Too Many Cooks in India's Telecom Kitchen

As wake up calls come, this one was a resounding one.

On June 11th Business Standard reported about a Ministry of Corporate Affairsministerial note outlining its strategy to bring all industry sectors in Indian within the ambit of the Competition Commission of India (CCI). The note also rejected the Department of Telecommunications' (DoT) request for India's Telecom sector to be kept out of the CCI's purview.

DoT had argued that the job of regulating competition was already being done by the extremely competent and capable Telecom Regulatory Authority of India (TRAI), so there was no need for a CCI to step in.

That's when it came, the call.

TRAI was merely a facilitator or enabler of competition, not a regulator, said the ministry.

To make matters worse, Telecom minister Kapil Sibal had on May 31st said TRAI was not a policy making body either. "Trai will not make any policy. Any major policy changes in future will be brought back to cabinet," he said.

So now the question is: if TRAI is neither a regulatory nor policy making body, what is it?

The Doctor Has Long Left the Building

While these questions may sound stark and existential, truth is successive governments have been chipping away at TRAI's powers ever since it came into existence.

Prior to that, the DoT was itself an all-powerful Judge Dredd kind of entity - creating policy, handing out licenses, and competing with private players to offer telecom services. Absolute power corrupts, we all know, and so it did the DoT too.

But under pressure from the new private players and the Supreme Court, it was forced to cede its regulatory responsibilities to TRAI from March 1997. It however continued to hold on, dearly, to policy making, licensing and operational roles, in spite of being a competitor too.

DoT made its displeasure at this know in January 1997, just two months short of TRAI's imminent formation, by overnight hiking outgoing tariffs from its landline numbers to mobile ones from Rs.1.40 per minute to Rs.32.20, a nearly 25-fold jump.

This move forced the newly formed TRAI under Justice S.S Sodhi, working out of the Hotel Ashok in New Delhi in the absence of even an office, to take on its own creator.

Sodhi tried his darnedest over the next two years to create a truly independent and far-thinking telecom regulator in India, but was stymied at every step by the DoT and the government which opposed, questioned or challenged his orders and powers.

By the end of 1999, Sodhi was at the end of his tether, desperately asking the government for real powers in order to function.

A few months later in January 2000, M.S Verma, a former chairman of the State Bank of India was appointed as the new chairman of the TRAI. And with that, TRAI went from being a neutral regulator to being almost an extension of the government.

Over the years the government would using a mix of court cases and legislation to successfully strip TRAI of most powers that had any impact. It could not adjudicate in disputes (that role went to the TDSAT); its recommendations weren't mandatory for the government; it couldn't regulate better revenue sharing agreements; it couldn't hire competent people at market salaries.

Converged World, Diverged Regulators

If there is one word that best captures the direction towards which Telecom technology and regulators are headed the world over, it is "convergence".

In such a converged world, consumers can use devices like a smartphone, PC or tablet almost interchangeably to make voice calls, have video conferences, watch TV, play songs or transfer photos.

On the technology and infrastructure side too, 3G or 4G cellular, wireless or wired broadband can be used interchangeably to carry any information.

Naturally, it makes sense to have "converged regulators" who have both oversight and authority across multiple industry sectors like Internet access, Media, Telecom, Infrastructure to ensure that the interests of the consumer are protected.

Ofcom in the UK and FCC in the US are two of the best examples of such converged regulators. Ofcom, the newer of the two, came into being in 2003 as a converged regulator that would combine the functions of five different regulators across TV broadcasting, telecom and radio. Today it is considered one of the most well-thought out converged regulators around the world, in spite of recent attempts by the Tory government to strip away its policy-making powers.

But believe it or not, just two months after the Ofcom bill was first proposed to the UK Parliament in June 2001, there was a similar bill that was tabled before the Indian Parliament too - the Communications Convergence Bill.

Like the FCC and Ofcom, it proposed the creation of a new "super regulator", the Communications Commission of India, that would regulate TV, telecom, Internet and radio.

Over a decade later there is no sign of neither the bill being passed, nor of the new regulator.

Instead what we have is a deliberate mishmash of bodies that fight with each other and with private license holders over all matters, big and small.

TRAI, with no real powers, is reduced to holding acrimonious 'open houses', writing optional recommendations and drafting opinions. It has no real power.

TDSAT hovers like a sword constantly above TRAI's head, with private players and the government running to it at the drop of a sword.

The Department of Telecom and its boss, the Ministry of Communications and IT, retain and use all the discretionary powers that have the potential to influence the competitive playing field in Telecom. Instead of the "light touch" approach used by progressive regulators around the world, these two walk loudly and carry big sticks.

"It is time for legislative action. The government has to decide as a matter of policy what it wants the role of the regulatory authority to be. It is really for the government to consider defining a policy now about what kind of environment they want in the telecom sector," said a frustrated Justice Sodhi in an interview with Rediff in October 1999.

13 years later, unfortunately, nothing seems to have changed.

The thoughts and opinions shared here are of the author.