A regulatory model designed taking into account
its own issues will work, not a borrowed one, which has probably
worked fine in some other country. A suggested approach…
There is
too much confusion about the words-liberalization, privatization,
and deregulation. Most of the time, they are used interchangeably,
and by almost everyone. But the fact is they are completely
different. Liberalization in telecom-though a very generic word
and is sometimes used to include all-basically means allowing
competition to the incumbent monopoly operator, usually (except
in the US) state-owned. Privatization means changing the ownership
of the state-owned operator, as has happened in a few countries
like the UK. Contrary to popular perception, deregulation is
not at all synonymous with any of the two. In fact, the need
for a strong regulation is the most immediately after liberalization.
As the chairman''''''''s report of the ITU colloquium on Regulatory
Implications for Telecommunications Convergence puts it, "the
growth of competition requires that regulators actively promote
market opening and equitable participation, given the historic
presence of monopoly providers."
However,
convergence has ensured that competition happens faster than
ever before. So convergence has thrown up a number of challenges
to the regulation in the developed and developing countries
alike. While developed nations have more or less sorted out
the first set of issues (those arising out of liberalization),
many developing nations like India have to tackle both the set
of issues simultaneously. The preaching of the vendors who want
to make a fortune also adds to the confusion. That is what has
been happening in India. Every step has to be careful, yet quick.
- The regulation
in countries today is influenced by a number of factors. Some
of the most significant ones, other than convergence, are
as follows.
- History
of regulation in the country: This is important, because this
determines want needs to be undone. In India, we have a lot.
- The legislative/judicial
framework/political system: The general framework of legislation
indicates how independent, transparent, and fast the regulatory
decisions can become. India scores on the first two points,
but lags in the third.
- National
Competitive Policy: This depends on the political will of
the party and people in power. This has to be revolutionary
for countries that are already lagging behind, like India.
This is also influenced by what has been promised to international
trade negotiations like WTO.
- Influence
of the incumbent monopoly: No one who knows even a bit about
Indian telecom liberalization needs to be told what it means.
- People
at the helm: People who are at the helm of policy making and
regulatory agencies also influence the path of regulation.
There are regulators and regulators. But there also was Reed
Hundt.The Indian
Reality
"India," remarks a successful NRI entrepreneur, "thinks
like a developed country, but move slower than any developing
country." You got to draw your own conclusions. It could
be a strength. It could be a weakness. Probably both.
Convergence
is a household word in India. One of the persons who talks (and
probably thinks as well) most about it is the country''''''''s septuagenarian
prime minister. On the ground, however, the country''''''''s telecommunications
are governed by a legislation, that is 115 years old. No mis-typing
there. It is one hundred and fifteen years old. And yes, we
have had two telecom policies in five years. We certainly think
a lot.
This is
one uniqueness of India-whether you like it or not-that no policy
can ignore. A highly centralized decision-making regime in a
Communist China can quickly roll out all that the government
thinks is right in no time. In India, no one can. So what if
we have many forward looking and well intentioned leaders? The
regulatory framework in India should be prepared, keeping this
absolute truth in mind.A Practical Approach
There are three essential steps that a country like India can
take, to tackle convergence in the very short term to long term.
Prepare
a convergence policy statement: Some of the Indian legislation
are fairly old. Even with the best intention and real fast work,
it will take quite some time to make new legislation, as it
requires a lot of debate. Till such time, as the new legislation
is ready, a convergence policy statement that overrides all
other clauses and conditions in any of the older acts should
be ready. This has to be done as quickly as possible.
Prepare
proper legislation: The Prime Minister has been talking about
it. His Information and Broadcasting minister has raised a lot
of hopes by his promises. It is time proper legislation were
made keeping the new realities of convergence (and thus competition)
in mind. And this should be for fairly long term. This legislation
should be the guiding force for all policy changes and regulation.
Almost every country does that now, right from the US to Malaysia,
UK to South Africa. Things become much easier for the regulators
then.
- Choose
a proper regulatory model suitable for India: Prepare the
best model of regulation, given the array of laws and acts
in India? Any model should
- balance
between economic and social objectives
- establish
strong, transparent, and neutral regulator(s)
- clearly
define the powers of all the authorities concerned
Regulatory
Models: The Options
Suggested here are five different models of regulatory framework.
None of these is best for every country. All have their strengths
and weaknesses. But we have to select the best for India.
Sector specific
regulation: This is maintaining the status quo. Telecom has
its own regulator and broadcasting its own. In India, we have
TRAI. We are still in the process of forming a broadcasting
authority. The problem is convergence.
Separate
infrastructure and content regulators: This means one regulator
regulates the medium, the other the message. The strength is
clarity of role and thus fast decision making. The weakness
is there will be a lot of conflicts. However, this is not very
different from the above model except that the frequency allocations
for broadcasting and regulation of cable companies for network
issues should be brought under the telecom regulator.Separate
regulation for competition and nationalistic/social needs: This
happened to some extent even now. Again, strength is clarity
about the agenda for regulators. But there is a lot of confusion
and contradictory pressures on the operators, affecting innovation
and creativity. More suitable for developed markets.
A single
regulator for everything: An idealistic model, this seems attractive
at first, the biggest advantage being no contradictions. But
the sectors themselves are too distinct, despite convergence.
To address all separate specific issues in detailed manner is
too big a job. The whole process will become too complex. Ideally
suited for a complete converged society, which will never be
there.
Any of the
first three models-model 1, 2, or 3-with a co-ordinating authority.
The confusion and contradictions are resolved at the co-ordinating
body level.
The Best
Model for India
Again, it is a matter of how developed is the market. And no
model will work forever.
Till now, we have had sector specific regulation which worked
almost fine. Convergence has changed all that. Though convergence
is dictating competition, the impact of convergence on competition
is much less in countries where technology is absorbed, and
not developed. Like India. The actual market competition depends
on a lot of other things. So the ground reality is convergence
at market place in India is-and will remain in medium term-much
less than convergence in technology.
What we
need in the medium term is a proper model to regulate technology
convergence, not market convergence. The best model for India
seems to be model 5, with separate regulations for infrastructure
and content and a co-ordinating body that has representatives
from all the regulators and policy making bodies. This model
will suit India best because there is already a telecom regulatory
authority, which the Prime Minister says will be strengthened
by legislation, and the content regulation for terrestrial and
even satellite broadcasters can be imposed, with no censorship
however.
Says PK
Basak, consultant on regulatory matters, telecom and media,
"The network is the same. The cable TV operator, by offering
Internet services, is essentially competing with the telecom
operators. There is no reason why he should not be subject to
regulation by TRAI." Many in the telecom industry echo
this opinion. The best thing about this model is that each of
the regulators will handle their respective issues, which are
governed by different laws and require people with different
skill-set.
However, the regulatory regime should change with changing ground
realities. As the market develops further, at some point of
time, separate economic and social regulators may be needed,
with a co-ordinating authority. But that is a long way.MOST importantly,
we have to be ready with proper legislation before the new regulatory
regime is put in place. Similarly, try to start some process-like
licensing-without the regulator in place is a wrong step, which
all those in telecom realise only too well.
The sooner
we come out with a legislation, the better. As Amit Dev of Sahara
TV puts it, "we certainly have the capability to do it."
It is a
matter of time. But how much? On that depends India''''''''s position
in the converged world. - Choose