what does jio or other telecom companies provide to the hefty customer base? a service that is enabled by purchasing spectrum from the government, hence no manufacturing, no use of inputs per unit, barring some technology and few essentials like towers and cables. so the radiowave that allows you to make calls or download data is all but any cost-incurring product. it may be 100 minutes of talktime or 1000 minutes, 1 gb data or 10 gb, hardly does that matter to your telecom company.
while submitting its arguments in the court, the attorney general, representing the government, clearly mentioned about the cartel of 4-5 telecom companies having billion subscribers and making inr 250 crore a day just from outgoing calls.
he also stated that none of the companies is ready to invest in technology and cited the inaction on their behalf to contain call drops. special mention was made of their counterparts in china who are more inclined toward upgrading their technology.
let’s view this with a wider glance. services are not manufacturing, although they are categorised as industry. a basic difference between the two is that while manufacturers have to spend additional cost on every new unit they produce, service providers have no such costs, even when they have, it’s trivial.
this is true with almost every industry in service sector- banking, telecommunications, hospitality or consultancy. while for manufacturers, competition crops up without delay and doesn’t allow superfluous profit-making, services enjoy some immunity.
moreover, services rank lower than manufacturing or agriculture in terms of their essentiality, hence under no good economic sense can they be allowed to make excess profits; rather, they must be free or provided at no profit no loss criteria since they are enablers, not the makers. internet only helps us know about happenings, helps us communicate, be educated, it cannot feed a child.
jio’s entry saw other players offering four-fold more data and free calls at same old tariff. how? do they fear losses? no. more players like jio will only correct the market, not distort its equilibrium.
give your verdict: