Regulating the regulator: The TRAI story

When it comes to the telecom sector in India, the players, the government and

the regulator never cease to be out of news. Last week, immediately after a

Delhi High Court ruling setting aside the recommendation of the Telecom

Regulatory Authority of India (TRAI) on the issue of Calling Party Pays, the

government decided to amend the TRAI Act, which will curtail the powers of the

regulator. However, it will now have bigger hand in dealing with the decision of

the Department of Telecommunications (DoT) in issuing licenses and settling the

revenue sharing arrangement between the DoT and the operators.

The TRAI has been divested of its power to arbitrate in disputes regarding

interconnection. On paper, TRAI’s powers on recommendations and licenses have

been strengthened. The DoT is now bound to seek a recommendation from TRAI

before finalising the terms and conditions of a license and issuing the same.

In the curtailment of TRAI powers as far as dispute redressal is concerned,

the DoT has come out a winner. The DoT has been in a fighting mood with the

telecom regulator ever since the latter was formed about three years back. The

war had got hotter when TRAI had cancelled the license issued to Mahanagar

Telephone Nigam Ltd. (MTNL) for cellular operations. It argued that the

regulator was not taken into confidence before the DoT issued the license to

MTNL. The High Court then settled the matter in TRAI’s favour.

Significantly, the DoT is not bound to accept the recommendations of TRAI,

thus reducing the regulator to mere advisory body. Can one still call the TRAI a

regulator? The only solace for the TRAI is with regard to its powers in setting

up revenue shares between the operators.

Though the New Telecom Policy 1999 had called for the TRAI being given

adjudicatory powers with regards to disputes between the licensor and licensees,

last week’s TRAI amendment gave the DoT a further shot in the arm, when the

government decided to create an independent appellate body for the purpose,

whose decision can be contested only in the Supreme Court. Shouldn’t this body

be the actual telecom regulator in the country?

Interestingly, the present TRAI members have been asked to vacate their

seats, which is beyond ones understanding. An amendment in the TRAI Act cannot

call for disbanding the regulatory body, whose members were installed by a

Presidential promulgation for a fixed period of time. The TRAI story is expected

to have far reaching ramifications as the country will see regulatory bodies

being set up in other services, such as insurance sector, too.

In order for a faster growth in the telecom sector and the government (read

DoT) and the players have to lead a healthy relationships and accept the powers

of the regulator. Enough time has been wasted during the last three years of

TRAI’s existence in questioning its powers in the courts by both the DoT and

the private players. One can only hope that the present set up will reduce the

incidences of difference of opinions being dragged to the courts and help give

the much-needed boost to improve the tele-density in the nation.