|
Vol.
XXVII No.
February
|
The
Telecom
Wars
Prabir
Purkayastha
THE
tariff
order
of
January
27,
introduced
by
TRAI,
imposes
steep
increase
tariffs
for
most
of
the
fixed
line
users,
which
will
lead
to
a
long-term
adverse
impact
on
telephone
demand.
The
new
set
of
telecom
policies
that
started
in
1994
was
supposed
to
help
increase
telephone
density
in
the
county
and
spread
rural
telephony.
The
reality
–
after
the
last
round
of
telecom
wars
and
Ministerial/TRAI
intervention
is
now
clear.
Increased
teledensity
is
not
on
the
agenda
of
either
the
Telecom
Regulatory
Authority
of
India
(TRAI)
or
the
government.
The
most
charitable
explanation
that
can
be
given
is
that
the
TRAI
and
the
government
have
succumbed
to
the
telecom
lobbies
–
the
private
basic
service
operators
such
as
Reliance
and
the
cellular
operators
–
and
decided
to
hand
them
a
bonanza
at
the
expense
of
the
existing
fixed
line
subscribers.
For
the
low-end
users,
the
latest
tariff
increase
means
an
increase
in
rentals,
lowering
of
free
calls
and
reducing
substantially
the
time
clocked
as
1
call
the
pulse
rate.
It
is
now
clear
that
competition
in
telecom
has
meant
more
choices
and
lower
rates
for
the
high-end
consumer
and
sharp
increase
in
costs
of
telephone
usage
for
the
low-end
consumer.
Various
groups
have
pointed
out
time
and
again
that
increasing
the
cost
for
low-end
consumers
is
squarely
against
the
objective
of
increasing
teledensity.
If
the
cost
of
a
connection
through
monthly
rentals,
free
calls
and
local
calls
charges
become
high,
then
the
chances
are
that
a
large
number
of
people
will
consider
the
telephone
to
be
a
luxury
and
will
do
without
it.
Unfortunately,
the
last
5-6
years
of
competition
has
progressively
pushed
up
the
costs
of
the
low-end
consumer
to
almost
3
times
of
what
it
was,
reducing
sharply
demand
for
new
connections.
BSNL
has
stated
that
the
connections
returned
in
the
last
12
months
have
grown
substantially
and
is
now
a
cause
for
worry.
REGULATORY
ANARCHY
The
involvement
of
Pramod
Mahajan
in
the
recent
telecom
wars
shows
the
scant
regard
that
the
BJP
led
NDA
government
pays
to
regulatory
independence.
Once
the
Cellular
Operators
blocked
the
incoming
WiLL
calls
from
Reliance,
MTNL
and
Tatas,
the
Minister,
it
now
appears,
intervened
to
ask
MTNL
to
turn
to
block
all
incoming
cellular
calls
to
their
network.
In
violation
of
all
principles
of
independence
of
the
regulator,
Mahajan
called
a
meeting
between
the
various
operators
and
TRAI
to
“resolve”
this
issue.
The
consumers
were
of
course
not
represented
in
these
discussions.
The
net
result
was
that
TRAI
issued
a
tariff
order
on
January
27,
that
benefits
the
WiLL
and
cellular
subscribers
at
the
expense
of
the
fixed
line
subscribers.
In
the
process,
MTNL
was
initially
used
to
help
Reliance
in
its
battle
with
the
cellular
lobby
and
later
its
interests
sacrificed
after
Mahajan’s
negotiations”.
The
poor
subsidising
the
rich
through
so-called
competition
is
the
pattern
of
neo-liberal
polices
that
are
being
practiced
world
over,
the
Indian
telecom
scene
being
no
different.
The
current
round
of
telecom
wars
started
with
TRAI’s
recommendation
of
accepting
Limited
Mobility
through
Wireless
in
the
Local
Loop
(WiLL)
Services
sought
to
be
introduced
by
the
based
service
operators.
After
exhausting
their
legal
options,
the
cell
operators
look
the
same
path
as
the
auto
drivers
in
Delhi:
force
through
illegal
action
what
they
had
failed
to
achieve
otherwise.
They
blocked
all
incoming
calls
from
the
WiLL
services
leading
to
MTNL
retaliating.
That
the
Communications
minister
was
willing
to
arbitrate
in
this
dispute
sent
a
completely
wrong
signal
to
all
regulatory
regimes:
current
or
future.
Governance
is
about
enforcing
regulatory
discipline
even
if
one
disagrees
with
the
regulator.
Regulatory
anarchy
is
unfortunately
the
direction
that
the
telecom
operators
have
taken,
a
course
that
Mahajan
has
encouraged
by
stepping
in.
Before
we
examine
the
issue
of
fairness
of
the
interconnection
charges
between
cellular
operators
and
basic
service
operators
that
the
cell
operators
raised,
we
need
to
look
at
the
genesis
of
the
WiLL
service.
The
cellular
operators
central
argument
was
that
if
the
basic
service
operators
introduce
WiLL
service,
this
will
mean
allowing
them
back-door
entry
into
mobile
services:
the
basic
service
operators
will
be
able
to
offer
mobile
services
without
paying
the
fee
for
a
cellular
license.
Contrary
to
cellular
operators
contention,
the
basis
service
tender
specified
that
the
local
loop
had
to
be
either
wireless
(Wireless
in
the
Local
Loop
WiLL)
or
optical
fibre.
Neither
the
Department
of
Telecom
nor
the
cellular
operators
realised
at
that
time
that
this
would
allow
the
introduction
of
limited
mobility
in
basic
services.
It
soon
became
clear
that
if
a
mobile
instrument
was
offered
for
WiLL,
the
operators
would
save
money
in
the
handset
costs
and
the
subscriber
would
gain
limited
mobility.
The
argument
against
WiLL
then
became
one
of
denying
these
advantages
by
creating
an
artificial
regulatory
barrier.
TRAI,
after
extensive
consultations,
accepted
that
WiLL
could
be
introduced
provided
it
was
limited
to
the
geographical
area
of
one
exchange
(limited
mobility)
and
not
become
a
fully
cellular
service.
It
also
agreed
that
the
WiLL
service
would
be
considered
a
part
of
the
basic
services.
QUESTION
OF
INTERCONNECTION
CHARGES
The
cellular
operators
did
not
focus
at
that
time
on
the
only
argument
that
had
some
merit:
the
question
of
interconnection
charges.
They
instead
repeated
their
arguments
that
WiLL
was
a
quasi-cellular
service
and
should
not
be
allowed
to
the
basic
service
operators.
Both
Telecom
Disputes
Settlement
and
Appellate
Tribunal
(TDSAT)
and
the
Supreme
Court
rejected
their
arguments
and
upheld
TRAIs
stand.
The
Supreme
Court
however
directed
the
TDSAT
to
examine
the
issue
of
a
level
playing
field.
TRAI
is
also
examining
the
issues
raised
regarding
interconnection
charges
and
tariff
structure
and
had
promised
to
finish
its
review
by
the
end
of
this
month.
Instead
of
waiting,
COAIs
decision
to
block
all
incoming
calls
from
WiLL
service
was
tantamount
to
blackmailing
the
regulator.
That
MTNL
followed
suit
with
ministerial
encouragement
only
reinforces
the
tendency
of
the
powerful
to
arm-twist
the
regulator.
Why
did
the
cellular
lobby
not
raise
the
issue
of
high
interconnection
charges?
The
reason
for
this
lies
in
their
need
to
keep
cellular
tariff
high.
The
high
cellular
tariffs
of
three
to
five
times
of
the
landline
tariffs
are
not
justified
either
by
the
capital
costs
(capital
cost
per
line
for
a
cellular
line
is
about
a
fourth
for
that
of
the
landline)
or
the
operating
costs.
The
cellular
tariffs
have
dropped
dramatically
in
the
last
few
years
all
over
the
world
and
today
are
even
lower
in
some
countries
than
the
landline
rates.
The
high
interconnection
charges
then
becomes
the
only
basis
for
justifying
high
cellular
tariffs.
The
decision
of
the
cellular
operator
not
to
focus
on
the
interconnection
charges
earlier
have
to
be
understood
from
this
point
of
view.
Any
drastic
change
in
the
interconnection
charges
would
open
the
entire
tariff
structure
of
the
cellular
industry
to
a
review.
It
is
highly
unlikely
that
the
current
high
tariff
regime
for
the
cellular
sector
can
be
retained
under
these
circumstances,
an
end
that
the
cellular
operators
did
not
want.
If
the
tariffs
for
cellular
and
landlines
are
of
the
same
order,
the
question
of
interconnection
charges
can
be
handled
far
more
equitably:
they
would
either
pay
same
interconnection
charges
or
pay
none
on
a
Caller
Party
Pays
(CPP)
principle.
By
retaining
high
cellular
tariffs,
TRAI
is
penalising
the
cellular
subscriber
and
creating
artificial
controversies.
Converting
both
the
cellular
and
basic
services
licenses
into
a
common
carrier
license
is
the
only
long-term
solution,
a
path
that
TRAI
and
the
Department
of
Telecom
is
unwilling
to
take.
PROBLEM
WITH
TRAI
The
increasing
problem
with
TRAI
trying
to
keep
two
different
regimes
for
basic
and
cellular
services
became
clear
when
Reliance
started
to
advertise
its
services
as
mobile
services
in
clear
violation
of
its
license
terms
and
conditions.
Reliance
is
parading
its
WiLL
services
as
if
it
is
just
another
mobile
service
on
par
with
any
other
cellular
mobile
service.
By
keeping
two
different
regimes
in
place,
TRAI
is
going
only
to
multiply
its
problems,
as
an
increasingly
complex
regulatory
system
will
give
rise
to
many
more
disputes.
Already,
the
cellular
operators
have
filed
their
complaints
against
Reliance
and
many
more
such
cases
can
be
expected
to
follow.
In
order
to
keep
both
the
cellular
and
the
basic
service
operators
happy,
TRAI,
opted
for
very
large
increase
in
tariffs
for
the
fixed
low-end
subscribers.
Their
pulse
rate
was
lowered
from
3
minutes
to
2
minutes,
the
free
calls
reduced
and
the
existing
rates
for
calls
were
also
increased
under
the
plea
that
cross
subsidies
were
no
longer
possible
and
the
low-end
subscribers
have
to
pay
“true”
cost
of
their
services.
ACCESS
DEFICIT
CHARGE
For
justifying
increased
rents
and
call
rates
for
the
low-end
consumer,
TRAI
has
come
out
with
a
concept
of
“Access
Deficit
Charge”.
This
is
based
on
an
understanding
that
each
subscriber
must
pay
as
rental
the
capital
cost
for
his
or
her
connection
(the
total
telecom
network
cost
divided
by
the
number
of
subscribers).
This,
according
to
TRAI
works
out
to
Rs
425
per
connection
as
against
a
current
rental
of
Rs
280.
This
was
also
used
earlier
for
increasing
rentals
and
has
now
again
been
used
to
lower
free
calls
and
pulse
rates.
We
have
already
advanced
arguments
in
these
columns
that
this
concept
of
Access
Deficit
Charge
is
not
valid.
Without
the
local
network
neither
the
cellular
network
nor
the
long
distance
network
would
have
come
into
existence.
Therefore
there
is
a
strong
argument
that
such
networks
must
pay
a
certain
cost
to
gain
access
to
the
existing
local
network
and
therefore
cover
this
Access
Deficit.
However,
let
us
for
arguments
sake
accept
the
TRAI’s
concept
of
Access
Deficit
and
examine
whether
there
are
other
ways
of
covering
Access
Deficit
that
would
not
impact
the
low-end
consumer
as
the
current
tariff
order
has
done.
A
simple
scheme
for
covering
Access
Deficit
would
be
to
use
differential
calling
charges
rates
based
whether
calls
are
being
made
on
peak
and
off
peak
periods.
Thus,
the
local
call
rates
can
be
high,
say
from
9
AM
to
6
PM
and
lowered
progressively
to
very
low
rates
between
10
PM
and
6
AM.
This
would
ensure
that
the
recovery
of
the
Access
Deficit
takes
place
from
those
who
really
make
commercial
use
of
the
network
and
allows
domestic
and
other
consumers
to
pay
low
rates
for
their
usage.
This
would
also
be
fair:
the
high-end
consumers
generate
the
peak
load
in
the
system
and
it
is
the
peak
load
that
is
responsible
for
a
large
part
of
the
capital
costs
of
the
network.
Therefore
treating
peak
and
off-peak
periods
differentially
would
not
only
address
Access
Deficit
but
would
also
be
eminently
fair
to
all
the
subscribes.
Introducing
this
differential
rate
is
a
simple
technical
exercise
–
just
changing
the
pulse
rate
at
different
times
would
achieve
this
purpose.
If
such
a
simple
solution
is
available
for
covering
Access
Deficit,
why
did
TRAI
not
take
this
route?
Answer
to
this
lies
in
that
the
regulatory
regimes
are
increasingly
being
used
by
business
lobbies
to
enlarge
their
high-end
subscriber
base
and
increase
profits.
In
other
words,
the
new
telecom
policies
are
to
help
the
rich
at
the
expense
of
the
poor,
Robin
Hood
in
reverse.
The
BJP
government
and
TRAI
are
both
partners
in
this
scheme.
