The role of TRAI has been the subject of much debate and some controversy. Questions have been raised on whether TRAI is independent enough or indeed, too independent. Industry experts discuss the role of the regulator in the light of the recent development in the telecom sector. As also, what its focus areas should be.

How would you rate TRAI’s performance over the last 12 months?

Banker
Reasonable, but a little low key, given all that has been happening in the sector this year - the intense debate over limited mobility, new licences,etc.

Manoj Kohli
The industry expected the performance of the new TRAI to be better. While it has involved itself in some industry issues, a lot of issues are still pending. Overall, it could have contributed much more to enhance the teledensity in India.

S.L.Rao
TRAI in its first four years (before the TRAI Act was amended) did some very innovative things as it was working in a highly independent way, taking the interest of all parties into account. Since them, the act has made TRAI into a recommendatory body and its recommendations appear to have been more often of the kind that the government would desire.

Mohit Saraf
TRAI has, after its initial bout with the government, created a niche for itself in the telecome sector. The harmonious functioning between the Ministry of Communications and TRAI can probably be termed as the greatest accomplishment of TRAI in the last one year. This positive synergy can be attributed to

• Clarity on the role and scope of the regulator on policy issues, terms and conditions of the licence to the service providers, need and timing of the introduction of the new service provider, etc.

• Separation of the administrative and judicial functions of the regulator.

• Corporisation of the Department of Telecom Services (DTS) into BSNL.

The work done by TRAI in the last 12 months has been excellent. Its indicators are enhancement of its credibility, successful perception as an independent regulator, and rational and reasonable recommendations to the government on issues like NLD, FSP licensing, entry terms for the fourth cellular operator, etc. These have mostly been accepted by the government.

What are TRAI’s key strengths and weaknesses?

Banker
Its strengths include the quality of analysis undertaken on many issues and the consultative approach adopted in most cases. The weakness lies in taking too much of an approach in dealing with one specific issue at a time, instead of taking a broader view with regard to the many dynamics in the sector of convergence, competition, privatization, technology development, etc.

Manoj Kohli
TRAI’s strength is that it is led by an experienced and eminent banker who has a good understanding of the industry. He is well supported by professional from various disciplines. The team at TRAI is capable and eminent. TRAI’s weakness is that it is yet to fully understand and appreciate the viability of various segments of the industry. The authority should undertake a much deeper economic analysis so that it can assess the sectoral viability in depth.

S.L.Rao
Its key strengths are the considerable amount of knowledge it has built up over the years and its reasonably open process of hearing. Its greatest weakness is that its recommendations do not have to be accepted by the government. This means that even parties that appear before it may not take it seriously. As a result, the old process of lobbying with government offices and politicians has probably come back in a big way.

Mohit Saraf
The key strengths of TRAI can be seen in its independence from executive control, and the participatory method used by it in the regulation-making process. The transparent approach adopted by it has enhanced its credibility as a neutral umpire. The TRAI Act has given it absolute jurisdiction in determining tariffs, interconnection charges and revenue share between operators. Pursuant to this, the regulatory has issued a forward-looking tariff order for various telecom service by balancing public interest, financial viability and the interests of various stakeholders. The dynamic tariff package offered by cellular operators is the outcome of this tariff order. The government can issue directions to TRAI only on limited grounds like the sovereignty and integrity of India, public order, etc. But only the policy directions are binding on it. The limited ground for issuing policy directions is a cause of strength for TRAI because it protects it against government intervention.

One of the main weaknesses of the regulator is that it has only a recommendatory role in policy issues. Other weaknesses are that the Ministry of Communications decides its financial requirements before being approved by Parliament, and it is not a licensing authority. The other issue, equally important, relates to the operation of the law. The government issued a policy direction to TRAI in March 1999 to hold its tariff order in abeyance without mentioning the grounds on which it was being done. It is expected that such policy directions are not issued in future in order to avoid controversies. Some of the weaknesses should hopefully be removed by the enactment of the Convergence Bill, 2000.

What should be its focus in the near future ?

Banker
The key focus should be to take a medium-term view and ensure that sustainable and equitable policies are implemented, with minimum change. Regulatory anomalies that can be taken advantage of based on how your business is structured should be eliminated. One must appreciate at the same time that the world over, convergence is posing new challenges to regulators, and there are often no answers that make everyone happy.

Manoj Kohli
There are five major issues that confront the industry. First is the issue of WLL. This has to be resolved, keeping in mind the long-term viability of the cellular sector. Second is the issue of CPP, which is essential for exponential growth. Third is the revenue-sharing percentage which, by today’s standards, is very high and has to be brought down to international levels. Fourth is the overall issue of interconnect. This has several subissues, including the emergent problem of not getting interconnect resources from BSNL and MTNL. Lastly, there has to be a resolution of WPC spectrum charges.

S.L.Rao
The law does not give TRAI teeth, so what focus can it have? What it could do is to use its truncated authority to widely disseminate and publicise its information, its process of reasoning and its decisions.

Mohit Saraf
TRAI’s key focus in the future should be:

Scientific basis for revenue sharing.

• Tougher standards and more effective monitoring mechanisms to ensure equality of service.

• Further rationalizations of basic telephony tariffs, keeping in mind all the principles of cost orientation, affordability and accessibility.

• To sort out pending issues of the interconnect agreement.

• Putting in place a system for the fulfillment of the universal service obligations.

How independent (from the Government of India and the Department of Telecommunications) is today’s TRAI?

Banker
In my opinion sufficiently independent, although it must be said that the popular perception currently is not so. (Likewise, at one point in the past, it was perceived as being excessively independent). A distinction must be made between the government’s role as an operator of telecom services and simply as the government itself. Complete independence from the former is a must. TRAI’s record in this regard is satisfactory. The gray area, however, lies in independence from the government in its latter role. On the one hand, the regulator must form its own opinions, and yet no regulator can work in a vaccum without regard to the objectives and priorities of the government. In this regard, a very delicate balancing act is required.

Manoj Kohli
TRAI has exhibited certain dependencies because it has to still fully grasp the viability of various segments of the industry. The deeper TRAI gets into the economic analysis of the business, its bankability, etc., its dependence on the government and DoT would keep reducing. It would then have more confidence to issue guidelines to expedite telecom growth to “China levels”.

S.L.Rao
It is more difficult under the present law since. TRAI is fully aware that its recommendations can be overruled. Therefore, it is quite understandable if its recommendations today are made with an eye towards not being subsequently overruled by DoT.

Mohit Saraf
TRAI is independent in the area assigned to it as per the TRAI Act, 1997. The government has powers to issue directions on policy matters to TRAI, which in fact are binding on it, on limited grounds and by following the procedure given in the act. This is an in-built safeguard against government interference. The act provides enough protection to ensure that TRAI is not perceived merely as an extension of the government. Its independence is maintained by ensuring that a government employee has to retire from service on appointment as TRAI chairman or whole-time member. They are also barred from further employment under the centre or state governments.