With the telecom scenario becoming increasingly competitive, the role of the regulator is key. Just how independent is the Telecom Regulatory Authority of India (TRAI)? Is it vested with adequate power to fulfil its role? Will the proposed Communications Commission of India erode its credibility? In this section, telecom experts were asked for their views on these and other related questions. Here are their responses……

How would you evaluate the performance of TRAI so far? Would you characterise it as a truly autonomous agency?

S.L. Rao
We cannot evaluate TRAI’s performance without examining the context. When TRAI was created, it was despite the reservations and even opposition of many in DoT. But it was unavoidable in the circumstances of the entry of private operators into cellular telephony. The government decided on two licensees per circle and looked to earn considerable revenues on excessive licence fees. Immature and inexperienced private sector companies completely misjudged the market and assumed that potential was unrelated to instrument prices and call charges. Simple laws of economics tell us that this is not so and cellular operators were forced to beg for concession from the government.

This gave the government the opportunity to change the terms of the original licenses. In none of this was TRAI fully involved, as it should have been. TRAI, in its first avatar, gave many independent decisions. A lobby, most probably from within DoT that resented the authority’s independence, tried to sabotage it, including through planted stories in the newspapers, making misleading allegations of extravagant expenditures by the members. Finally, a furore was created in Parliament about the rural poor being charged high rates and about TRAI being anti-rural and anti-poor. This led to the emasculation of TRAI into a recommendatory agency with an appellate tribunal that would sit in judgment on its decisions. In the event, the appellate tribunal has been of little use in bringing about speed or even technical competence. Meanwhile, TRAI has lost its powers. And its credibility and authority have been undermined. DoT has reasserted itself and, with the support of the concerned ministers, taken back many of the powers that were with the authority. The large number of members in TRAI, totally out of relation to the need, has not helped matters. The only achievement of having so many members is to give secretary-level positions to many retiring bureaucrats, particularly those from DoT. Presumably, their DoT background would make them subservient to DoT’s wishes. In these circumstances, it is amazing that the telecommunications industry has made the progress that it has, despite vacillation and interference by DoT and the ministry. The government has gone back on many of its commitments, and TRAI has not had the authority to intervene. Perhaps it should have expressed its distress at its inability to intervene and correct the situation. At least the publicly voiced dissent might have increased its credibility and shamed the government into being less interventionist. But it did not, for whatever reason. Perhaps the excessive number of members in TRAI came in the way.

Hence, the answer to the question is that when TRAI was structured with authority and penal powers, it was independent and effective. In its second incarnation, as an emasculated regulator, it has done its best despite internal difficulties due to its incompatible and large membership and frequent government flip-flops.

Aditya Sapru
The present TRAI has been characterized by relatively slower decision-making when compared to its predecessors. Which could be acceptable if one were to consider that the second levels of regulatory reforms would need to be more thoughtout than the ones that needed to be undertaken before. But the fact is that there has been significant progress achieved in areas like limited mobility while lack of clarity on interconnect guidelines is styming the complete deregulation and the extent of rollout of NLD service. However, the speed at which TRAI operates should not necessarily imply that there exists a stated bias. It is to a large extent an independent agency that compares favorably with some of its peers across the globe.

Mohit Saraf
The institution of “telecom regulation” in India is relatively young. Besides, one should judge the performance of any institution keeping in mind the scope of powers vested in it. TRAI currently enjoys limited powers. Keeping this fact in mind, TRAI has certainly done a commendable job in regulating a sector as wide and complicated as telecom, where the government happens to be a major stakeholder. A specific instance that has enhanced TRAI’s creditability is the fact that the tariff rates in the country are amongst the lowest and most competitive in the world. The rational and reasonable recommendations made by TRAI to the government on issues like long distance and basic telephony, or internet telephony have been well taken by the government.

For any regulator to emerge as a successful and powerful entity, it has to go through a conflict phase with the operators and the government. In fact, most countries that have demonopolised or privatized their telecom sector have invariably witnessed fierce conflicts between the incumbent operators (the government) and the regulator. For example, AT&T and the Federal Communications Authority in Australia, and even Singapore Telecom and the Telecommunications Authority of Singapore. This would be relevant in the case of India, where government-held undertakings are major stakeholders in the sector.

Therefore, the issue of characterizing TRAI as a truly independent, autonomous agency will be best addressed a couple of years down the line. Only when the whole Indian economy and the telecom sector mature completely can a truly independent regulator emerge.

Mahesh Uppal
TRAI’s performance, in my view, has been fair. It has taken several decisions and made recommendations such as those on deregulation of long distance services, internet telephony, mobile tariffs, etc., which seem courageous and sound. TRAI’s open houses in recent years have demonstrated a degree of open consultation that we had not hitherto seen in the sector.

However, I do think TRAI is handicapped to act independently. TRAI needs substantive high quality specialized and often external inputs to augment its limited resources of expertise and funds. However, the government controls its pursestrings, gives it little latitude on hiring and firing, and offers relatively poor job security to its chairman and members. It is further dependent on the government-owned incumbent for most of its information. Many of its senior staff have come from DoT/BSNL. Interestingly, after serving a stint at TRAI, many have even returned to their parent organizations, including one who now has a major operational responsibility. This does not augur well for credibility. Added to this, private sector players too have sought to put considerable pressure on TRAI through litigation. There is, of course, no reason to doubt any individual’s competence or integrity. But, the above scenario does not make TRAI look independent even if it does actually act independently.

Many of TRAI’s important decisions have tended to be challenged by government-owned enterprises or agencies. Has this affected its credibility?

S.L. Rao
Challenge and defiance by government-owned enterprises are to be expected in a sector that has traditionally been government owned and has always had a close nexus with bureaucrats and ministers. Telecom is in a worse position than electricity in this respect because it was a monolith with very few entities and entirely subservient to the ministry of which it was a department. Challenge in the courts holds up implementation of decisions and the extent to which challenges were founded on lack of adequately reasoned judgments. If that is so, TRAI needs to improve the reasoning in its orders. If not, the courts are perhaps also adding to the loss of credibility of the authority.

Aditya Sapru
It is natural for an incumbent that is likely to loss market share with privatization to question decisions. Hence, I am not sure we need to read too much into this. We do have to realize that conceptually the new TRAI is stronger and enjoys more powers. I think the organization needs to come to terms with the power that is vested in it and then start approaching the issues that it needs to resolve.

Mohit Saraf
An important constituent of any democracy is the freedom to exercise one’s discretion. As per of the democratic process in the telecom sector, every stakeholder deserves the right to challenge any decision against its interest. Government-owned enterprises happen to be major stakeholders in the telecom sector and it is only natural that they will challenge the decisions taken against them by TRAI. This phenomenon instead of denting TRAI’s credibility, in my opinion, only reinforces its credibility as an independent and unbiased entity, and not as an authority that is a mere puppet in the hands of the government.

Previously, the Delhi High Court had reversed several decisions of TRAI and these were challenged by government enterprises. Further, after the formation of the TDSAT, a few decisions of TRAI have been stayed. However, such situations should not be seen as denting TRAI’s credibility. Rather, they indicate that telecom regulation in India is evolving and maturing at a satisfactory pace. The change in the structure of the appellate forums – from TRAI to a specialist body called the TDSAT instead of the Delhi High Court – has certainly strengthened the process of telecom regulation in the country. And this certainly would contribute immensely to TRAI’s credibility.

Mahesh Uppal
Yes, it has to some extent. Even if one was to ignore the merits of the decisions, there has been a lot of flip-flop between TRAI and the government on the opening of national long distance services and allowing limited mobility services as a part of the fixed line business. This has raised justified concern. Government intervention has, however, not always been negative, In the case of the Unversal Service Fund, I believe the government was right to take a market-driven approach. I think recent government pronouncements on interconnection – a subject on which TRAI legally has complete jurisdiction – does seem to undermine the regulator.

Do you think TRAI needs to have greater powers than it does now? If so, which ones?

S.L. Rao
Yes, TRAI must have much more powers than it has now. It must have a final say on the type of decisions that the government is making today. For example TRAI should be asked to examine issues such as the merger of BSNL and MTNL, or the interconnect controversy between VSNL and MTNL since these affect the perceptions of other investors, affect competition and the consumer.

Aditya Sapra
As I mentioned earlier, it is not as much to do with the degree of power but has everything to do with the institution’s ability to come to terms with the power vested in it, its ability to make an uninfluenced decision that is likely to further the cause of the telecom sector in India. I think all of us had exceptionally high expectations when the present TRAI came into being and therefore we might blame the pace of progress on the absence of power. Instead, the focus should be on leveraging the existing charter to the fullest.

I think the areas that TRAI needs to safeguard, moving forward, is the quality of services as received by the end-user as well as making sure that market forces guide the competitive landscape and that there is very little place for unhealthy competition.

Mohit Saraf
In order to enable TRAI to deliver as an effective regulator, it needs to be vested with powers that are along the lines intended for the proposed Communications Commission of India (CCI), viz., the power to report and make recommendations either suo moto or on such matters as may be referred to it by the union government; the power to formulate and lay down commercial codes in respect of communication services and network infrastructure facilities; and the power to institutionalize appropriate mechanisms and interact on a continual basis with all sectors of the industry and consumers.

TRAI enjoys no power to change or vary the rights of parties under the licenses. It can only regulate within the terms and conditions of the licence. The scope of TRAI’s powers thus needs to be broadened. TRAI should be given the power to review and regulate arrangements that have a detrimental effect on consumers. For instance, arrangements that restrict competition and growth and do not rationalize tariff rates.

Further, TRAI has only a recommendatory role with regard to the need and timing for introduction of new service providers, the terms and conditions of the licence, revocation of licenses and in matters relating to the development of telecommunication technology or to the telecom industry in general. TRAI being a specialized body needs to be vested with greater definitive powers than mere recommendatory powers. Accordingly, it needs, to be vested with the power to penalize companies for violating its orders and with powers to recruit in accordance to its needs (currently, a large part of TRAI’s officers are on deputation from DoT). Also, TRI should be funded from the revenues earned through the operators’ licence fees instead of budgetary support from the government.

Mahesh Uppal
TRAI needs significantly more powers in the area of competition where the TRAI Act retains the jurisdiction of the relatively outdated Monopolies and Restrictive Trade Practices Act. Given that competition management is one of the most important tasks that telecom regulators perform the world over, this lacuna is very serious. Even if, or when, the proposed Competition Act is enacted, it would make sense to give TRAI concurrent jurisdiction in this important area since competition issues in telecom are not all generic and in many cases require sector-specific treatment, which TRAI should be expected to provide.

While there has been no progress on the establishment of the Communications Commission of India, does the prospect of such a commission being formed affect TRAI’s functioning?

S.L. Rao
The CCI is a sword of Damocles that must affect the perception and reality of the functioning of TRAI today. When you are seen as a lame-duck, even when you have a lot of authority, you become ineffective. TRAI does not even have the authority. Its lame-duck position weakens it. This probably suits the ministry since it can keep dragging its feet on the establishment of the CCI since the result is the further diminution of the effectiveness of the authority.

The TRAI experience has been a learning experience for the bureaucracy. It has led to new regulators being created that are founded on this experience of creating a regulator to suit the needs for investment, but to keep government control over decisions that should have been made by the regulator. Independent regulation, instead of being a new and more transparent and consultative form of governance, is being converted into another arm of the bureaucracy.

Aditya Sapru
There is always a concern whenever there are multiple “super authorities” created in regard to the overlap and the resulting confusion that might be caused. This is more so far an industry sector that has now grappled with the vacillation for a fair amount of time. I am not sure at this time that there is a cause of concern, at least at this stage.

Mohit Saraf
TRAI is just the first phase of the evolutionary process of telecom regulation. The very fact that the CCI is intended to be formed with more power and with jurisdiction over a wider area proves that the first phase of telecom regulation has been successful and we are ready to move towards the next phase. One could say that the formation of the CCI is a pretext for the government to not vest TRAI with more powers in the interim. But the CCI has been on the horizon for the last two years and no visible progress has been made.

In order to have a truly independent and autonomous “super regulator”, there needs to be continuous progress by strengthening the current telecom regulator. The goal ultimately is to have an efficacious regulator with effective powers, regardless of whether it is referred to as TRAI or CCI. Therefore, the government/DoT should adopt an open mind towards TRAI and grant it more financial autonomy, give due credit to its current demand by vesting it with more powers in order to enable it to take action against companies that violate its orders, etc.

Mahesh Uppal
The proposed legislation to set up a Communications Commission has faced considerable flak since it seemed not to address the market players’ current concerns, such as anomalies in licensing and competition, and had little on what the commission would do about the current licenses. However, there should not be any major effect on the work of TRAI since it is envisaged that it will become the “carriage” part of the commission, which would have to deal with carriage and content.