Opinion - Editorials

Cross connection

THE IMMEDIATE CAUSE for the intense acrimony over telecom regulation might be over relatively technical matters such as interconnect and access charges. However, neither a proper identification of the problem nor a reasonably just solution will emerge unless the entire policy including the crucial regulatory function is understood in the correct perspective. Technology has been a key driver transforming the telephone landscape and it is very likely that no regulator however well equipped can regulate a sector that is changing by the day. In India, for a newly opened-up telecom sector, technology has also been the denominator differentiating not only the various service providers but also in stretching the scope and jurisdiction of the telecom regulator, TRAI. The two antagonists in the ongoing battle, the cellular operators and the newer WLL (wireless in local loop) service providers have used two different technologies, the former the global system for mobile communication (GSM) and the latter the codified division multiple access (CDMA). The world over these two technologies have been competing with each other.

In India too, even in these early days, there have been claims and counter claims but the issue at the moment is not merely over the technology but its impact on the economics of the industry as it enters a highly competitive phase. The private WLL providers, Tatas and Reliance, have big plans to tap their CDMA platforms to undercut competition. The cellular operators, spread all over the country, feeling threatened had sought regulatory and judicial intervention first to block the WLL providers from entering and when that failed by refusing to provide interconnect facilities to the newer players. That would severely limit the reach of the WLL operators and render their services uneconomic besides depriving their subscribers and networks of connecting with their counterparts in the cellular domain. The cellular companies which have defied the regulator have promptly been served a show cause notice. However, it is unlikely that their defiance will continue indefinitely. For, it does not make commercial sense to stay away from what could be a huge market developed by the WLL players. Then there is the argument that the Government cannot stand by when consumers' interests are jeopardised through commercial disputes between rival operators. Not surprisingly, the cellular group says that it will interconnect provided it gets commercial terms for providing those services. The TRAI says that it is looking at the entire gamut of issues including those related to providing interconnect facilities between the different service providers. In the recent past, however, regulation and the telecom policy have not been proactive.

The early legacy of the reforming telecom sector complicates the matter further. It makes the regulatory function of protecting the interests of the entire stakeholders — the Government, the consumers and the service providers — an especially thankless task. The private cellular telephone companies, the first to enter the newly opened-up sector, grossly miscalculated the size of the market by paying hefty license fees and then citing that as the principal reason for levying an extraordinarily high tariff on their initial subscribers. Failing badly in that gambit, they lobbied hard to migrate to a revenue sharing agreement: instead of the high annual license fees they are now sharing a portion of their revenue with the Government besides paying for the spectrum charges. Even the new dispensation has been disappointing to some players who have either wound up or merged with others. In that context, the entry of the WLL providers, who have a basic operators' licence but can use the technology to expand beyond their prescribed range, has been deeply worrying to the cell phone companies. Not to be ignored are the interests of the still-dominant public sector companies, BSNL and MTNL. Their stake in the ongoing fracas over interconnect is significant. Cellular operators have been paying them for calls made from cell phones to fixed lines. In the days before liberalisation, the public sector companies were the sole recipients of those charges from the cell phone operators. The list of basic operators has now expanded. The cellular companies' case is that they too should get the same level of access charges on interconnecting with the newer players. Hopefully, the Government will be able to reconcile the conflicting commercial interests and simultaneously uphold consumers' interests.

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