Are Indian Mobile Operators running in a Cartel Mode?

By July 31st, 2014 AT 1:04 PM

Since I have been traveling for a month now, it’s fun to notice what operators have to offer in different regions. Specifically, what I have noticed is there’s little or no differentiation when it comes to tariffs offered by different operators for services like SMS, voice calls or data. It almost makes me want to question whether these top private operators are running a cartel.

For the uninitiated, a cartel is defined as a group of firms that gets together to make output and price decisions. When I look back, it more than assures me that telcos are in one way or other trying to manage the telecom tariffs. If you take a look at the previous link, it also mentions that cartels tend to arise in markets where there are few firms and each firm has a significant share of the market, which is again true in the current scenario where there’s little competition now.

During the tariff war, each operator had something significant to offer that differentiated themselves from other operators. The customers significantly benefited here. When the tariff war ended, the market leaders have more or less maintained the same price points for most of their services including data. To point out few instances when these operators have increased / reduced tariffs for data, SMS or voice calls at the same time check out the 2014 tariff hike timeline.

It’s understandable that these cash-strapped companies want to increase rates and be more profitable. However, shouldn’t there be some sort of regulation that disallows companies to increase / decrease tariffs at the same time? While this might not pinch us a lot for now, when the market solidifies it will. And by then it will be too late to regulate such activities and as a customer we will only receive undifferentiated products, which is already in fashion.

Do you agree that there has been cartelization in the Indian telecom industry? Let us know your observations through comments.

Apurva is a tech enthusiast who loves her gadgets and talks about digital media usage. She is currently developing and works for an IT company.

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