Nature of Telecommunication Industry
The Telecommunication Industry is Oligopoly.It is one of the largest and most profitable market in the world. the most identifying charisteristics of an olgoploy is the number of sellers .In the case of telecommunication industry the number of sellers are small, each of them holding a sizable percentage of the market share.
When the firm working within an oligopoly, the number of sellers are so small that must anticipate their competitors reaction before making pricing decision. Being an Oligopoly the barriers to entry in the telecommunication industry is very high. It is extremely difficult for new firms to enter in the market as a barriers such as control over customer switching cost and strong brand image block access to new firm.
Example- Airtel existing loyal customer would less chance to switch to other telecommunication company because they have strong customer loyalty and trust in brand which they are using.
Characteristics of Oligopoly Market-
• Interdependence – Telecommunication companies are interdependent to each other in terms of pricing and tariff plans.
• Advertising- under oligopoly major policy change in one firm likely to have immediate effect on others companies, so advertising is key tool in hand of an oligopolistic.
• Competition- Every seller keep watch on their Rivals moves
• Barriers to entry- For long run of companies there is some barriers.
• Group Behaviour – There is competition between companies but they have different common goals.