© Ravi
Visvesvaraya Prasad, December 1999. Reproduction strictly prohibited and
will be prosecuted without any warning.
Published in The Telegraph, Calcutta, India on Friday, 17 December 1999, on the Edit Page. Go to http://www.telegraphindia.com Click on Archives and go to issue dated 17-12-99. Click on Editorial. Then Click on Regulator Off The Hook |
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At
the Federation of Indian Chambers of Commerce and Industry, the prime
minister played to his audience when he announced that the Telecom
Regulatory Authority of India (TRAI) would be strengthened and the
Indian Telegraph Act of 1885 overhauled. However,
it would be naïve to believe that the prime minister would be able to
reform the telecom sector without considerable opposition, even if he
was really serious about doing so. On paper, TRAI already has far more
powers and independence than almost any other telecom regulator, but
powerful interests in the executive, legislative, and judicial branches
of government have successfully reduced it to impotence. While
they will pay lip service in public to the concept of an independent
statutory regulator, no politician or bureaucrat will willingly cede
control, especially in a lucrative sector like telecom. And certainly
not largesse-dispensing politicians like Ram Vilas Paswan or champions
of the Indian Telecom Service like Pradhan Saran, Secretary of the
Department of Telecom Services. If
successive governments were really serious about reforming the telecom
sector then they would not have deliberately confined the reports of the
Nanda committee on overhauling laws and regulations and the Athreya
committee on demonopolization and privatization to cold storage for
nearly a decade. While every recommendation of both these excellent
reports was entirely in the national interest, and especially in the
interest of consumers, their implementation would have required
politicians and bureaucrats to cede power. Prolonged
battles between TRAI and the Department of Telecommunications (DoT)
regarding their respective roles and powers are to be expected. Most
countries that have demonopolized or privatized their telecom sectors
have witnessed fierce turf battles between incumbent operators and
regulators – AT&T and FCC, British Telecom and Oftel, Telstra and
Australian Communications Authority, Hong Kong Tel and Ofta, even
Singapore Telecom and Telecommunications Authority of Singapore. Even
the judiciary regards TRAI as an intrusion into its domain, arguing that
neither Federal Communications Commission in USA nor Oftel in UK have
powers to deliver judgements. The first draft of the TRAI Act in the
mid-nineties envisaged TRAI to have the status of a High Court and
powers to imprison transgressors. This was later watered down in the Act
as passed by Parliament in 1997 to give TRAI the status of a mere civil
sessions court, subject to the jurisdiction of the High Court of Delhi. Parliamentarians
had very carefully, and subtly, drafted the TRAI Act to be deliberately
vague and the terms used to be capable of multiple shades of meaning.
The High Court of Delhi has consistently upheld Parliament’s
terminology, in contrast to TRAI’s interpretations of several words in
the Act. While staying MTNL’s entry into cellular services as well as
the internet policy, TRAI maintained that it was mandatory for the
government to seek its recommendations before introducing new service
operators. The High Court of Delhi overruled TRAI, pronouncing that the
word “recommend” had a connotation of a discretionary element which
could be exercised by the government as it pleased. Justice Usha Mehra
pointed out that if TRAI’s interpretation were to be correct, then the
government could be held to ransom indefinitely by a regulator which
refused to furnish its recommendations within a reasonable period. TRAI
is now perceived by the public as being anti-consumer rather than the
guardian of their interests and as being in the grip of private
operators. It has been incredibly naïve in its dealings with
politicians, bureaucrats and the media. Instead of pressing home its
considerable initial advantages vis-à-vis an ineffectual minister like
Beni Prasad Varma, TRAI fell into every trap laid for it. It did not
kowtow to ministers with large egos like Sushma Swaraj and Jagmohan, and
did not pay obeisance to the parliamentary consultative and standing
committees. It retained a public relations agency with no understanding
of power equations in the capital. It did not fully appreciate the pulls
and pressures on correspondents and editors and the equations that
newspaper proprietors had with politicians, bureaucrats, and telecom
operators. TRAI
also made major public relations gaffes when it notified new telecom
tariffs in March 1999. TRAI’s logic that subsidization of the local
loop by long distance and international telephony had to end and that
tariffs had to be based on costs was absolutely correct, but Jagmohan
managed to paint TRAI as a villain and successfully portrayed himself as
a champion of poor subscribers by refusing to raise rentals and local
call rates. TRAI should have instead packaged this as a tariff
rebalancing exercise, played down the fact that rentals and local call
rates were raised, and instead drawn attention to an overall basket of
services being available at lower rates. Instead
of adopting guerrilla warfare tactics, TRAI took on the much more
powerful DoT head-on, who successfully managed to label it as a
handmaiden of private operators, and proceeded to set the Comptroller
and Auditor General on it. TRAI’s attempt to intrude into the
Executive’s domain received a severe rebuff when the High Court of
Delhi ruled that TRAI had no jurisdiction over the government in its
role as a licensor, as well as in licensor-licensee disputes. Last
fortnight, MTNL went so far as to submit to the High Court of Delhi that
TRAI did not have the power even to regulate revenue sharing
arrangements between operators. Further, Pradhan Saran has successfully
ensured that the Department of Telecom Services will have a key role to
play in the drafting of the new regulatory act that the prime minister
has promised us. In
its efforts to protect its turf from encroachment by DoT and MTNL, TRAI
has totally lost sight of the larger objective for which it was set up
– that of protecting consumer interests. Some of its judgements have
caused considerable financial loss to the nation and almost every one of
them has hurt the interests of poor subscribers. Since the government
repeatedly refused to provide TRAI a copy of the Jalan committee report
on the internet policy despite several requests, TRAI stayed the
internet policy on the grounds that the government had not sought its
recommendations. This cost the country very dearly in terms of lost
export opportunities and prevented a drastic reduction of international
communication and business transaction costs. TRAI’s
judgements preventing MTNL from offering GSM cellular services, CDMA
Wireless-in-Local-Loop, and free phone connections to internet
subscribers have certainly harmed the interests of subscribers by
denying them the benefits of lower tariffs. Thousands had queued up for
MTNL’s CDMA WLL services and there were angry scenes when
registrations had to be suspended. MTNL, led by its politically astute
and media-savvy quartet of S. Rajagopalan, S. D. Saxena, A. K. Bhatnagar,
and G. D. Gaiha, was quick to project itself as a consumer-friendly
organization which had been unfairly persecuted by TRAI. The fact that
even a much-hated company like MTNL has been able to swiftly turn around
its public image is a severe indictment of TRAI’s totally failing to
protect consumer interests. At
least Indian politicians and bureaucrats have been far subtler than
their European counterparts in the ways they have sabotaged TRAI; in
Italy the regulator has not been able to even begin working due to
political pressure. In contrast to TRAI, which is an independent
statutory body and none of whose Members has any formal links with the
Department of Telecom or with any operator (though several senior staff
of TRAI’s secretariat are retired DoT officials or are serving DoT
officers on deputation to TRAI), in Luxembourg the chairman of the
incumbent operator also heads the regulator, and in both Belgium and
Portugal the ministers of telecom head not only the incumbent operator
but also the regulator. The French and German regulators are for all
practical purposes under the thumb of France Telecom and Deutsche
Telekom respectively. Both Autorité de Régulation des Télécommunications
and Bundesministerium für Post und Telekommunikation have been strongly
criticized by the European Commission on several occasions for not even
attempting to prevent abuses of dominant market position by these two
operators. Last fortnight, the European Commission severely indicted the
inadequate functioning of the telecom regulators of Italy, Belgium,
Denmark, Germany, Greece, France, Austria and Portugal. Even
FCC and Oftel, often held up to be role models for regulators, are
executive branches of government, with far less powers than the TRAI has
on paper. In USA, real clout over operators is wielded not by FCC but by
the utilities regulatory commissions in each state which have the power
to penalize operators. In UK, the Director General of Oftel is
subservient to the Minister for Trade and Industry, and Hong Kong’s
regulator is a government department. While they carry out surveys,
issue consultative papers, hold public hearings, draft rules and
regulations, recommend tariffs, and act as umpires, neither FCC nor
Oftel have the judicial powers that TRAI has. Which makes TRAI's
travails all the more surprising. Published in The Telegraph, Calcutta, India on Friday, 17 December 1999, on the Edit Page. |
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Published in The Telegraph, Calcutta, India on Friday, 17 December 1999, on the Edit Page. Go to http://www.telegraphindia.com Click on Archives and go to issue dated 17-12-99. Click on Editorial. Then Click on Regulator Off The Hook Reproduction of any portion of
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