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June 16, 1997


N Vittal

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 scams.

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:

  1. Ensuring technical compatibility and effective inter-relationship between different service providers;
  2. Regulation of revenue-sharing arrangements among telecom service providers;
  3. Bringing about competition and promoting efficiency in the operation of telecom services so as to facilitate growth in such services; and
  4. 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 DoT.

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 India.'

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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