Policy-induced theft

Reliance Infocomm is reported to be in the dock for allegedly routing international long-distance calls illegally, prompting BSNL to threaten to cut off its connections in at least 30 cities where such calls are said to have been passed on.

As this newspaper has been arguing for a long time, the primary responsibility for such theft, wherever it exists, lies with the telecom regulatory regime. Under the Access Deficit Charge (ADC), telecom companies have to shell out a hefty portion of what they earn to fund Bharat Sanchar Nigam Limited (BSNL).

While this amount is large for national long-distance calls (around 60 paise on calls where companies charge Rs 2.50 per minute), it gets worse on international calls.

Here, the subsidy that has to be given to BSNL works out to Rs 4.25 per minute on calls that cost Rs 8–10 a minute. So it’s hardly surprising that companies are tempted to not declare these calls to BSNL, and simply pocket Rs 4.25 per minute. Given that the total value of incoming international minutes is in the region of Rs 6,000 crore per annum, there’s a huge amount of money to be made through such “arbitrage”.

Indeed, it is possible that companies are indulging in such arbitrage on national long-distance calls as well, since shelling out a fourth or a fifth of your revenue to a competitor like BSNL is not the most attractive proposition for anyone.

What makes such arbitrage attractive from a telecom company’s point of view, over and above the financial saving, is the fact that BSNL uses this money to compete against the very firms who pay it the ADC—witness the savage cuts made by BSNL in all its tariffs over the past year, and you realise just what the private sector telecom firms are up against.

What makes the whole situation ludicrous is the telecom regulator’s position on the matter. Some months ago, when it was clear that the grey marketing of calls was skyrocketing, TRAI put out a consultation paper on ADC and discussed the idea of charging ADC as a flat revenue share of all calls, as opposed to the current system of levying flat rates on different types of calls, ranging from 30 paise per minute for intra-circle calls to Rs 4.25 for international ones.

Now, despite all the advice it has got to scrap the per-call ADC, senior TRAI officials have told this newspaper that the existing system is likely to stay. TRAI chief Pradip Baijal is also reported to have referred BSNL’s allegations against Reliance to the government, arguing that he is not a policeman and it is not his job to catch such theft.

Mr Baijal is wrong, as even a cursory reading of Sections 11 through 13 of the TRAI Act makes it clear that this is very much TRAI’s job; TRAI has the power to inquire into the matter, and to recommend, at the extreme, cancelling licences for non-compliance with the terms and conditions of a licence. It’s time TRAI woke up to its responsibilities, instead of just passing the buck.