By B. Sivaraman
Consider a few apparently unconnected recent events in the Indian telecom sector.
On 29 November 2018, about 1,200 workers of HiPad Technology India Private Limited —Modi’s Make-in-India showpiece, manufacturing Chinese Xiaomi and Hippo smartphones — went on a revolt, ransacking the company premises after the company illegally denied work to 200 workers without even offering a notice.
The All Unions and Associations of BSNL (AUAB) had given a strike call for 3 December 2018. After protracted negotiations with Telecom Minister Manoj Sinha, they won their major demand of allocation of 4G spectrum, ending deliberate discrimination against the state-owned telecom in favour of private monopolies. Hence, they deferred their strike by a week pending further negotiations on commencement of third pay revision.
On 23 October 2018, TeamLease Services, India’s leading staffing firm (labour contractors), came up with a study that said after losing 75,000 jobs in 2017, the Indian telecom sector would lose another 65,000 jobs this fiscal by March 2019 end. Yet another study by staffing firm Randstad India concurred but added that “a further 60,000-75,000 telecom jobs would be lost in 2019 and the trend would continue through 2020 with similar number of redundancies”. The great Indian telecom revolution is heading for a bloodbath.
Apparently they may be isolated and unconnected events. But the common underlying thread connecting them is the creeping crisis in Indian telecom. The year 2016 marked the watershed, when the Indian telecom revolution turned ugly.
The Economic Survey 2017–18 gave a graphic description of the telecom crisis in the following words: “It is important to note that the telecom sector is going through a stress period with growing losses, debt pile, price war, reduced revenue and irrational spectrum costs.”True, the telecom crisis has mortally wounded many investors, lenders, and vendors alike among both telecom service providers as well as equipment manufacturers. However, unlike the earlier structural crises like the transition from analog to digital telephony, and then the technological disruptions due to rapid succession from 2G to 3G and then to 4G services, this time the crisis has a qualitatively different dimension. It is the crisis of monopolisation.
The launch of a predatory price war by India’s richest man Mukesh Ambani’s Reliance Jio—with its mindboggling investment of Rs.1,50,000 crore, the largest ever by a single Indian company with the offer of unbelievable freebies to finish off competitors — in 2016 has already reduced the Indian telecom scene into a monopoly of just three players: Reliance Jio, Bharti Airtel and Idea Cellular-Vodafone. With such monopolisation, carcasses of numerous telecom companies are already strewn around all over the telecom arena and the former state-owned telecom monopoly BSNL finds itself on the death throes. Without referring to Mukesh Ambani or Reliance Jio by name, the Economic Survey 2017–18 said as much: “A new entrant has disrupted the market with low-cost data services and the revenue of incumbent players has fallen. The crisis has also severely impacted investors, lenders, partners and vendors of these telecom companies”. What Jaitley avoided mentioning was that under his government’s influence, the regulator TRAI, far from curbing this tendency of monopolisation, fully backed Reliance Jio in this journey to a monopoly position. How long Airtel and Vodafone, already struggling with steep fall in revenue and market shares, would survive Mukesh Ambani’s assault is anybody’s guess.
Monopoly is bad not only for the consumers and for the overall growth of any industry; it hits the workers the hardest. Evolution of Indian telecom also illustrates that monopoly is bad not just as an antithesis of competition, as liberal economists insist; rather, it is no less harmful as a logical culmination of the same cut-throat competition. The leading business magazine Economist is currently on a crusade to curb monopoly and promote competition as a means of revival of global growth. Many developed countries are also beefing up their competition laws. But Manoj Sinha, the Telecom Minister in Modi’s Cabinet, sounded wishy-washy in an interview on 9 September 2018: “Once you have opened the sector to private operators, automatically, the government’s role is reduced to a minimum. If we intervene in the market forces, we will be criticised. On our part, if people want to take any progressive step, we will try our level best to act as facilitators. But let me assure you, there is no question of any monopolistic situation arising in the telecom sector”.
But his vague assurance did not cut much ice with Mukesh Ambani’s younger brother Anil Ambani, who openly contradicted the minister within ten days when he asserted on 19 September 2018 that the telecom sector would eventually become a monopoly, thanks to the “creative destruction” underway and added that around 20 lakh jobs out of the present 45 lakh direct and indirect jobs would be lost. Though Anil thanked his elder brother Mukesh for coming to his rescue, he avoided mentioning that his own Reliance Communications was the biggest victim of the “creative destruction” let loose by Mukesh’s Reliance Jio. Anil should know better, as 48,000 out of the peak 2016 level of 52,000-plus employees of his RCom lost jobs in 2017 when his brother Mukesh took of the company.
Not just RCom, many other service providers and equipment manufacturers like Aircel, Ericsson, Tata Communications, Tata DoCoMo, Tata Teleservices. Telecommunications Consultants India, Telenor India, Tulip India and Videocon Telecom etc. shut shops in 2017 to name only a few major ones. Numerous smaller players, including Lava, Intex, Micromax, Karbonn Mobile, Obi Mobiles founded by a former Apple CEO, S Mobility, HTC, LeEco, CDMA of MTS, and even a renowned name like BlackBerry have already closed down or heading for closure.
RJio left even the cheaper Chinese mobile manufacturers like Gionee and Xiaomi reeling as its fascinating freebies went only with its own handset. Xiaomi was leading the assault of the Chinese handsets in the Indian mobile market until Reliance Jio arrived on the scene. Despite announcing expansion by setting up its third plant in Noida hardly a year earlier, under the Jio heat it was compelled to shed one-sixth of its workforce, leading to the workers’ angry outburst.
It is said revolutions devour their own children. Telecom and IT revolutions in India are no exceptions! (IPA Service)