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Journalism of Courage
No country has seen as much litigation in telecommunications as India, ninety per cent of which was avoidable, according to Ernie Newman, vice chairman, International Telecommunications Users Group. Soon after taking over as the Minister for Communications, Arun Shourie expressed apprehension that the numerous lawsuits would scare away much-needed foreign investment. Shourie has begun well by attempting an out-of-court solution to the long-running battle between cellular mobile telecom operators and basic telecom services providers regarding the provision of limited mobility in the local loop by the latter.
For several months, the Supreme Court heard arguments on the appeal filed by the Cellular Operators Association of India against the order dated March 15, 2002 delivered by the Telecom Disputes Settlement and Appellate Tribunal. TDSAT had dismissed COAI’s petition seeking to set aside the decision taken by the government on January 25, 2001, permitting basic operators to provide limited mobility. TDSAT’s main ground was that courts could not interfere in policy decisions unless they were contrary to law.
In December 2002, the Supreme Court referred the matter back to TDSAT, directing it to apply its mind afresh to all the issues raised by COAI and to ensure a level-playing field for all operators. However, the Supreme Court declined to stay the rollout of Wireless in Local Loop services by basic operators. TDSAT will hear the matter on February 24 now. Another petition pending before TDSAT is the one where COAI alleged that some basic operators had clandestinely installed Mobile Switching Centres, which would permit them to hand over calls from one Short Distance Charging Area to another. COAI also wanted TDSAT to ensure that all basic operators compulsorily installed the V 5.2 interface, as had been mandated by TRAI.
On February 14, in an attempt to reach an out-of-court settlement, Shourie set up a seven-member committee headed by Telecom Commission chairman Vinod Vaish and including Prithipal Singh, chairman, Bharat Sanchar Nigam Limited (BSNL). Basic operators were represented by Mukesh Ambani, chairman, Reliance Industries; S. Ramakrishnan, managing director, Tata Teleservices; and Prakash Bajpai, chief executive, Reliance Infocomm while cellular operators were represented by Sunil Mittal, chairman, Bharti group; Rajeev Chandrashekhar, chairman, BPL; and T.V. Ramachandran, director-general, COAI. This committee will look into three issues:
• Ensure mobility under WLL services remains limited as per the modified licence conditions (without roaming);
• Ensure a level playing field;
• Identify safeguards to ensure healthy competition in the future
Shourie stated that this committee would submit its report by March 1 this year. He added that it was up to the committee to decide whether the cases pending before TDSAT would be withdrawn.
The issues before this committee are unnecessarily narrow and myopic, especially the attempt to ensure that mobility under WLL services remains limited. The emergence of 3G (third generation wireless technology which reconciles GSM and CDMA) and its adoption by the International Telecommunications Union is already blurring the differences between basic operators, cellular operators and Internet Service Providers (ISP).
Moreover the widespread implementation of packet switching and Voice-over-Internet-Protocol is already blurring the prevailing distinctions between voice and data services, and even local, long-distance and international calls. A VoIP call between two Delhi-based ISPs may travel via New York and London and back to Delhi, making a mockery of the distinctions between local and international licences. A VoIP-on-WiFi operator would be able to undercut all existing basic and cellular operators and provide virtually free international calls.
Since any effort to regulate emerging telecom technologies and services is doomed to fail, all telecom licences should be made technology-agnostic and service-agnostic immediately. The best long-term solution would be to permit anyone to provide any telecom service anywhere in India — whether local, long-distance, international, voice, data, cellular, fixed-line, WLL, internet, VOIP, WiFi, VSAT, paging, etc. The entry and licence fees for a convergent licence could be determined by TRAI. The existing licencees could be appropriately compensated for the licence fees already paid by them, and then be permitted to provide any telecom service at any location in India.
While Indian cellular operators deserve sympathy since the government changed policies to their detriment well after they had installed equipment worth over Rs 250,000 million, they could be appropriately compensated for the licence fees already paid by them, and allowed to provide any telecom service anywhere in India. TDSAT had stated: ‘‘In our view, the government is entitled to deviate from a policy decision and adopt another policy in the public interest…If technological advances make it inevitable that the existing business conditions of the various players in the market will be affected, the same can be taken care of by modifying the terms and conditions of their licences…’’
Such a unified licence was envisaged in the Convergence Bill, drafted by Fali Nariman, which has been pending before Parliament for years. Malaysia has introduced such convergent licences recently. Shourie and Nariman should update the Convergence Bill and pilot it through Parliament in the Budget Session itself. However, powerful lobbies are arguing that it is premature for India to introduce convergent licences when Europe and America have not yet done so.
Shourie will also have to be careful that his remark taking cognizance of the charges of predatory pricing levelled by COAI against BSNL and WLL operators does not open a further can of worms. First, the consumer is benefiting from the lower tariffs offered by BSNL and the WLL operators, which have forced GSM operators to lower their tariffs correspondingly.
Second, dozens of allegations of predatory pricing in telecom services have been pending in European and North American courts for years but none have been upheld so far. Under international competition and anti-dumping laws, there is a specific multi-part test for proving predatory pricing. According to this test, it would be impossible for COAI to prove its allegation of predatory pricing against BSNL and the WLL operators.
After decades of sleaze and ineptitude, the telecom sector has obtained an able and honest minister. There are several other contentious issues that Shourie has to address immediately:
• Implementation of a national spectrum frequency allocation plan;
• Provision of rural phones and village public telephones;
• Implementation of a fair universal service obligation fund;
• Establishment of a national internet exchange and bandwidth exchanges;
• Permitting trading and arbitrage in spectrum and bandwidth;
• Hiking the Foreign Direct Investment limit in telecom services to 74 per cent, as recommended by the N.K. Singh committee;
• Divestiture of MTNL and BSNL.
(The writer owns consulting firms in telecom, software and internet)
