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Building start given to the incumbent public

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Building or access optical fibre network – Well the largest optical fibre has been built by BSNL as it is government operated. – The private sector players such as bharti, reliance and idea have also constructed optical fibre cable network but mainly in cities where as reliance already started to build up optical fibre network in urban areas also. – So, for a new entrant it will not be easy and cost effective. Government and legal barriers – Licensing policy: The government has provided six new 2G licenses to telecom operators at a fee of Rs. 1650 crore in 2008 on first come first serve basis. This distribution took place after seven years of the previous distribution. In recently held 3G licences auction all the incumbent private players managed to get licenses for 9-13 circles. It has been evident that the delay in the 3G auction, auction procedure and the head start given to the incumbent public players has caused lot of unrest in the industry. Government licensing policies, and a 74% FDI cap in telecom sector has made industry unattractive to new entrant and investors. – The Spectrum Issue: Spectrum is the most important resource that is required for providing mobile services. Scarcity of spectrum leads to higher cap on deployment of mobile networks for the operators as they need more cell sites to improve service quality. Further the growing usage of spectrum and the resultant scarcity may lead to re-use of spectrum and increase chances of congestion in networks leading to constraints on service quality. ( www.lawctopus.com) – A minimum licence fee was specified for each metro. The annual licence fee was highest in Bombay. It was set at Rs. 30 million, which was increased to Rs. 240 million by the seventh year, similarly licence fee for Delhi, Calcutta and Madras were set at Rs. 20 million, Rs. 15 million and Rs. 10 million, respectively. However, by the seventh year the licence fee for the three metros were 160 million, 120 million and 80 million, respectively. – The licence fee was revised and the DoT asked the operators to pay Rs. 5000 per subscriber as annual licence. The licence fee was again revised and service operators had to pay Rs. 6,023 per subscriber. (cis-india.org) Counter attack by established players – The new entrant will face incumbent wrath that holds the high share in the market and command like Airtel, Reliance, idea, Vodafone because of a well-established network presence, a brand that a customer is aware of and sheer economics of scale. – The existing players can come up with bundle packs for voice, data, video and other value added services all together at very cheap prices to maintain their position and to attract more customers towards them. – Incumbents possess substantial resources to fight back, including excess cash and unused borrowing power, available productive capacity, or clout with distribution channels and customers.

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