Idea Cellular in 2017 created the largest telecom operator in the country, sparking concerns about market concentration. However, the CCI approved the merger, considering the benefits of economies of scale and the financial viability of the merged entity in a highly competitive market. Another major development was the acquisition of Tata Teleservices’ consumer mobile business by Bharti Airtel in 2017. This acquisition was also approved by both DoT and CCI.