My Article on Disputes between TRAI and Dept of Telecom in October 2005 issue of RealPolitik Magazine
ravi.v...@gmail.com
issue of RealPolitik Magazine
Copyright: 2005, Ravi Visvesvaraya Prasad
International Publishing rights in all media with RealPolitik Magazine
Reproduction and Forwarding strictly prohibited.
International Copyright in all Media, Ravi Visvesvaraya Prasad, 2005
By Ravi Visvesvaraya Prasad
For several months, telecom circles have been abuzz about the bitter
battle between the Minister of Communications Mr Dayanidhi Maran and
the
Chairman of the Telecommunications Regulatory Authority of India Mr
Pradip Baijal. Both of them want to appropriate the credit for
decreasing telecom tariffs, for the rapid growth in the number of
subscribers nationally, and for subsidizing rural telephony.
Baijal was considered to be a protégé of Mr Arun Shourie, the telecom
minister in the previous NDA government. Maran wants to protect the
public sector Bharat Sanchar Nigam Limited and Mahanagar Telephone
Nigam
Limited from private sector competition and has painted TRAI to be in
the grip of private operators. Several media reports appeared about the
favours allegedly provided by Baijal to Reliance InfoComm, and
Communist
Party of India (Marxist) member of parliament Mr Nilotpal Basu called
for Baijal'sdismissal. The battle became so bitter that Maran
prevented
Baijal from going abroad to chair a conference of international telecom
regulators.
In May 2005, when TRAI released its recommendations on spectrum
allocations to telecom operators, Maran snubbed it, stating that TRAI
had exceeded its terms of reference. Rejecting most of TRAI's
recommendations, Maran pointedly statedthat DoT's Wireless Planning
and
Coordination Wing was fully equipped to handle all spectrum issues
"efficiently
and impartially".
TRAI recommended the setting up of a national interconnection exchange,
which would have greatly reduced interconnection costs of all
operators.
But this would have cut into the artificially inflated revenues of
BSNL,
which had a legally mandated monopoly on interconnection. The minister
killed TRAI's proposal.
The latest dispute between the minister and TRAI is over Access Deficit
Charges. ADC is a cross-subsidy paid by private operators to BSNL and
MTNL. It is a fraction of the charges of each international and
long-distance
call made by the subscribers of private operators, and is used to
subsidise the rentals charged by BSNL and MTNL from their subscribers.
TRAI wanted to drastically reduce ADC, which was a consumer friendly
move since it would have greatly reduced the charges that subscribers
of
private operators would have to pay. Legally, setting tariffs is the
responsibility of TRAI alone, and the ministry has no locus standi
whatsover. So, to protect the revenues of BSNL and MTNL, Maran resorted
to the legal legerdemain of issuing a Policy Directive to TRAI under
Section 25 of the TRAI Act of 1997, which says that the government may
issue policy directives "in the interests of the sovereignty and
integrity of India, the security of the State, friendly relations with
foreign States, public order, decency or morality."
It is difficult to see how the reduction of ADC, a consumer friendly
move, affects the "sovereignty and integrity of India, the security
of
the State, friendly relations with foreign States, public order,
decency
or morality".
TRAI retaliated that it would make the minister's letter (which was
marked "Top Secret") issuing this policy directive public. TRAI
asserted
that under Section 11 (4) of the TRAI Act, it was required to
"ensure
transparency while exercising its powers and discharging its
functions",
and so it would have to make public all the confidential directives
issued to it by the government.
The Prime Minister's Office is now intervening in the matter. The PMO
has reportedly advised Maran to bide his time until Baijal retires in a
few months.
Such disputes between dominant operators / ministries and statutory
regulators are not unique to India, as seen by the prolonged battles
between AT&T and Federal Communications Commission in USA, British
Telecom and OFTEL in UK, Telstra and Australian Communications
Authority,
and even Singapore Telecom and Telecommunications Authority of
Singapore.
One saving grace is that TRAI has far more powers and independence than
telecom regulators in most other countries, at least on paper. 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.
Even FCC and OFTEL, often held up to be role models for regulators, are
executive branches of government. 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.
In contrast, TRAI is an independent statutory body.
(750 words)
By Ravi Visvesvaraya Prasad
The author, an alumnus of Carnegie Mellon and IIT Kanpur, is an
entrepreneur and consultant in telecommunications and information
technology. He may be contacted at r...@k.st or p...@r67.net
Ravi Visvesvaraya Prasad
19 Maitri Apts
A - 3, Paschim Vihar
New Delhi 110 063 India
r...@k.st r...@50g.com p...@r67.net
Tel: {91}(0) 98 117 56789, 92 121 13579, 987 12 45678
Copyright: 2005, Ravi Visvesvaraya Prasad
International Publishing rights in all media with RealPolitik Magazine
Reproduction and Forwarding strictly prohibited.
International Copyright in all Media, Ravi Visvesvaraya Prasad, 2005
Published in RealPolitik Magazine, October 2005 issue