Strong, competitive sector augurs well for deployment of new technology: CCI

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New Delhi, Jan 25 (PTI) A strong and competitive sector augurs well for the deployment of new technology such as 5G while a weak sector will dull the incentives to innovate and compete, fair trade regulator CCI said in a market study conducted on the telecom sector in India.

Releasing the findings of the study and its own observations, the Competition Commission of India (CCI) noted that with the average spectrum holding for an Indian operator is 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.

'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,' it said.

The study further noted that unbundling infrastructure and service will become inevitable with the launch of 5G.

According to experts, infrastructure, network, service and application layers must be completely segregated to induce competition within the market.

Unbundling would allow telcos to reduce their costs by outsourcing specific services to independent license holders. 'This will also increase competition within each layer,' the study said.

The current financial health of the sector as a whole could result in an uneven speed of adoption of 5G by operators, the more profitable ones are likely to be faster off the block. In case this scenario unfolds, it will have implications for the level of competition in the long-run.

'For India, spectrum allocation will be key to the successful launch of 5G services,' CCI said.

The learning from India's experience also suggests that the quantum of the spectrum will also determine the quality of 5G offerings; scarcity increases costs and makes operations inefficient.

CCI further found that acquisition of data has become an important factor of competition.

The study made observations about 'combined data power' in case of merged entities in multi-sided markets.

The market power of the combined data share can result in entry barriers for potential entrants and also harm the incumbents present in the digital markets as they may not be able to match the combined data.

Experts suggest that that competition assessment of merged or integrated entities in multi-sided markets must consider the combined data power of the new entity in establishing dominance.

Considering the various facets of vertical integration, the regulator said that 'CCI would need to examine whether the collection of 'excessive' amount of data can be anti-competitive and thus warrant such conducts to be scrutinised on a case by case basis.' PTI SRS MR