Telephony regulators cannot stay speechless

The recent imbroglio on interconnectivity between cellular and fixed/WiLL-CDMA subscribers left many speechless. The response came via a proxy war involving MTNL and BSNL. This is worrying; for interconnectivity is the basic technical and legal requirement of a public switched telephone network. The issues in the instant case were then 'resolved', not by the regulatory process, but through political intervention

By Sandeep Verma
Published: Saturday 15 March 2003

Telephony regulators cannot stay speechless

-- The recent imbroglio on interconnectivity between cellular and WILL (wireless in local loop)/CDMA (code division multiple access) subscribers left many of us speechless. Literally. The response came through a proxy war involving Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL). This is worrying; for interconnectivity is the basic requirement of a public switched telephone network (PSTN), in a technical as well as a legal sense. The issues in the instant case were ultimately 'resolved', not by the regulatory process, but through political intervention.

This turn of events signals a serious blow to the long-term interests of telephony subscribers. Political intervention, without first allowing space to the regulator to manage a contentious situation, undoubtedly weakens the role of regulatory bodies. It places consumers at the mercy of business and political interests, arbitrated neither on the basis of sound technical and economic reasons, nor on transparent information and fair procedures - systemic issues that are critical to the idea of independent and effective regulation.

The events themselves demand urgent regulatory action on a number of key issues. These include not only the ongoing 'WILL is legal/ illegal' sloganeering and issues of interconnectivity and 'level-playing field', but also matters regarding operationalisation of the Universal Service Obligation Fund so as to expand services to remote areas, for which there is an extra levy on customers. The regulator also has a responsibility towards ensuring that commercial regimes do not adversely compromise public investments made in telecom public sector units (PSUs), for it is the financial viability of these PSUs that shall play a strong role in preventing cartel-formation in the industry.

Resolution of retail pricing issues, in oligopolistic sectors like telecom, must necessarily provide for involvement of the consumer. While there is some degree of transparency through the present mechanism of issuing detailed technical and commercial consultation papers, it stands to reason that the lack of involvement of consumers at the adjudication level can only result in decisions that would generally be against their economic interests. The fact that consumer concerns stay un-attended and un-addressed, in telecom, and in the power, the petroleum and the cable TV industry- where the service providers are naturallyinclined to form cartels- can therefore be traced to the basic problem of the lack of consumer fora, which could apply sufficient public and legal pressures on the regulator and the private operators.

First, the issue of interconnectivity. This basic requirement of public telephony must now receive the priority it deserves, and interconnect facilities must come fully integrated with the telephone service, by specially including interconnect provisions within the approved tariff plan. The need for market discipline also cannot be over-emphasised. Cellphone companies, by selectively blocking calls, have only managed to raise eyebrows about their bona fides. It has to be made clear by the regulator that the absence of 'level playing field', or any other seemingly 'valid' ground for that matter, can never be justification for such rash hooliganism. Deterrent penalties must be imposed on defaulting parties, even if the imbroglio lasted a few days.

Another issue in need of close and urgent attention is the economic cost of the risky policy regime that now seems to govern the WILL/ CDMA services. Are WILL/ CDMA to continue? Will there be any changes to ensure a 'level playing field'? The telecom operators, both private and public, need answers fast. Any further ambiguity and delay only increase the financial risks for telecom companies, and consumers end up paying more than what they would in a non-risk environment. The pace of investments, especially by PSUs, is also slowed down as a result of the inherent risks, as they are forced to maintain a more conservative approach in deployment of their financial resources. This investment slackness reduces the level of competition, thus adversely affecting the consumer.

The Telephone Regulatory Authority of India's recent decisions are bound to hurt most ordinary consumers financially. Monthly rentals go up; there are fewer free calls; and per-minute charges are higher. Subscribers are now likely to move from fixed to WILL- mobile plans as a result of the price differential just created. This will further erode the profitability of the telecom PSUs, which are already dealing with setbacks in their WILL expansion plans. The consumer in future will therefore be in no position to block cartelisation by private companies. It is, therefore, time we realise that PSUs serve as a very strong influence against arbitrary hikes by private operators. A pro-PSU approach in the telecom sector must be accepted as 'politically correct', and in the larger interest of consumers.

More so, in view of the fact that media coverage has centred on 'up-market' issues of mobility. The need for telecom expansion in rural areas has been largely ignored. The Administrator for the USO Fund is in place, and resources available in the fund must now be translated into greater infrastructure in rural areas. It is time that the private basic/ fixed telephony operators are held accountable for the gaps in their services in these areas, and the ones currently rendering services in these areas are compensated for the operational losses.

There was also much talk of reducing and/ or eliminating cross subsidisation of basic calls from the international traffic, but the absence of a tariff regime for international calls for most operators, together with the absence of details on the revenue outgo, makes it impossible to determine whether this elimination or reduction of cross- subsidisation has actually been achieved with the recent hike, or whether the consumers are to prepare themselves for further arm- twisting by the telecom operators.

Consumer bodies and other non-governmental organisations must therefore seriously evaluate the situation for themselves. They must mobilise public interest litigation and use their influence on decision-makers to ensure that consumer interests find adequate representation and weight within the prescribed regulatory framework. Individual consumers would neither have the time nor expertise to deal with the long-drawn out and fairly technical consultation process prevailing now, and the regulator must therefore simplify and enable this consultative process. Consumer action is a very lonely battle, and the government must not be left alone in this onerous task.

Sandeep Verma is a member of the Indian Administrative Service. These are his personal views

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