The Hindu : Roadmap for telecom policy

Online edition of India's National Newspaper
Tuesday, Apr 15, 2003

Opinion

Opinion - Leader Page Articles

Roadmap for telecom policy

By N. Vittal

In an attempt to have a level-playing field, the basic principles of a sound policy in telecom sector have been forgotten.

THERE IS a tale about an Englishman, a Scot and an Irishman who decided to share a bottle of whiskey. They agreed that each would get one-third share. They gave the bottle first to the Irishman. He emptied it. The other two disappointed men asked him "why did you drink the entire bottle of whiskey''? To which the Irishman said "you see, I drank the bottom one-third''.

Looking at the ongoing controversy and the issue before the Telecom Dispute Settlement Appellate Tribunal between the cellular telephone operators, who are operating GSM technology, and the basic telephone operators who are expected to use wireline technology and are permitted to use wireless technology of the CDMA for the limited purpose of the so-called last mile problem, one wonders if the latter have played the role of the Irishman.

The excitement began in the Indian telecom scene in the 1990s when the monopoly of the Department of Telecom was being given up by the Government of India. Initially, the concept was that cellular services were "value added services'' and were distinguished from the basic telephone services. These were a century-old monopoly of the Department of Telecom, based mainly on wireline.

The 1994 National Telecom Policy and the subsequent New Telecom Policy, 1999, threw the entire spectrum of telecom services open to the private sector, including the basic wireline telecom service.

Policy-making in telecom is one more example of how vested interests and pressure groups in a democratic system can influence decision-making. The pressure groups can lead to situations and introduce options in policy, which, from an objective point of view may look ridiculous, if not plain stupid. For example, can we think of an open skies policy, which says that foreign direct investment in the aviation sector is welcome but companies in the airline business are prohibited?

The telecom sector also perhaps has its own share of such distortions in policy. The basic telephone operators who are expected to use wireline made of copper or optic fibre, were given the concession of using the CDMA technology or wireless communication for overcoming the so-called last mile problem. The policy restricted them to use their services only in what is called the short-distance charging area.

As long as you use radio frequencies, it is wireless communication. As long as you use wireline made of copper or optic fibre, it is wireline technology. Apparently, when the so-called limited mobility concept was introduced, this aspect was perhaps overlooked. That is why we find that suddenly the cellular phone operators are raising a hue and cry. They had paid through their nose for getting the radio frequencies for wireless communication. They feel that the basic telephone operators have been able to get into the same business of wireless mobile communication through the backdoor. The issue is before TDSAT and let us hope that some pragmatic solution will be arrived at.

Anyone who has followed the Indian telecom scene and the world telecom scene will realise that four engines drive the sector. They are technology, political will, regulatory activism and market dynamics. Technology has been developing so fast that the traditional government system of policy-making lags behind and policy restrictions have become meaningless. For example, it is possible today to use voice over Internet or use Internet telephony. Internet telephony helps anyone with a computer make telephone calls at a fraction of the cost incurred through normal telecom service providers. Purists may quarrel that the quality of voice in Internet telephony is not up to the mark but the fact is that it is a new technological reality.

The Government of India did not recognise this reality initially. There was a ban introduced in 1998 when the Internet service providers were given licences on the condition that they should not use Internet for telephony. This was an exercise in the tradition of King Canute ordering the waves to obey. The waves of technology will not be stopped by policy fiat. The GSM and the CDMA are two competing wireless technologies. The cellular operators are using GSM and the basic telephone operators have chosen the CDMA and have been given permission but with the restriction that they should operate only in a limited area, which is much smaller than a telephone district.

Technologically, it is not possible to restrict such communications. That is why we find basic telephone companies offering the nationwide roaming facility at very highly competitive and aggressively priced rates, which has really made cellular operators cry wolf. They have raised a hue and cry about there being no level-playing field. The TRAI tried to balance the field, which ultimately had the effect of pushing up the tariff. In this attempt to have a level-playing field, the basic principles of a sound policy in telecom sector have been forgotten.

There are four Cs which are critical and should be the basic parameters for defining and evolving a sound telecom policy. The first is the consumer. The objective behind opening up the telecom sector was to see that the Indian consumer got world-class services at competitive prices. In the process of trying to strike a balance between the two sets of service providers, if the tariff is going to be revised upward, then, this basic focus on the consumer is lost.

The second important C is the technological reality of convergence. The Internet telephone is a classic example of this emergence of convergence in this sector. The Government of India is aware of the significance of convergence and is one of the early Governments to frame a Communication Convergence Bill, which is still before Parliament.

The third important C is competition. Any policy that is designed should apply the test whether it provides a level-playing field for all the competitors. I wonder whether the limited mobility concept tilted the field against the cellular service operators who are using GSM.

The fourth C in policy making is commitment — both financial and legal. Investment in any business involves financial commitments and these investments are guided by the legal commitment provided by the Government in the form of policy. If the policy is to be changed later on, to that extent, it creates an unfair situation. Predictability of policy and reliability are always an important factor in attracting investment, both within the country and abroad.

It may be necessary to apply the 4C tests to every policy measure if we want to escape our present situation of muddling through.

(The writer is a former Central Vigilance Commissioner.)

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