Monopoly in India's Telecom Industry through Monthly Compulsory Recharge

The telecom industry in India has undergone significant changes over the past few years, with the entry of new players, intense competition, and the rapid adoption of mobile devices and data services. However, one issue that has emerged in recent times is the dominance of a few major players in the market, which has led to concerns about monopolistic practices and consumer welfare.

One of the ways in which this dominance has been manifested is through the introduction of compulsory monthly recharge plans by some of the major telecom players. These plans require customers to recharge their prepaid accounts every month with a certain minimum amount, in order to continue using their mobile services. Failure to do so can result in the deactivation of the SIM card, which can be a major inconvenience for customers. This practice has raised concerns about the impact on consumer welfare, as it effectively creates a barrier to entry for new players and reduces competition in the market. To address these issues, the government of India has taken a number of steps to promote competition and consumer welfare in the telecom industry. This includes the introduction of measures such as number portability, which allows customers to switch between providers while retaining their phone number, and the imposition of fines and penalties for anti-competitive behaviour.

However, the issue of compulsory monthly recharge plans remains a contentious one, with some arguing that it is necessary to ensure the viability and sustainability of the telecom industry, while others argue that it is anti-competitive and harms consumer welfare.

Some of the examples to illustrate the issue of monopoly in the telecom industry in India in the context of monthly compulsory recharge:

ü  Limited Consumer Choice: With the introduction of compulsory monthly recharge plans, consumers have fewer options to choose from in terms of mobile service providers. This limits competition in the market and can lead to higher prices and reduced quality of service.

ü  Anti-Competitive Behaviour: Some major telecom players have been accused of engaging in anti-competitive practices, such as offering special discounts or incentives to customers who recharge their accounts with the minimum monthly amount. This can make it difficult for smaller players to compete and can further entrench the dominance of the major players in the market.

ü  Impact on Low-Income Consumers: Compulsory monthly recharge plans can have a disproportionate impact on low-income consumers, who may not have the financial resources to recharge their accounts every month. This can lead to the deactivation of their SIM cards and a loss of access to mobile services, which can be a major hindrance to their daily lives.

ü  Barriers to Entry for New Players: The introduction of compulsory monthly recharge plans can create barriers to entry for new players in the market. This is because they may not have the financial resources or customer base to compete with the major players who already have a significant market share.

ü  Lack of Transparency: Some consumers have complained about the lack of transparency in the way that compulsory monthly recharge plans are marketed and sold.

These examples highlight the complex and multifaceted nature of the issue of monopoly in the telecom industry in India in the context of monthly compulsory recharge. While there may be arguments in favour of these plans, there are also concerns about the impact on consumer welfare and the need for greater competition in the market.

The government has actually taken some steps to address the issue of compulsory monthly recharge in the Indian telecom industry. For instance, in late 2019, the Telecom Regulatory Authority of India (TRAI) introduced new rules that prohibited telecom operators from deactivating a customer's mobile number due to non-payment of the minimum recharge amount. The issue of monopoly in the telecom industry in India in the context of compulsory monthly recharge plans raises important questions about competition and consumer welfare. While the government has taken steps to promote competition and protect consumer rights, there is a need for continued vigilance and regulation to ensure a level playing field for all players in the market. And these compulsory monthly recharge plans can have a disproportionate impact on low-income consumers, who may not have the financial resources to recharge their accounts every month. In the next phase, this duopoly may lead to a pure monopoly in the country. 

Suhaib. P,  Asst. Professor of Commerce, Al Shifa College of Arts and Science, Kezhattur, Perinthalmanna.