Regulating Competition in ICT Value Networks

The recent Telecom Regulatory Authority of India (TRAI) norms on mergers and acquisitions (M&A) create a two-pronged upper bound for the merged entity based on spectrum share and market share. The spectrum share, defined in terms of share of second generation (2G) spectrum held, is set at a low level (25 per cent) and the market share at a high level (60 per cent). This severely restricts the M&A transactions possible, and also ignores the fact that since each subscriber is increasingly being serviced using a combination of 2G and third generation (3G) technologies, the definition of spectrum share cannot merely be restricted to 2G spectrum. Further, given the convergence of the computing and telecommunications industries and the creation of value networks of devices, service providers and applications to provide a seamless computing, telecommunications and entertainment interface to the consumer, one has to look at regulating the market power of networks rather than of industry silos. This article details the implications of the TRAI approach and shows the need for a new framework of regulation.