But, that should not upset Mittal. His two main rivals, Vodafone and R-Com, whose half yearly financial results showed a big drop in earnings and negative growth in profitability, are not complaining. Capitalism is all about competition, the freedom to choose and the survival of the fittest.

Is Mittal afraid of competition? Normally, he shouldn't be although he built his empire under a rather oligopolistic high-tariff, low-competition regime. It is the government's competition mantra that broke the monopoly of its own department of telecommunications (DoT) in the wireless telephony system and a host of other related services such as telemarketing, DTH and broadband internet. It helped a new and relatively unknown player like Sunil Mittal to become India's fastest and richest post-reform billionaire, who is now diversifying into a host of sunrise areas of business to multiply his wealth and, in the process, the wealth of his shareholders. Like the I-T sector, telecom has produced more billionaires in India than any other businesses in the recent past.

Mittal and his Bharti Telecom must thank their stars that DoT, initially, and much later the Telecom Regulatory Authority of India (TRAI) for facilitating the transformation at the cost of telephone users since the sector was open to private and multinational participation some 15 years ago to exploit its vast business potential. Although the original entrants - Australian Telstra with the Delhi-based B K Modi group and Telecom Malaysia with Kolkata's B K Jhawar-led Usha group - failed to read the business prospect early, Bharti, the Essar group, Reliance, Tata and a host of other players, including the public sector MTNL and BSNL, went on expanding their networks and subscribers' base to reap good results.

Bharti's Airtel maintained its pre-eminent position in the industry over the period by sheer dint of hard work and constant support from the government and TRAI. The latter's support to the industry was rather passive. Seldom did it flex the muscle to regulate the industry, which it is supposed to do, to ensure fair competition among operators, proper investment in infrastructure network by them, better deal for customers in terms of tariffs and services and the reach. The business grew at a mind-boggling pace. Though India has world's largest number of wireless subscribers, some 500 million till now, the service to customers across the business continued to be rather poor.

There have been a lot of shake-ups and some consolidation in the business, including changes in shareholding patterns, mergers and acquisitions: the coming together of the country's two most powerful business houses, one led by Ratan Tata and the other by Kumarmangalam Birla, and their subsequent split over the control of Idea Cellular, Vodafone's entry to take management control of Hutchison-Essar (originally Sterling Cellular), Tata tie-up with DoCoMo, Japan's largest, and the entry of MTS and others.

A number of foreign players from the USA, the UK and the Continent, Japan, Singapore, Korea and Australia are showing interest in India. Several are already here. The industry is bound to witness more competition in the next two or three years - some fair and some even not-so-fair — among both the old and new players, especially those with deep pockets and big future plans. For now, the five-member private telecom cartel, comprising Airtel, Vodafone, Reliance, Idea and Tata Indicom, looks rather vulnerable in the face of strong competition from newer players and tough tariff war. Established operators may dislike it, but customers are going to benefit if the war prolongs and gets nastier in the coming years.

The telecom sector has been one of the highest growth areas in the recent years, beating all market projections. At present, it is the fastest growing market in the world. It has been growing at the mind boggling rate of 30-35 per cent since 2004. Last month, Vodafone alone added nearly three million new customers. The operators using GSM platform, which excludes Reliance and Tata Indicom, added over 10 million new subscribers in October. Initially, the tariff war was started by the public sector MTNL and BSNL on both STD and local calls to attract new customers as they fell behind their private sector rivals in marketing blitz and sales campaigns. The private sector operators, led by Airtel and Reliance, spared no time to revise their tariff plans downward and offered innovative price packages at regular intervals.

With the customer base growing fast and the demand for pre-paid service outnumbering the traditional post-paid business in many areas, the sales margin remained attractive to draw newcomers in the business. The system of fixing call rates per minute, high tariff for SMS, STD and roaming charges, etc. continued to inflate the top line and the bottom line of the service providers. But, all that is now changing with as many as 13 operators jostling for space in the world's biggest wireless telephony market and more willing to stick their neck out to share the India excitement.

Lately, the pay-per-second scheme and a cut in STD rates introduced by operators such as DoCoMo, Idea, etc. are forcing changes in business models hitherto pursued by big operators and trend-setters like Airtel, Vodafone and R-Com. The chances are the tariffs will fall further. The SMS and roaming charges too are expected to take a hit. Both these rates are at present very high. Lower termination charges enforced by TRAI are still not low enough and deserve to be brought down further. This is good news for customers though not for the erstwhile private sector telecom cartel, which forced their subscribers to pay for a minute even if the calls were for a few seconds. When the cellphone service was first started in the early 1990s, subscribers were charged even for receiving calls. The cartel is being forced to give in as a result of growing competition from a host of aggressive new players.

There is no doubt that the tariff war can't continue forever. It will find an equilibrium point sooner than later. A consolidation in the industry, which Bharti is currently talking about, is bound to take place. Some players are certain to exit. However, a time frame towards such a consolidation may not be easy to forecast. Much will depend upon the laws governing the move, particularly in areas such as cross-holding, foreign control, etc. A consolidation may be required even in the public sector, which should be represented by one strong company instead of two, if it has to survive the competition. A change in the government policy on foreign participation in the telecom sector, which has a strong security implication, will also have a lot to do with any future business consolidation. Until then, let customers be the king. (IPA service)