Santa Clause 11(2): The TRAI Bill could
deliver many gifts to the private sector
Perhaps the most significant step taken by the government after
the announcement of the National Telecom Policy is the setting
up of the Telecom Regulatory Authority of India in February.
The chairman and members of the TRAI have already been appointed.
The question now is: Will the TRAI be able to play an effective
role in carrying on the process of telecom reforms?
The manner in which the telecom reforms were started after the
announcement of NTP94, (the new telecom policy), has disenchanted
most of those who are genuinely interested in the progress of
the sector. The telecom reforms were almost lost in the telecom
There is a Tamil proverb that for an intelligent person even a
blade of grass is an effective weapon. India's Election Commission
has been around for over 40 years now but no one took much notice
until former chief election commissioner T N Seshan came along
and created a completely new image and role for the apex government
organisation. This shows that the effectiveness of any institution
depends a lot on the persons running it.
Even if the organisation itself is harmless like a blade of grass
it can be made into an effective instrument of change by the application
of imagination and intelligence.
Fortunately, the TRAI is not a totally harmless blade of grass.
Its effectiveness as an instrument to catalyse telecom reforms
will depend on how intelligently it is used by its chairman and
members and more importantly by the private sector.
The Department of Telecommunications, which has carried the reforms
process this far, has itself been a monopoly in the sector of
the economy for over a 100 years now.
It was DoT which processed the NTP94 and has been calling the
shots in designing the contracts or selecting private sector companies
for providing telecom services.
Unfortunately, DoT's monopoly mind-set combined with a healthy
instinct for self-preservation have been its guiding principles
in penning the fine print of various contracts that the private
sector had to sign or challenge in the courts of law.
The TRAI can be an effective instrument in ensuring a level playing
field between DoT and the private service providers.
The powers of the TRAI have been spelt out in Clause 11 of the
TRAI Bill. The important ones are:
- Ensuring technical compatibility and effective inter-relationship
between different service providers;
- Regulation of revenue-sharing arrangements among telecom service
- Bringing about competition and promoting efficiency in the
operation of telecom services so as to facilitate growth in such
- Settling disputes among service providers.
The private sector can use these powers of the TRAI for removing
all the difficulties they face in their one-sided contracts with
Here's an example: There have been some decisions which have rendered
the telecom business unprofitable in India: One; is the restriction
on the number of telecom circles in which a private service provider
can operate. Two; is the restriction on the tariff structure.
And three; is the denial of the right for providing nationwide
STD, ISD calls.
Now the private sector could challenge all these decisions with
which it does not agree and take the dispute to the TRAI. Just
like it has been done in the case of DoT's unilateral price enhancement
for cellular service.
In fact a healthy provision has been made in Clause 11(2) which
says: 'Notwithstanding anything contained in the Indian Telegraph
Act, 1885, the authority may from time to time, by order, notify
in the official gazette, the rate at which the telecommunication
services within India and outside India shall be provided under
this, including the messages transmitted to any country outside
Once the private sector raises issues adversely affecting them,
the TRAI, in exercise of its powers under Clause 11, will be able
to apply its mind and give a decision.
One function of the TRAI is to facilitate competition and promote
efficiency in the operation of the telecom services to facilitate
growth in such services. How can one player, DoT, have the power
for nationwide STD and international calls. How can the private
sector be prohibited from providing these services?
This is an issue to be challenged before the TRAI and it will
be interesting to watch the developments.
Yet there is a catch. The TRAI may have powers under Clause 11
but the government can always resort to the tremendous powers
it has under Clause 25 and break the bubble.
According to Clause 25 'The Central government may, from time
to time, issue such directions to the TRAI as it may think necessary
in the interests of sovereignty and integrity of India, security
of the state, friendly relations with foreign states, public order,
decency and morality. The TRAI shall be bound by such directions
and questions of policy as the Central government may give in
writing to it from time to time, provided that the authority shall,
as far as practicable, be given an opportunity to express its
views before any direction is given under this sub-section. The
decision of the Central government, whether it is a question of
policy or not, shall be final.'
Whenever an inconvenient issue is raised before the TRAI, the
government can resort to use Clause 25. If the TRAI is to function
effectively, especially in matters relating to competition, its
views should prevail.
The TRAI provides an excellent opportunity for the private sector
to virtually redraft the contracts for their operation so that
they can start their projects on a viable footing.
Incidentally, the financial institutions which are finding telecom
projects to be not viable for funding today will see that once
these correctives are initiated by the TRAI, the telecom sector
will become a very healthy sector to finance.
The NTP94 gave us a vision of a telecom revolution in the country.
Will TRAI be the catalyst in making that vision a reality?
N Vittal is chairman of the Public Enterprises Selection Board. However, he is best known for his tenure as the secretary of the Telecom Commission and the many revolutionary policies he introduced.
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