Government needs to assist the telecom sector to facilitate a smooth transition to 5G (Live Mint)

Mains Paper 3 : Economy
Prelims level : 5G
Mains level : Smooth transition process of telecom sector

Context

• The government, as reported, is considering a ₹74,000 crore bailout plan for the bleeding state-owned telecom companies Bharat Sanchar Nigam Ltd (BSNL), which operates across India, and Mahanagar Telecom Nigam Ltd (MTNL), which runs telephone services in Mumbai and Delhi.
• The proposed bailout package includes a handsome exit package for employees, including a good golden handshake scheme.
• Also, the plan earmarks sums for the acquisition of airwave spectrum and capital allocation.
• In all, the government expects these companies to shape up rather than ship out.
• For observers keen on a sell-off of these state-owned utilities, this is a disappointment.
• The package money, they argue, would be better spent elsewhere even as these two are placed in private hands.

Reason behind retaining public ownership

• There is good reason to retain public ownership of the two, however. Unlike a market that has no entry barriers, telecom is a licensed category for the simple reason that it depends critically on airwave spectrum, a scarce resource that needs allotment by the government. oo many. So the number of players needs to be limited. By virtue of this, however, such a market is also vulnerable to cartelization. Sure, several private operators are currently reeling under mounting losses, growing debt
• Anything scarce that is shared cannot be shared by tpiles and heavy government levies.

Conclusion

• Also, low service charges and freebies suggest that competition in this market is remarkably fierce, if anything.
• But look ahead: Stiff rivalry amidst a sea of red ink could result in consolidation, if not a shake-out of weaker players, and this would set the stage for a winner-takes-all scenario.
• New operators could always be allowed in, yes.
• But such markets have a special need for a state-owned operator, one that’s answerable to Parliament, to which customers can turn. State presence alone could keep private dominance in check.

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Prelims Questions:

Q.1) With reference to the Jal Shakti Abhiyan, consider the following statements:
1. The focus of the campaign will be on water stressed districts and blocks.
2. It is an initiative taken by the NITI Aayog.

Which of the statements given above is/are correct?
A. 1 only
B. 2 only
C. Both
D. None

Answer: A
Mains Questions:
Q.1) To what extent Government needs to assist the telecom sector to facilitate a smooth transition to 5G. Give your arguments in this regard of this statement.