|
Close on the heels of the Delhi High Court striking down
crucial "decisions" regarding service provision and interconnection taken
by the Telecom Regulatory Authority of India, the cabinet has decided to
institute via an ordinance a whole new regulatory framework. There are
three departures that are to be made in the new framework. First, a leaner
regulatory authority, which must be mandatorily consulted by the
government, is to be given well defined powers to investigate and make
recommendations with regard to a range of issues varying from conditions
and timing of entry and technology choice to service standards and
interconnectivity charges and tariffs. Second, these recommendations are
not to be mandatory on the government, which has the right to accept or
reject them. Finally, the TRAI has been stripped of its quasi-judicial
powers, but disputes relating to the policy or charges imposed must be
taken by service providers to a telecom dispute settlement and appellate
tribunal. Any appeal against the judgements made by the tribunal can only
be filed in the Supreme Court.
These revisions are expected to deal with the lack of clarity
with regard to the TRAI's powers, as well as the fallout of the High Court
judgement striking down the TRAI's controversial Calling Party Pays ruling
with regard to calls made from fixed to mobile phones. The High Court
reportedly held that: "TRAI cannot lay down the terms and conditions to
service providers on introduction of telecom service, installation of
equipment, technology and regulate in respect of the telecom industry." It
said that the regulator's powers in this regard were only "recommendatory"
and the Government was not bound to abide by the proposals.
Introducing greater clarity regarding the powers of different
institutions constituting the regulatory framework is, no doubt, a
positive step. Over the last three years, despite the existence of a TRAI
Act, which defines the role, powers, and jurisdiction of the regulatory
authority, the TRAI has repeatedly sought to extend its brief, putting it
on a collision course with the government. In this it has implicitly and
sometimes explicitly used three arguments. First, that by combining in
itself the roles of policy maker, licensor and operator, the Department of
Telecommunications has the ability to dilute or sabotage the government's
liberalisation drive, which threatens the monopoly profits that service
providers under its control have earned in the past. Second, that an
inappropriate licence fee structure that had emerged out of the process of
auctioning licences to the highest bidder, adopted before the creation of
the TRAI had resulted in inadequate entry by private operators, especially
in basic services. And third, that appropriate regulation requires the
TRAI to have a say in the determination of all aspects of telecom policy,
including licensing issues such as the introduction of new service
providers, compliance with licence conditions and revocation of a licence.
This implies that the jurisdiction of the authority covers not merely
service providers, including the service providing divisions of the DoT,
but also the DoT as a policy maker and licensor.
In addition, the TRAI has tended to behave as if its role in
this enlarged jurisdiction is not merely one of advisor but a decision
maker whose decisions are binding on both the government and the private
operators alike. This unilateral interpretation of the law, which the TRAI
went about implementing in practice, resulted in a most unsavoury
situation. First, it led up to a series of disputes between the DoT and
MTNL one the one hand and TRAI on the other, souring the relationship
between the two. Second, it encouraged private operators, who found
themselves unable to meet financial and other commitments made when
bidding for licences, to use the TRAI as the means to stall permissible
penal action against them. Influenced in part by its own conflict with DoT,
the TRAI has tended in these instances to rule in favour of private
operators, inviting the allegation of partisanship. In the event, the TRAI
found itself dragged to the courts which were called upon to interpret the
existing law defining the Authority's powers (See accompanying Box). The
court's decisions thus far have made it quite clear that the TRAI had
clearly gone beyond its brief, necessitating the current exercise to
restructure the regulatory framework.
But the new initiative does little to resolve the issues that
arose during the course of liberalisation and the TRAI's initial tenure,
relating to the likely consequences of the opening up of the telecom
sector (i) for the spread of the telcom network; (ii) social benefits of
competition; and (iii) the objectives and feasibility of regulation.
The Court as Arbiter
The decision of the government that the TRAI would not have
the power to adjudicate in disputes between the DoT as licensor and the
private operators as licencees merely incorporates into the legal
framework a judgment that had been arrived at by the courts in cases
which challenged the TRAI's tendency to unilaterally assume such powers.
Those cases were of two kinds. Those that challenged the TRAI's effort to
intervene in disputes between the DoT as licensor and private operators as
licencees, over issues regarding the implementation of the license
agreement. And those that challenged TRAI's claim that it had the right to
decide on the need and timing of entry of new operators.
The first of these became a problem when the TRAI decided to
hear a set of petitions filed by private operators in the paging and
cellular businesses against the effort of the DoT to encash bank
guarantees in lieu of unpaid licence fees and revoke licences in some
cases on account of non-payment of licence fees. Among the cases before
the TRAI were petitions filed by Netherlands India Communications Ltd,
Fascel Ltd, ICNET, Marcstat Communications, Koshika Telecom, Reliance
Telecom, Bharti Cellular and Modi Korea Telecom Ltd. The hearings in many
of these cases had to be stalled because the DoT filed appeals in the
Delhi High Court, saying that TRAI was not competent to hear disputes
between DoT (the licensor) and the licensees. It argued that under the
conditions of the licence, disputes were to be settled through arbitration
by an arbitrator appointed by the licensor. Following this appeal, the
Delhi High Court stayed further proceedings. TRAI on the other hand held
that DoT should not invoke the arbitration clause in the interests of
justice, since it was one of the affected parties.
The second controversy dragged to the courts was the decision
of TRAI to insist that it had the right to decide on the need for and
timing of entry by new operators into various telecom sectors. The
clinching case in this regard was the was the controversy over the
decision by Mahanagar Telephone Nigam Ltd. to launch cellular services
based on the CDMA technology.
On the basis of a petition filed by cellular operators with
the TRAI, the Authority issued an order in January 1998 directing MTNL to
desist from launching cellular services till it has decided on the matter.
Among the questions raised by the cellular operator's association was the
right of the government to provide a licence to a new service provider
without referring the matter to the TRAI. A month later the TRAI ruled
that MTNL's licence to enter the cellular mobile and paging services
business was invalid, since the Authority's recommendations were not
sought before the licence was amended in October 1997 to include the above
services. It held that the Government would have to mandatorily seek the
recommendations of the Authority on all matters pertaining to licensing
including those that involve introduction of a new service provider. The
TRAI simultaneously held that "the Internet policy, which was formulated
and announced by the Government without obtaining TRAI's recommendation...
cannot held to be valid." The order also held invalid the revocation of
licences of paging service operators, since no recommendations were sought
from TRAI.
|
