Indian Telecom

Strangler Fig Syndrome in the Indian Telecom Sector

Strangler Fig Syndrome

Life cycle of a Strangler fig provides for a fascinating drama. They literally kill other trees to propagate and grow. It starts as a fig seed dropped on a host tree by a carrier bird. The seed ensconced in a crevice of the host tree germinates and sprouts an aerial root. At this point the seedling does not harm the host tree. Situation turns interesting, once the root reaches the ground. It grows rapidly forming a mesh of woody branches around the host tree. The roots thicken and tighten around the host tree trunk literally strangling its growth. Its roots in the ground   amass all the nutrients   depriving the host tree. In the meanwhile, the crown of the fig plant grows foliage at the top competing for sunlight with the host tree.  Deprived of food and sunlight the host tree starts rotting and eventually dies. The dead host tree decomposes leaving the strangler fig standing on a column lattice roots around an empty core.

Figure A Strangler Fig sapling
Figure B Strangler Fig encircling the host tree
    Figure C Fully grown Strangler fig with hollow in place of the host tree

Some naturalists believe that birds do their own farming and disperse seeds of fruit bearing trees. On the other hand, naturalists like David Attenborough think that it is the plants’ strategy of propagating – the seed of the plant has an outer coating that stimulates a sticky secretion in the gut of the bird. This means that the bird has to wipe its cloaca on a twig to remove the dropping – thus the seed entrenches itself on the host tree and starts its cycle of life. Strangler Figs change the whole treescape – all other types of trees are replaced by figs (very evident in Amazon rain forests).

We dwell on the players and the process in some detail as we will see something akin panning out in the Indian Telecom market – the similitude is striking.

Strangler Fig and the Indian Telecom Market

Over the last eight weeks (June- July 2020), an Indian   telecom company was in news for getting   investments worth $30 billions   from multiple   investors including the two of the big 4 viz. Google, Facebook. This helped the Indian telco to become debt-free and the Telco’s principal shareholder to move up the Billionaires list to the fourth position. All this happened in midst of a severe bear market and the Telco’s parent company’s stocks were one of the few gaining stocks.

Analogies as a rule go so far and no further, but let us stretch it bit and consider Indian Telecom as a diversified jungle of host trees – trees being metaphors for existing telecom service providers; the said Indian Telco as the carrier bird; and Google / Facebook as the Strangler Figs.

Let us examine how the strangler fig syndrome is panning out in the Indian telecom sector now

  • Before 2016 the Indian Telecom market was the fastest growing and the second largest market in the world with multiple competing telcoes thriving and innovating to stay in the race. The customer never had it better.
  • In 2016 a new Indian telco entered the market and offered its services free   for the first one year. In the process they gained around 35% market share and the Indian state lost AGR revenues as no revenues accrued for the Telco
  • Two players viz, the state-owned BSNL and privately-owned Vodafone are one the verge of shutting down – one main reason being loss of   business due to the predatory pricing war.
  • Google and Amazon have managed to drop the proverbial fig seed. Between the two of them, they virtually control   the content and the app market. Now with 7% and 9% stake respectively in the Indian Telco, Facebook and Google will   surely be represented on the board.
  • Facebook
    • A couple of years ago Facebook had tried a backdoor entry into the Indian market through its offering of Free Basics partnering with the now dead RCom. Thankfully TRAI banned it on grounds of breach of net-neutrality
    • Thus Free Basics in a new avatar will make a grand entry as an introductory free service –  a practice perfected by the Indian Telco when it launched its 4G/LTE   service in India.
    • As is known, Free Basics would provide free access to a select group of apps and services from partnering companies. This of course   would put the non-partnering companies at a disadvantage and perhaps out of business
  • Google
    • In case of Google the carrier telco would get a huge anti-competitive advantage. If telco A is in a position not to charge internet access fees for Google service while telco B is not, it is a no-brainer which telco the customers would flock to.

In next couple of years, most telecom service providers in the Indian Telecom market will have been strangled by the Googles and Facebooks –  the metaphorical figs.  The market will have moved from a free-for-all competitive market to a monopolistic or at best a duopolistic market controlled by Facebook-Google-Jio behemoth. The customer will have to get used to a set of services with Contents, Service Quality and Price Points provided by the behemoth.

Disclaimer

Conclusions and surmises arrived at in this write-up are predicated on information available in public domain. References are not cited for ease of reading and the fact that this is more of an RFC document purporting to throw open the debate. Interested  may write to dev.baul@gmail.com  for  further exchanging of notes.

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