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India: A Suggested Regulatory Approach

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VoicenData Bureau
New Update

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…



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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.

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