Has telecom regulation taken a beating?

DEBATE

No one's doubting Maran's recent initiatives, but the TRAI remains emasculated on critical issues like interconnection and BSNL's monopoly

Mahesh Uppal,
Director, Com First (India) Private Limited

"A regulator without robust control of the interconnection regime can hardly ever be effective"

Given the tasks before them, of ensuring a competitive and efficient market, telecom regulators can be effective only if they have sufficient say in entry and exit of players and if they can ensure that new entrants can interconnect their networks to the existing network. Indeed, Trai Act of 1997 was amended in 2000 to fortify the regulator's powers in these two areas. The amendments made it obligatory for the government to consult the regulator before licensing new players and virtually removed government powers in tariffs and interconnection. In spirit at least, all these amendments have been violated in recent times.

While most have welcomed Telecom Minister Dayanidhi Maran's decision to reduce the licence fees on long-distance telephony to a fraction and the freeing up of Internet telephony, it will be dangerous to ignore the other signals. The minister seems increasingly involved in the nitty-gritty of telecom regulation which seems far removed from conventional policymaking. There is no evidence that the minister has reconciled this decision with recommendations that the Trai made to him a year ago or to explain why the fees he has proposed are so different from Trai's proposals.

Trai has also only barely survived an assault on its authority on interconnection. There are close to 1,000 applications for interconnection with BSNL in which Trai has been virtually impotent to act till just last weekend. TDSAT had earlier ruled that a complaint against an operator failing to interconnect makes the matter a dispute which only TDSAT is empowered to resolve. The defiance or delay in compliance of these rules could cripple the player seeking interconnection but Trai could do little. A regulator without robust control of interconnection regime can hardly ever be effective.

The minister has openly opposed Trai's proposals to control BSNL's market dominance by getting it to share its infrastructure, and on the ADC issue, when the Trai tried to correct course (experts found several inconsistencies in its ADC brainchild) by merging ADC with the USO fund, it got a directive from the minister asking it to refrain from taking a decisions related to ADC.

It is not that Trai's processes have been unimpeachable. It has failed legal and expert scrutiny more than once. Its treatment of unified licensing got it stinging rebukes from the judges who questioned its fairness. Baijal believes, probably rightly, that the increased competition as a consequence of Trai's proposals in the sector have led to explosive growth and cheap mobile services. That Maran has undoubtedly done better than the regulator's team on some issues, too, is undeniable. Some of his proposals on long distance will probably deliver healthier competition in a relatively short time. The minister's proposals would deliver a de facto unified licence far more effectively and sooner.

Thus, both Maran and Baijal could claim defence in their decisions being in the interest of consumers. They could both be broadly right. However, the way in which the decisions have been taken in recent times have severely undermined Trai and, more pertinently, undermined the role of regulatory process.

T V Ramachandran,
Director General, COAI

The announcement seeks to introduce unified licensing in the spirit enunciated by the TRAI

It is both untrue and mischievous to suggest that the government is, in any manner, bypassing the regulator. In fact, the recent landmark announcements by the Union Minister for Communication and IT Thiru Dayanidhi Maran constitute a brilliant piece of policy engineering that seeks to introduce unified licensing in the spirit and intentions enunciated by the Telecom Regulatory Authority of India (Trai). I believe that these announcements are fully supportive of the regulatory framework and are intended to implement the regulatory recommendations after fine-tuning them to make them more meaningful and effective.

To illustrate, reduction of revenue-share license fee to 6 per cent, complete waiver of roll-out obligations and reduction of entry fee for long distance service "" aren't these in consonance with the spirit and intent of the Trai recommendations? Isn't the permission to access providers for Internet telephony, Internet services and broadband services completely in tune with the concept of convergence that is wholeheartedly endorsed by the regulator and the consumers? Isn't the announcement as regards IP-VPN licences in sync with the reality that the march of technology has blurred the dividing line between pure data and voice services? Maran's announcements reflect the understanding that the licensing and policy regime must be such that it permits India to keep pace with technological and market developments, to help build economies of scale and scope and enhance competition. As a result, better services will be made available to the Indian consumers at cheaper prices, which, in turn, will facilitate achievement of the government's target of 250 million telephone subscribers by 2007.

These announcements will also provide excellent support for India's flourishing BPO/KPO sector, which is truly the nation's pride, as hereafter, NLD/ILD licencees will be able to access the end-user directly for provision of leased circuits. This will greatly help improve the BPO/KPO sector's costs and efficiencies and, thus, further enhance India's competitive edge in the ITES segment.

The minister's announcements also seek to level the playing field for existing NLD licencees, who will be able to avail of significant concessions under the new policy regime "" a whopping 60 per cent reduction in revenue-share license fee, removal of onerous roll-out obligations and complete waiver of all bank guarantees. Additionally, these announcements will open up a hugely-profitable new revenue stream for existing licensees who will now be able to sell their surplus bandwidths amongst the numerous new NLD/ILD licencees.

The conclusions are inescapable. The minister has extracted the true essences of Trai's recommendations on unified licencing and, after brilliantly improving and fine-tuning them, moulded them into a policy that will provide phenomenal benefits to Indian consumers, service providers and the government. These latest policy announcements are truly a worthy successor to the world-class NTP-99 and constitute a historic step in the process of telecom reforms and liberalisation in India. These announcements need to be seen, understood and lauded from this perspective.