My Article on Disputes between TRAI and Dept of Telecom in October 2005 issue of RealPolitik Magazine

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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 protégé 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 Autorité de Régulation des Télécommunications and Bundesministerium für 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 snipped-for-privacy@k.st or snipped-for-privacy@r67.net

Ravi Visvesvaraya Prasad

19 Maitri Apts A - 3, Paschim Vihar New Delhi 110 063 India

snipped-for-privacy@k.st snipped-for-privacy@50g.com snipped-for-privacy@r67.net Tel: {91}(0) 98 117 56789, 92 121 13579, 987 12 45678

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International Copyright in all Media, Ravi Visvesvaraya Prasad, 2005 Published in RealPolitik Magazine, October 2005 issue