The Trial of TRAI

Never has the authority of the reconstituted TRAI been so much  under scrutiny or considered inadequate as has been
illustrated by  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 the Regulator 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 would 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." 

It may be argued that the newly deregulated telecom industry is  evolving and 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,"
said  Rothin Bhattacharya, Head Telecom Practice, KPMG Consulting. 

TRAI was set up in 1997, which 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 and  two full time members along with 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 105th 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," said Mahesh Uppal, a telecom  consultant. "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 maintained 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 Regulator'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 the Regulator 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. Established professionals from the industry who can  address issues at an entirely different pace altogether man
successful regulatory bodies like the FCC.

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 that 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. 

(CNS)