Regulatory stalemate

(A shorter version of this appeared on the Edit page of Business Standard on November 8,2005)

While Communications Minister Dayanidhi Maran is basking in the glory of both the massive growth in the telecom sector as well as the number of prestigious foreign investment projects he's getting to the country, the latest being Cisco Systems, there's a huge problem in his backyard that he needs to address. And that's a near-complete logjam when it comes to implementing the recommendations of the telecom regulator, the TRAI. As a result of this, while anywhere between 2-2.5 million subscribers get added to the telecom network every month, the congestion on the network has multiplied to almost intolerable levels. In July, according to the TRAI which monitors this, there were about 86 Points of Interconnection (a PoI is the junction where, for instance, a Reliance network connects to a Bharti
one) where the congestion levels were as high as 10 per cent, itself 20 times worse than the benchmark -- this was up to 122 PoIs in August. At the heart of this is, with a few exceptions, the refusal of the government-owned operator, Bharat Sanchar Nigam Limited (BSNL) which controls 79 per cent of the country's fixed lines, to allow private operators to connect to its customers. The TRAI has given instances of 918 such cases of pending demands of which 367 have been pending for more than a year. The problem here is that while the TRAI has ordered that such interconnection be provided within a maximum of 90 days, BSNL refused to do so and challenged the order at the telecom tribunal, the TDSAT which ruled that the TRAI did not have the power to order interconnections. The TRAI has challenged this is the Supreme Court, but till now no date has been set for the hearing. Since interconnection is the life-blood of telecom, clearly it is up to the ministry of telecom to amend the law and remove this lacunae which prevents the regulator from ordering interconnection -- yet, the ministry has chosen to sit around doing nothing, leaving it to the courts to decide the matter in their own sweet time.

The regulatory stillmate doesn't end here either since most recommendations made by the TRAI over the past year or so have been met with stony silence from the ministry. So, it has not moved on the TRAI recommendations on unified licensing which would allow users to offer any service, telephone or TV or internet, on a single license -- to be fair, the license fee recommended by the TRAI was excessive, but the government hasn't rejected it either. No action has been taken on the TRAI's recommendations to reduce tariffs for VPN services on the internet -- indeed, in an interview to this newspaper, British Telecom has said it had applied for a VPN license in March but has still not been given this. Nor has the telecom ministry asked TRAI to give its recommendations on reducing international and national long distance tariffs (under the law, a TRAI recommendation is mandatory before the ministry makes any decision), and the move to reduce the Access Deficit Charge paid by telecom users across the country to BSNL also remains in a limbo. The recommendation that, as in the rest of the world, the incumbent operator (BSNL) should be forced to allow others to use its last-mile access to provide broadband internet services, though desirable from the nation's point of view, has been rejected by the government. While many blame the current problem on the apparent personality clash between the TRAI chief and the telecom minister, there can be no change unless BSNL is forced to observe regulatory discipline. In any case, since the TRAI chief is there till the end of March, waiting for him to go is clearly no solution.