Is the TRAI dead?

Given how Telecom Minister Dayanidhi Maran has cocked a snook at the telecom regulator, the Telecom Regulatory Authority of India (Trai), ignored its major recommendations for over a year, and not even bothered to go through the mandatory consultation process before completely overhauling the long-distance telephony rules, it appears obvious Trai has been dealt a body blow. More so since, when it comes to Trai’s other powers, to insist that telecom firms allow others to interconnect with their subscribers on fair terms, these have been circumscribed by the telecom appellate tribunal, the TDSAT. While it just takes a simple instruction from Maran to say interconnection disputes are part of Trai’s jurisdiction, the minister’s in no hurry to do anything of the sort—let Trai fight out the issue in the Supreme Court seems to be his view.

Indeed, since Trai has cosseted the long-distance players for so long (its Universal Service Licence, USL, recommendations in effect extended their cartel-like profits for a few more years), and given how it went along with Arun Shourie to bypass the rules to allow Reliance a backdoor entry into the mobile phone market, it’s hardly surprising that few are shedding tears over this. While formulating the USL in 2004, Trai’s argument for extending the protection was that long- distance telcos like Reliance, Bharti and the Tatas (VSNL) had invested good money and so needed some time to recoup this—an argument not used to give cellular firms more time during the WLL mobile days! It is, surely surprising, that while Maran has been talking of a cartel in the long-distance telecom market, Trai never paid attention to how the long distance-firms have nearly identical tariffs, to how this is the only segment of the industry where costs are way below the tariffs being charged, or to the fact that despite the access deficit charge payable on incoming international calls falling by over a rupee since February, the settlement rate with international carriers remains unchanged.

But merely hailing Maran as the all-in-one minister-cum-regulator in preference to the in-your-face Pradip Baijal, never mind your differences with the latter, can hardly be good for the sector. For one, the evidence of each sector, from power onwards, has shown that wherever there have been politicians, the pace of reforms has slowed. In the telecom sector, Maran’s predecessors, and later he, have been happy to protect the incumbent BSNL and VSNL in the days before it was privatised. The imposition of the access deficit charge, which drains out around Rs 5,000 crore annually from customers to line BSNL’s pockets, is just one example. Even today, BSNL refuses to provide leased line services to competitors for internet services like VPN and the rules of the game were changed overnight to facilitate this—VPN services, which were part of the internet licence, were suddenly reclassified as a new licence for which the entry fees was jacked up from one rupee to Rs 10 crore. BSNL also refuses to allow its competitors to connect to its customers—Trai has cited 918 such cases recently, of which 367 have been pending for more than a year. When Trai said, in line with the global practice, that BSNL would have to allow others access to its last-mile fibre going into consumers’ homes, the ministry simply ignored this recommendation. The short point is that while Maran has done the right thing by increasing competition in the long-distance business, there is a fundamental conflict of interest. First, he’s responsible for BSNL’s profits. Second, as a politician, his interests cannot be the same as that of the industry. The ADC and VPN cases are examples of just this.

But what if the regulator hasn’t done a good job? After all, in the WLL mobile case and the long-distance cartel, Baijal’s decisions were one-sided. So how do you prevent a regulator from being arbitrary? An arbitrary regulator, it is true, is a bad thing, but is any day preferable to an arbitrary politician. When a regulator gives a recommendation, he has to publicly consult all stakeholders, and then give a written explanation for the recommendation. If anyone finds the arguments flawed, he can go to the TDSAT, and later the Supreme Court. When Trai passed an order reducing tariffs for international leased lines, but didn’t share the basis of its findings, VSNL went to the TDSAT, which struck down the Trai order twice, on different grounds each time! When politicians decide on things, on the other hand, the decisions are generally shrouded in mystery and the data are never made public. For instance, it is only now when Trai laid bare the whole process of how calls are to be accounted for that you know just how much extra you’re being billed for by the long-distance players—in the earlier days when politicians decided what long-distance tariffs were, you had a vague idea you were being fleeced, but had no clue about how much, and so were in no position to do anything about it.

Many of Baijal’s decisions may have been questionable, but to cripple the institution of Trai because of this is akin to cutting off your nose to spite your face.