Telecom Regulatory Authority of India (TRAI) and its First judgment

On April 25, 1997, the recently constituted Telecom Regulatory Authority of India (TRAI) gave its first judgment -- a landmark one, delivered with speed and style. This judgment and its no-nonsense approach could well set the stage for things to come.

TRAI quashed DoT’s (Department of Technology) order of January 29, which had sought to hike rather steeply, the price of calls made by users of ordinary fixed line phones to cellular subscribers in the non-metro areas.

Fixed line users pay local call rates when they dial a cellular number in the four metros (Calcutta, Chennai, Delhi, and Mumbai). But users in the circles (which are typically the same as states) would be charged Rs10 per call for the same facility, if the DoT order in question had not been quashed.

DoT had raised current rates on grounds that such charges were low and allowed users in the circles which are much larger than metros, to make long distance calls without paying STD charges. On the face of it, DoT is entitled to want to change this state of affairs. But in trying to correct one injustice to itself, it managed to inflict several on the users and other service providers.

The cellular operators lost no time in going to the courts, since TRAI did not then exist. The courts in turn took an enlightened decision to pass the matter on to TRAI on March 3, as the body had been formally constituted by then.

TRAI took a few weeks to give its judgment and ruled against the Department of Telecom. The body was not persuaded about the justness of DoT’s order.

Nor was TRAI particularly impressed by the operators contention that DoT was not authorized to raise these tariffs. The judgment clearly says that the order of DoT to raise the tariff was passed before the TRAI was formally constituted and during the said period in question, the DoT was the sole body with the power to amend tariffs.

The regulatory body accepted that DoT failure to consult the operators before issuing the rather drastic increase in tariffs was not per se against the letter of the law although it was most certainly against its spirit: DoT’s clarifications on tender documents had explicitly stated that operators would be heard before tariff changes announced.

DoT ‘s attempt to question TRAI’s authority invited a stern response. TRAI said in the judgement that the counsel for DoT "had the audacity to impute lack of jurisdiction to TRAI in dealing with matters raised, even in the face of the order of the High Court of Delhi of March 3, 1997 where petitioners were directed to avail of their alternative remedy before TRAI .". It asserted that TRAI act gave it full jurisdiction over tariff issues including customer charges, interconnect charges etc. In fact it ridiculed DoT’s contention on grounds that its officer’s affidavit challenging TRAI’s competence to deal with tariff issues, referred, in another part of the document, to the TRAI’s authority in this regard.

TRAI’s order also enjoins upon DoT to allow operators to have any number of interconnect points as well as both-way connectivity at these points. It questions DoT’s contention that the operators were not allowed to set up more than one MSC. (Mobile Switching Center). The judgement quotes a letter written by DoT’s senior officer to the cellular operators asking them about their plans to set up multiple Mobile Switching Centers.

All in all, it looks like DoT’s case was a total shambles. Yet, there is merit in its case – that if the metro cellular tariff scheme were to be carried to the circles, its revenues would be affected. The fact that fixed telephone subscribers pay extra to call mobile subscribers in many countries cannot be wished away.

So what went wrong? The department is facing a crisis, due to its inability to adapt and respond to changes in the telecom environment. And its poor public image further exacerbates this. To that extent the charge that they have been greedy or malevolent towards users or new operators is not entirely accurate.

Even the cellular operators, whose stand was accepted by the TRAI, would accept privately that the respondent DoT was poorly served by many of its officers and lawyers who were entrusted with the task of representing DoT’s case.

They seemed to have cut a very sorry figure before TRAI, ignoring or not being prepared by reading pertinent papers, such as tender documents, the clarifications offered to would-be bidders, or the correspondence that DoT was having with the operators later. Since the tender documents mentioned that tariffs would be the same for circles and metros, it would have made sense for DoT to seek legal advice on how to correct a mistake, if that is what it was. An appeal to TRAI could perhaps have been recourse, as the body is in charge of tariffs.

The above situation was created by a major lapse in the tender documents for cellular services, which seem to be concerned, more with charges paid by users and providers of cellular services. The anomalies of access to cellular services by fixed line users seem to have been ignored.

The DoT’s approach to case before TRAI seems to have been to confuse the issues by raising certain technicalities, rather than present its genuine concerns about anticipated revenue losses.

Observers believe that DoT is a divided house – some staff are upset with its management about the concessions being made to the new private players; others would like to get on and prepare themselves for the battle ahead for a market share; and, there are those who are preoccupied with plans to take more lucrative jobs with the competitors. This is not an environment which encourages high morale or focused efforts.

Ordinarily, there are major advantages that the incumbent operator has when competition is introduced in erstwhile monopolies. The incumbent has a working network, while the new operators have to spend huge sums to develop theirs, and then more to interconnect their new networks to the existing ones.

But DoT’s ability to exploit this advantage in the existing environment is limited. It is run more as a bureaucracy is and less as a business and its restructuring seems very far off. It is unprepared for competition.

It is clear that that DoT’s long-term interests are not being addressed, either because of lack of comprehension or its political inexpediency in the current economic environment. This could have has encouraged some unrepentant monopolists, within DoT to undertake rear guard action – sloppily.

It is in this context the reported refusal to implement TRAI’s order should be seen. DoT argued that the order, which had been read out, in court, reported and commented on widely, had not been delivered to it, and could thus not be implemented. This is an indication of the mindset that the operators and regulators are dealing with.

However, there is good news. DoT has agreed to implement the regulatory decision, and not take the case to the High Court, as the TRAI act allows them to do. It is of course disappointing that TRAI’s first regulatory decision forced those (cellular operators) whose appeal had been upheld to lodge yet another appeal to seek TRAI’s intervention to get DoT to implement the decision.

But perhaps these are early times and we should all be glad that better sense has prevailed. The Chairman of TRAI said recently that he wished that the body’s role would not reduced to mere dispute resolution. He could not have been more right.

TRAI can now get on to more challenging tasks.

Dr Mahesh Uppal is a communications and information technology specialist.