TRAI on trial

NEW DELHI: Never has the authority of the reconstituted TRAI been so much under scrutiny or considered inadequate in the wake of the developments during the past few days. The regulator has been in the thick of controversy over the interconnect issue. While giving the regulator its due in its performance appraisal, it must also be pointed out that it has indeed dragged its feet on the interconnect issue. It is not without cause that the cellular operators have been up in arms about the access charge, which is essentially an interconnect issue. In the tangled world of telecom, the only issue that will rear its ugly head again and again is the interconnect issue. As Dilip Modi, Chairman of COAI rightly said, "If there are three issued faced by the industry today, it is interconnect, interconnect and interconnect."

While it may be argued that the newly deregulated telecom industry is evolving and that such disputes are only expected of an industry that is maturing. At the same time, it is also true that TRAI has had the luxury of learning from the experiences of regulators in more developed telecom economies of the world. And addressing interconnect has been priority for most regulators. After all what is telecommunication (or communication for that matter) if one set of users are not able to interconnect with another set of users simply because the framework of interconnection has not been laid? And here we are talking of a 3G environment where connectivity is expected to be seamless!

Did TRAI falter? Not really. TRAI was set up much after the first set of licenses was auctioned. Usually a number of issues are addressed before the licensing process begins. "There are four major sets of issues on which the government gives guidelines before licensing: a framework for standardized interconnect offer; interconnection to be cost-based; number portability and carrier selection," says Rothin Bhattacharya, Head Telecom Practice, KPMG Consulting.

TRAI was set up in 1997 and initially received much flak for taking on the state PSUs under the chairmanship of Justice SS Sodhi. That panel was reconstituted in 2000 with the major role of TRAI being restricted to ensuring a level playing field for operators, regulating interconnect issues and upholding consumer interest by restricting monopolistic practices. At the same time, its dispute settlement powers were vested in a newly constituted body called the Telecom Dispute Settlement Appellate or TDSAT.

The newly constituted TRAI comprised one full time Chairperson, two full time members and two part time members. Close to three years now, the Regulatory body did commendable work in certain areas like regulating Internet telephony, international long distance calls, ensuring quality of service from ISPs, auctioning of the fourth cellular license. However it has lagged behind in its ability to solve the vexed interconnect issue. India's abysmal lack of initiative on this front has been reflected in the 105^th ranking accorded by an online study in addressing interconnect issues in telecom.

Theoretically, interconnect has to be based on a policy of account separation and be adjudged on a per unit time basis on an incremental basis. Telecom consultants say that estimates have to be forward looking since new operators would not be willing to take on the historical accounts of the incumbents.

"Here TRAI has drawn a blank since regulating interconnection is essentially ensuring fair connectivity rates between the incumbent and new operators," says telecom consultant Mahesh Uppal. "Because interconnecting is possible only between equals. Where there are giants involved, the regulator has to step in to ensure fairness in interconnecting. And there are many aspects in ensuring fair interconnection. Besides ensuring that interconnection is cost-based, the regulator has to ensure that it is also reasonable."

TRAI maintains that it is not possible to arrive at a framework for interconnectivity unless BSNL and MTNL provide accounts of their operations. So while TRAI scuttles between the PSUs' unwillingness to maintain books and separate accounts, the operators fight it out spilling considerable amount of mud onto the regulator's credibility.

Therefore, what is contended here is the TRAI's unwillingness to take a pro-active stand. While its limitations in getting a breakup of the incumbents' expenditure is understood, there is no reason why it cannot come up with an interim reasonable framework till the accounting details are finalized. When the final recommendation comes, it could be implemented retrospectively.

Critics attribute this lack of initiative to the composition of the Body. All the three permanent members are retired government officials and are undeniably seeped in with the bureaucratic spirit of following the rules by the letter rather than adhering in spirit. Successful regulatory bodies like the FCC are manned by established professionals from the industry who can address issues at an entirely different pace altogether.

Clearly there is a need to prioritize issues that TRAI addresses and execute them with a precision befitting the fast pace of technological changes in the telecom sector. Analysts say the regulator needs to make public its long term roadmap for addressing issues with a priority matrix keeping in mind consumer interest, monitoring the incumbent operator, enabling the licensing process and interconnectivity issues.