Pricing Telecom Licences in India
by Srabanti Mukherjee, Debdatta Pal
On February 2, 2012, the Supreme Court of India cancelled all 122 second-generation (2G) telecom licences issued on or after January 10, 2008 by the Department of Telecommunication (DoT). This judgment, along with the announcement of the National Telecom Policy-2012, forced the DoT to rethink the issue of pricing spectrum, which was earlier bundled with 2G licences. First, was re-auctioning required? If so, what should be the minimum reserve price? Should DoT follow a uniform pricing strategy for all the incumbents, including those whose licences were cancelled? How could it strike a balance between investor apathy and the government’s objective of increasing rural tele-density, given the possibility of a tariff hike after the refarming of spectrum?
Learning Objectives:
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To understand oligopoly market structure and price stickiness.
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To examine the public policy framework and the regulatory framework for pricing natural resources.
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To consider the ethical implications of natural resources allocation.
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To analyze the concept of auction pricing and its pros and cons.
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