Rediff Logo Infotech Banner Ads Find/Feedback/Site Index
June 9, 1997


N Vittal


Yes. The Telecom Regulatory Authority of India's authority cannot be spelt with a capital 'A'.

The arguments are many. But let us first recollect the history that led to the setting up of the TRAI.

Throughout the world we are witnessing a shift from a command economy to an economy which is determined by the market. The shift in India came in 1991, when thanks to the financial crisis, the government of India took a U-turn, away from the socialist policies it followed for four decades after Independence.

A consequence has been liberalisation of the infrastructure sector including telecommunications. The National Telecom Policy was announced on May 13, 1994.

An interesting feature of the whole shift in the paradigm of governance is that the government is moving from a 'rowing mode' a 'steering mode'. Instead of being an interventionist and an actual player in the game of economics, it is becoming an umpire.

For more than a century, telecom has been a government monopoly. It was the government which had taken the initiative to set up the telecom infrastructure. But now, thanks to the National Telecom Policy, we are entering an era where from monopoly we move to competition; from a single-player situation to a multi-player field.

While the role of the government as an activist gets reduced, the significance of the regulatory body becomes important. Therefore, subsequent to the National Telecom Policy, one of the constant demands had been the setting up of a regulatory authority. Then, at last, the Telecom Regulatory Authority of India was set up and the ordinance replaced by a regular bill.

How effective will the TRAI be? Will it be able to meet the expectations of being an effective regulatory body and give a boost to achieving the objectives mentioned in the National Telecom Policy?

We are at an interesting stage in the liberalisation process of the telecom sector. The functions of the TRAI have been spelt out in clause 11 of the bill. They are:

  1. Ensuring technical compatibility and effective interrelationship between different service providers;
  2. Regulating arrangement amongst service providers and sharing their revenue derived from providing telecommunication services;
  3. Ensuring compliance of licence conditions by all service providers;
  4. Laying down and ensuring time period for providing local and long-distance circuits of telecommunication between different service providers;
  5. Facilitating competition and promoting efficiency in the operation of telecommunication services so as to facilitate growth in such services;
  6. Protecting the interest of the consumers of telecommunication service;
  7. Settling disputes between service providers;
  8. Rendering advice to Central government in matters relating to development of telecommunications technology and any other matter relating to the telecommunication industry in general;
  9. Levying fees at such rates and in respect of such services as may be determined by regulations;
  10. Ensuring effective compliance of universal service obligations;
  11. Performing such other function including such administrative and financial functions as may be entrusted to it by the government or as may be necessary to carry out the provisions of the ordinance.

It is interesting to note that the TRAI has to function in a manner that it does not step on the toes of two other bodies which are there to ensure that fair trade practices are followed and consumer interests protected.

There is also another clause which says that nothing in this clause will apply to matters relating to dispute between the Telegraph Authority and any other person referred to in Subsection 1 of Section 7 (b) of the Indian Telegraph Act 1885.

The TRAI becomes TRaI basically because it is a recommending authority and its main jurisdiction is in settling disputes among service providers.

Perhaps immediately, the main problem is going to be the disputes between the new service providers and the established giant on the scene, the Department of Telecommunications.

The situation which existed in Britain at the time of introduction of Mercury against British Telecom will be repeated here in India.

The David of private service providers, perhaps can look forward to an authority which will help them to tackle the Goliath of DoT.

It is interesting that the TRAI can only make recommendations regarding…

  1. Ensuring technical compatibility and effective interrelationship among different service providers;
  2. Regulating arrangement amongst service providers of sharing their revenue derived from providing telecommunication service;
  3. Protecting the interest of the consumers of telecommunication service; and
  4. Performing such other function including such administrative and financial functions as may be entrusted to it by government or as may be necessary to carry out provisions of the ordinance.

The government, under Section 25, has the power to issue to the TRAI such directions as it may think necessary in the interests of the sovereignty and integrity of India, friendly relations with the states, public order and morality.

Section 25 (2) provides that the Authority be bound by such directions and policy as the Central government may give in writing from time to time, provided that the Authority shall, as far as possible, be given an opportunity to express its views before any direction is given under this subsection.

Subsection 25(3) makes it very clear that decision of the Central government, whether it is of policy or not, shall be binding.

By this provision, it will be possible for the government to virtually render the TRAI a harmless body so far as encouraging competition is concerned. When I was chairman of the Telecom Commission I had an interesting situation when my predecessor had rejected the application of All India Radio for using its FM frequencies for introducing RDS paging.

This was perhaps done without consulting the minister. But when I looked into the matter and thought it was worthwhile encouraging RDS paging, the then minister took the view that it was a matter of policy and revoked my order.

Ultimately on the insistence of the then minister for information and broadcasting, the RDS paging, after discussion with the communications minister was approved.

I am mentioning this only to show that sometimes introduction of a new service or a new competitor can be interpreted either as an administrative action or a matter of policy.

Especially, when the TRAI has the power to look into the issue of protecting the interests of the consumer, Clause 11 (I), and settle the disputes between the service providers, which is interpreted as a policy issue, we will find that the TRAI will not be able to give a push to the process of introducing new technology and services in the country.

At best it can be only a recommendatory body and it will be for the government to decide at what pace the telecom reforms will take place.

I do not know whether this is the intention of the government. In the worst case scenario, the TRAI may be reduced to a dispute settling body between the service providers. The real engines of growth like introduction of new technology or new service providers will be in the hands of the government. One can therefore wonder whether TRAI is going to be able to play a really effective promotional role.

Perhaps it can improve the maintenance function but not the promotional function in the telecom sector. Of course, we are taking the initial steps in the telecom reforms. Ultimately a lot will depend on the conventions that will grow and the relations between the TRAI and the government.

As I see it, if the TRAI has to be an effective force for pushing the telecom reforms in the country, it should have the power to issue and cancel licences. So long as this power vests with the government, the TRAI can only be a body judicially examining the conditions of observance or their breach.

The service provider will have a tremendous opportunity to delay the process, especially if the licence has to be cancelled. After all, the orders of the TRAI can be challenged in the high court as provided in Clause 18 of the bill. Will the TRAI have real clout under these circumstances?

Any observer of the telecom scene today will be aware of the fact that the future is going to be wireless. Especially with the increasing popularity of mobile telephony and the new services that are available, wireless telephony is going to be the major area where the growth will take place.

In fact if I remember rightly, the new service providers will have to go for 'wireless in local loop' technology for providing services. The key issue here is the allocation of the spectrum.

This is controlled by the government through the Wireless Promotion and Coordination Wing of the Ministry of Communications. I would suggest that this power of spectrum management must also be given to the TRAI, otherwise, again we will have delays taking place.

At times this may come in the way of growth of indigenous technology too. For instance, Dr Jhunjhunwala in IIT, Delhi has developed a 'wireless in local loop' technology which costs a third of the prevailing technology.

The frequency required is in the 1800 MHz. This has to be allotted but has not been done so far. So it is quite possible to kill any indigenous technology by delay.

If a body like the TRAI which is oriented towards the customer and interested in the development of the telecom services is given this power, we can be sure that the indigenous technology developed will not remain an orphan or die a premature death.

In short, the TRAI is a step in the right direction. However, the authority may not be effective in giving a push to the telecom reforms process in the country nor contribute to speedy decision-making. For instance, the major issue of the cellular phones has been referred to the TRAI. It will be interesting to watch how quickly this issue is resolved.

If the TRAI is able to get the disputes resolved quickly, it would have made a small contribution towards the process of better telecom services in the country. Nevertheless, the TRAI lacks teeth because it lacks the power to issue and cancel licences. Further, spectrum management is outside its purview.

TRAI may be only half a loaf for anyone interested in the development of healthy telecom services in the country. But half a loaf is better than no loaf.

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.

Previous column: Critical mass

Tell us what you think of this column