The automotive industry have on the economy.

Comparing Indian and US telecom industry , why has the US industry become much less competitive and anti-consumer as compared to its Indian counterpart, although the US is relatively a more market based economy?

• The US telecom industry seems to think much less about attracting more consumers nowadays by innovating due to much less competition.

• Answer:

  The US telecom industry is consolidated in a classic economic sense.  In the US, there are 2 players which account for ~80% of the subscribers (both mobile and fixed line).  The next biggest ~10 handle another 15%, and then there are about 1200 which take care of the remaining 5%.  There are essentially no subscribers who are "un-served". This is not the case in India.  As of April 2011, only 12 million users had broadband internet.  Mobile penetration is better at ~70%.  However, that still leaves ~400 million people who have no telephony service in India.  There are multiple carriers (both mobile and fixed line) who are still expanding their coverage to capture this.  Of course, many of those un-served consumers in India can not afford service in any form what so ever, so they are not necessarily the most attractive area of expansion. In the US, the Universal Services Fund reimburses US operators (both mobile and fixed line) for providing and expanding services to un-served subscribers.  This is funded by a tax on every phone bill.  This is in fact how many of the 1200 operators remain solvent.  They take funds from the 80% to pay for operations to the 5%. The regulatory system in India does not look or act anything like the USF system in the US.  India's environment is not stimulating land-line based services in any meaningful form. The benefit of the USF system in the US is that virtually everyone can have a single party phone line and broadband internet.  And as a result, for the most part, they have these things.  The downside of this is that there are many telephone operators who are not economically solvent without it.  There are tariffed rates for operators who participate in USF recovery.  They have certain prices and product offerings that they have to abide by. For many of them, once they start to exist as an operating entity by way of this government subsidy, they no longer have the incentive / skills / resources to innovate product outside the tariff structure. The summary is this - Consolidation can be naturally less 'competitive' for many customers.  Individually, these customers are not financially interesting, and so there is a form of tacit collusion which occurs.  If you don't like the term 'collusion', we can call it "detente". Government regulated subsidies take a lot of the wind out of the sails of many would be competitors for the remaining consumers. I think if you looked at the market for enterprise services, the US market is much more competitive.