My Article on Disputes between TRAI and Dept of Telecom in October 2005
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 protege 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 Autority de Regulation des Telecommunications and
Bundesministerium f 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 rp@k.st or p@r67.net
Ravi Visvesvaraya Prasad
19 Maitri Apts
A - 3, Paschim Vihar
New Delhi 110 063 India
rp@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
ravi.v.prasad@gmail.com