|Let’s TRAI again|
|Thursday, 20 January 2011 00:00|
Much of the debate over the rights and wrongs of what A. Raja did is predicated around various recommendations of the Telecom Regulatory Authority of India, or TRAI. So, for instance, Nripendra Misra, the TRAI chief whose recommendations Raja says he followed, has been crying himself hoarse saying Raja didn’t follow them. Kapil Sibal, Raja’s successor, has argued that Raja couldn’t possibly have auctioned the licences in 2008 since TRAI had said auctions for 2G spectrum were a bad idea. Planning Commission chief Montek Singh Ahluwalia, the latest to jump into the fray, has said much the same thing.
Even the CAG has based its findings on the TRAI recommendations, though of a later vintage — last year. While recommending what one-time fee should be charged from telcos like Bharti, Vodafone and BSNL, who had got extra spectrum compared to the 6.2 MHz specified in the licence, J.S. Sarma’s TRAI said this should be charged at the rate paid in the 3G auctions. Which is why, after making estimates of losses in the Rs 60,000-70,000 crore range, the CAG suddenly gives a huge Rs 176,000 crore estimate as well. This is the estimate Sibal and Ahluwalia have ridiculed the CAG for — so they accept TRAI recommendations under Nripendra Misra as gospel, and reject TRAI recommendations under J.S. Sarma as pure drivel!
So how seriously are we to take TRAI recommendations? Does the government have to accept all TRAI recommendations? And what is its record on this front? This is really the heart of the telecom problem, indeed even the solution to it.
The answer clearly depends on how good the TRAI process is, and how independent TRAI is. When TRAI was set up in 1997, things were going pretty well, so much so that when the government decided to grant a mobile licence to MTNL, TRAI chief S.S. Sodhi dashed off a missive to the government saying it had no right to grant a licence without consulting TRAI. The government responded by dissolving TRAI, and that was probably the beginning of the decline of the institution — the government argued it needed to dissolve TRAI since it was both the judge and the jury (at that time, appeals against TRAI orders were heard by TRAI), but the argument is weak since it didn’t need to dissolve TRAI to come up with a separate appellate tribunal.
While there’s little doubt a TRAI-led process is better than the old government-led one, it’s been a mix of good and bad and seriously weak since Justice Sodhi was removed. Indeed, most of the flip-flops in government policy of which Ratan Tata accused the NDA government took place only after TRAI recommended they be allowed to take place.
So, in 2000, under M.S. Verma, TRAI came up with an inexplicable recommendation: to allow telcos that had licences only for fixed-land services (that’s your plain old desktop phone) to offer what was called “limited mobility”. Wireless in Local Loop (WiLL) services allowed users to move around with their cordless phones within city limits — so you could use an MTNL WiLL in Delhi but you couldn’t take the same phone to Mumbai (the other city in which MTNL operates) and expect it to work.
Theoretically, this didn’t cut into the cellular mobile phone firms’ business, but given that more than 90 per cent of subscribers don’t need anything more than limited mobility within the city, it actually affected them in a big way. It didn’t help that some other policy lacunae made offering limited mobility commercially more attractive than offering unlimited mobility on cellular phones.
Ram Vilas Paswan used Verma’s recommendation to push through WiLL phones. But when Verma realised WiLL was being used to bring in full-blown mobility through the back door, and protested to the then-telecom secretary Shyamal Ghosh, the latter lost no time in telling him to shut up. By 2003, the cellular mobile phone firms, who’d paid more than three times the licence fee than had the fixed-land firms, realised that just pleading with the government wouldn’t help. So they cut off all connections to WiLL mobile phones, which resulted in Pramod Mahajan being sacked.
The new minister, Arun Shourie, put the matter to TRAI under Pradip Baijal. Baijal obliged and gave Shourie a way out. At the drop of a hat, and a relatively minor penalty, offering full-blown mobile services on a limited-mobility licence became legit. Baijal made the argument that, had fixed-land licence firms been granted cellular mobile phone licences in 2001, none of the full-blown mobility services they were offering would be illegal — so why not assume they were given the licences in 2001, but had forgotten to pay the licence fee, charge a penalty for this, and be done with it?
The government also used TRAI’s recommendations on converting existing WiLL-licences to full-blown mobile licences as a pretext to hand out brand-new licences. This is also the subject of the controversial CAG report that has the government in knots. Baijal was helpful enough to send a side letter to the government to allow this to happen, after he’d given his recommendations on converting the WiLL licence — in which he’d said all future mobile licences would have to be auctioned! This recommendation the Cabinet accepted, and soon after it was notified.
In 2007, Nripendra Misra gave a set of wishy-washy recommendations that allowed Raja to give out licences at the 2001 prices. Raja cherry-picked even these recommendations, but there is little doubt Misra was not in favour of auctions though he later said he was. Indeed, since the government had agreed, in 2003, that all future mobile licences would be auctioned (never mind that Baijal himself helped the government break this rule within weeks of it being formulated), Misra’s no-auction recommendation was itself bad in law. A former telecom secretary, Misra never saw the obvious contradiction.
In 2010, when the older cellular mobile firms were battling the government on its decision to hand out cheap licences, in what was no doubt a huge coincidence, J.S. Sarma’s TRAI came out with recommendations that badly hit these firms. So they were asked to pay for the “extra” spectrum they had over 6.2 MHz — never mind that government policy had allowed it, and they were paying higher annual fees for specifically this. A recommendation was made they pay for this at a rate higher than even what was paid in the 3G auctions. Other recommendations that hit them were also made.
Now, when Kapil Sibal trashed the CAG by arguing 3G auction prices could not be used to determine 2G prices, the same TRAI is in the process of coming out with specific recommendations on the 2G-3G price linkage. It’s not clear if it will toe Sibal’s line, but market rumours are that it will.
Perhaps it’s time to revisit the entire regulatory system — and not just for telecom, since there are too many instances of regulators behaving like they’re hand-maidens of the government. Time to, as it were, TRAI again.
|Last Updated ( Wednesday, 30 November 2011 16:21 )|