Telecom Regulatory Authority of India

Over the past few years, there has been a spurt of the telecom growth. Even though it has been in fits and starts. Envisaged in the National Telecom Policy was the role of a regulator. However, as the action on the ground has demonstrated, Telecom Regulatory Authority of India has clearly failed in its mandated role. The Indian telecom has had strange bedfellows. Department of Telecom was the regulator as well as the service provider. It made sure that its two very ugly daughters Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telecom Nigam Limited (MTNL) remained at the forefront of inefficiency.

TRAI was set up much later and it was envisaged to be a regulator and to safeguard the interests of the consumers. TRAI was in a bind and fix because most of the decisions that it ever took were either challenged in the courts or ignored. This has indeed limited its scope over the period of time whereby it cannot claim its mandate.

Seeing that a large number of cases were dragged to the court, the government of the day set up Telecom Disputes Appellate (TDSAT). TDSAT has however usurped the quasi-judicial powers of TRAI, which does not reflect a healthy regulatory regime.

Chief among the problems that TRAI is facing is the limited scope of its role in the market. Its method of financing wherein the telecom operators need to set aside 1% of their revenues for the same. There have many contentious issues of the fixed licensing fees whereby TRAI mandated them to shift to revenue sharing model. The license fee was unusually high which the GSM operators bid in, before they started their services. The setting up of Universal Service Obligation (USO) fund for subsidizing the telecom services in the rural areas. This has hung fire recently for the refusal of BSNL to expand its services. However, TRAI has been almost powerless to affect the spread of the telecom in areas where it has deemed to be important. Another area is the Access Deficit Charge, which BSNL has been claiming on dubious grounds. TRAI wants this to be phased out over a period of time wherein BSNL is not happy over the idea.

Over the past few years there have many task forces and committees to look into the spread of telecom in unviable areas. One such dealt with the need for the broadband access since the optic fiber has reach in most parts of the country.

TRAI s scope has been limited to procedural matters and some say cynically that the regulator is just an address in New Delhi. However, matters came to head when the broadband policy was announced. Most of the recommendations of TRAI were ignored in the best interests of BSNL. They had envisaged tax holidays and opening up of the local loop to private players. This evidently did not happen and TRAI was left twiddling its thumbs.

In this backdrop, the regulatory regime is ineffectual. Or rather, it has made to be one. This is the main reason why infrastructure funds are not flowing in the sector in a manner they ought to be.

There is a clear reason behind this. As the foregoing account goes, the telecom policy has been changed to suit a few people depending on the proximity of those people in the corridors of power. Reliance got license to start telecom services only as limited mobility clause. However, they announced roaming for the customers in the name of call divert. This obviously hurt the businesses of the GSM operators. TRAI could not really affect Reliance since technically speaking there was not any violation of the license. Paying a paltry sum as compared to the GSM operators, Reliance finally managed to get a unified license for its services and hence started offering full-fledged mobile services.

This kind of twisting of the laid down policy does not really enthuse the investor who would clearly investing his money on a long-term basis. Typically, infrastructure funds remain locked up on a long-term basis. This means that banks typically would not be able to offer the funds anyway. This indeed calls for a radical overhaul of the investment climate. There is a talk of using our bulging foreign reserves for the same purpose. However, at the point of repetition TRAI's role needs to be clearly defined, as well as, clearly mandated for any dispute resolution. It also needs to be armed with more powers than it is currently now. For example, it could cancel the license of any operator who has flouted its regulations. This argument should hold true for BSNL! In the name of national interest, they have made sure that most of the consumers cannot reap the benefits of a robust telecom regime.

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This post was submitted by Dr. Abhishek Puri on the Broadband Blog on Techwhack.