Regulatory Disruptions in the Indian Telecommunication Industry

The dimensions of technology-led, business model-led, and services or product-led disruptions are well established. However, scant literature considers regulatory actions and assesses their disruptiveness. Using the definition of disruption from Kilkki et al. [2018], this paper proposes a “Disruption Assessment Framework†for assessing the disruptiveness of regulation. The “Disruption Assessment Framework†considers measures related to redesigning of survival strategies of existing agents and the percentage of the agents in an ecosystem that are disrupted. Using the Disruption Assessment Framework, the authors analyze the disruptiveness of four key regulatory actions from the telecommunications industry in India. The creation of TRAI, the introduction of Calling Party Pay, the permission to use Wireless in a local loop, and the issuance of a 2G license in 2008 are found disruptive. The study reveals that regulatory actions can be disruptive and may negatively impact the market, unlike technology-based innovations. Contrary to regulatory objectives, disruptions due to regulations may impact market and consumer welfare negatively. This paper is a novel attempt to analyze the disruptiveness of regulatory initiatives taken in the telecommunications industry in India. Findings from this study can be incorporated into the regulatory impact analysis and regulatory consultation process to identify risk from regulatory disruption ex-ante.