The Telegraph
Since 1st March, 1999
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The consumer of telecommunications services in India today is caught in the middle as cellular companies and limited mobile service providers fight it out over the issue of interconnection. But will the Telecom Regulatory Authority of India be able control them or will it helplessly stand by and watch' That is the question consumers in India and regulators worldwide ask as the tense battle is fought.

Regulators are supposed to be “independent” and cannot afford to be perceived as inactive or biased, particularly in a market where the stakes, financial and strategic, are very high. Private operators in the telecom sector have been clamouring for a regulator which has the courage to act independently.

Snide remarks have been made in the past about many of TRAI’s decisions. But dissent came out in the open when the cellular operators issued a joint advertisement accusing TRAI of being biased in favour of limited mobility players because it had refused to set a level playing field for providing telecom services. On Monday, the former backed down and agreed to provide interconnection to the limited mobile service providers, but the concession is still small. But TRAI too seems helpless. It is easy for the government to dictate terms to the regulator since it is the communication minister who answers all questions raised in Parliament on telecom issues. Also, TRAI office-bearers have been appointed by the government, which has also fixed their salaries and delineated the ambit of their powers.

Is it then the unstated conviction of the powers-that-be that the government regulates the regulators' How else does one explain the amendment introduced in the TRAI Act in 2000 which took away the adjudicatory powers of the regulator and vested them with the telecom dispute settlement appellate tribunal' This definitely clipped the independence of the regulator.

One school of thought believes that it is not the powers bestowed on a body that makes it powerful or weak, but the personality of the incumbent who needs to display the leadership qualities and vision to deal with situations using the powers conferred on him.

Be that as it may, the battle between limited mobile service providers led by Reliance Infocomm on the one hand, and cellular operators spearheaded by the Bharti group on the other, has held customers to ransom. Now, even the government-owned Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited have jumped into the fray by threatening to cut links with cellular mobile operators. These state-owned telecom companies and cellular operators have already snapped links in a few states, paying little heed to the needs of the customers.

Cellular operators decided last week to cease links with basic operators in some zones but were immediately ordered by the regulator to restore them. When they refused, TRAI issued them a show-cause. As allegations and counter-allegations flew thick and fast, state-owned telecom companies hit back by cutting off links with the cellwallahs. TRAI wants to take action against cellular operators for refusing to heed its directives. But cellular operators claim that the issue is pending before the TDSAT and that the regulator has no right to issue any directive.

Everyone involved in the drama — the government, the regulator, and private- and government-owned telecom operators — swear that they have the best interests of the customers at heart. Unfortunately, their actions belie their intentions. The regulator has a much bigger role to play than merely threaten cellular operators with the cancellation of their licences. It is time the regulator acted to bring some decorum in the sector, not necessarily by initiating penal action against anyone, so that consumers’ interests are preserved. After all, many business and critical applications depend on the telecom services.

Sadly, telecom is not like the public transport service where the government can requisition vehicles from other states whenever private transport operators threaten to go on strike.

Private cellular companies claim they are ready to offer interconnection to limited mobile operators on the principle of equity and reciprocity. Basic and limited mobile operators, on the other hand, claim that interconnection is their basic right. But don’t they have the responsibility also to maintain the commercial viability of the sector and to prevent the possible emergence of a monopoly in the current crisis' If that happens, customers will be at mercy of one, or maybe two, operators. What will happen to competition then'

The regulator has an important role to play to bring the two warring parties to the table and sort out the vexed issue. The delay in doing so has resulted in both parties seeking the government’s intervention.

But what is the need for an “independent” regulator if the government is to intervene everytime' Besides, the government should stop interfering in regulatory issues — however much private entities might request it to — and help strengthen the institutions it has set up to deal with them. It should explore ways to ensure that regulators in any sector are given the necessary freedom to be transparent and not bogged down by controls —in terms of financial resources and accountability.

A middle-path to settle both the short- and long-term issues would be for a dialogue to be opened up between the operators, with or without the intervention of the regulator. That will be a sign of true market-driven competition.

The convergence bill, now put on the backburner, had explored the possibility of appointing a regulator with the help of a team of experts comprising representatives of the government and opposition and industry. If needed, the TRAI act can be amended to make it truly “independent”.

This is also not the first time the regulator faces a standoff on the issue of interconnection. When Bharti Enterprises launched its basic telephony services in Indore a few years ago to emerge as the first private player to break into the hitherto jealously-guarded public sector fiefdom, the service arm of the department of telecommunications, which has since metamorphosed into BSNL, delayed interconnection. It required government intervention to sort out the matter then.

The debate over independence of the regulator has come full circle, at least in the case of limited mobility services. In 1997-98, when TRAI had refused to allow basic service operators from offering limited mobile services, the government had approached the courts and argued that the regulator was not independent and that its observations were against the government’s policy to increase tele-density.

Cellular companies had then claimed that the regulator was independent and that it was the government which was not accepting its directives. The result was the amendment to the TRAI Act 1997. The reconstituted TRAI permitted basic telephone operators to offer limited mobility services after the entire matter was discussed and debated by the group on telecom and information technology — which had the interesting acronym GoT-IT.

Cellular mobile operators had then accepted the verdict of TRAI, disallowing limited mobile service, but now they claim that the regulator is not independent. It is clear that the issue is not whether the regulator is independent — it is a matter of the perception of the government and the operators.

Even in the world’s leading open-market proponent — the United States of America — it took a long time for a strong regulator and powerful consumer court to emerge. India is not any different. But any hasty move on part of the regulator or avoidable intervention from the government can derail the process of liberalization. The regulator in a market economy plays an important role by being impartial at all times.

The government, the regulator, the operators and consumers — all have an important role to play in this battle. While the government can take necessary measures to instil confidence in the operators that it will not use its powers as an excuse to intervene, the operators can show that they are capable of sorting out matters amicably across the table.

As for consumers, they should wait awhile so as not to become ammunition in this war for market access. A strong and independent regulator is in the interest of the consumer in order to ensure that the profit made by operators does not burn a hole in the consumer’s pocket.

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