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TRAI's new initiatives on convergence

Plan for single regulation to govern telecom, Internet and broadcasting

— File photo

LURE OF TECHNOLOGY: A visitor admiring the products on display at the 12th Convergence India 2004 International Exhibition in New Delhi.

NEXT MONTH, the Telecom Regulatory Authority of India (TRAI) will once again revive an initiative which has eluded policy makers for nearly five years. Based on feedback received from key players, TRAI plans to frame recommendations for a single regulation to govern the telecom, Internet and broadcasting sectors.

In effect, the regulator will be reopening the issues that were given a burial by the previous government in September 2003 when it put on hold the Convergence Bill and with it the effort to set up a super-regulator to oversee the information, communication and entertainment sectors.

The basis for its exertions is a consultation paper released this month.

The dimension of the gigantic task for TRAI may be gauged from the fact that the erstwhile National Democratic Alliance government stalled the efforts by the Ministries of Communications as well as Information and Broadcasting to push through the Convergence Bill and envisaged setting up a super-regulator.

The consultation paper in fact goes a step ahead and poses questions relating to issues that will cause concern at the political and corporate levels.

These include the need for common foreign direct investment (FDI) ceilings for all the sectors including Internet, telecom and broadcasting.

FDI ceilings

On surface the TRAI poser in this respect appears innocuous — "different FDI limits in different industries also give unfair advantage to certain technologies/ service providers over others even though the end service provided to the consumer may be the same.'' But in reality, the present coalition government supported by the Left parties from outside took more than a year of consultations to raise the FDI limit in just one segment — telecom — from 49 to 74 per cent. The genesis of the increase in FDI limit can be traced to the previous government which, despite the preponderance of laissez faire proponents among its supporting parties, was unable to take a decision.

Another potentially divisive issue, but at the corporate level, relates to spectrum with TRAI wanting to know whether there should be flexibility in spectrum allocation to take full advantage of services and evolving technologies for existing services. The issue of fair allocation of spectrum has engaged the attention of governments since 1998 when mobile services were yet to occupy prime space in the telecom sector and therefore consumption of airwaves was yet to reach the level it has done now.

Local area phones

Yet another poser by TRAI — of revisiting the telecom policy — to allow companies to offer phone operations within local calling areas has the potential of dividing the industry. So far, phone licences have been given according to telecom circles that are broadly contiguous to States. Any move to allow smaller players will reopen the policy debate that was settled in 1993 by deciding to grant licences on the basis of telecom circles. In view of the fact that any change in the telecom policy over the past decade has triggered litigation, it will be fair to assume that if TRAI recommends the entry of more players and the Government acts on the suggestion, a protracted legal battle will be on the cards. This poses the question as to why TRAI is raking up an issue that has eluded a solution by policy makers for so many years. Is it to simply legitimise its control over the broadcasting sector that has been allotted to it on an ad hoc basis or is there a more altruistic motive?

TRAI has sought to answer the poser by pointing out that convergence will usher in greater competition.

"Convergence can vastly increase competitiveness and hence efficiency of the Indian economy. This is all the more important in an era of growing importance of information and communications,'' notes TRAI.

"From a regulatory standpoint the important issues are the implications of such convergence on competition and the nature of regulation in future. This consultation paper is aimed at eventually making recommendations which knit together these threads in a complete conceptual framework. (Secondly) there have been some developments that have not been specifically addressed — notably the lack of comprehensive legislation to deal with the rapidly converging telecommunication/ broadcasting carriage issues — these gaps have been filled in this paper.

"Finally, TRAI had constituted a committee to look into the issues relating to broadband and telephony over Cable TV networks: the suggestions of this committee have been addressed in this paper,'' it further explains. Though there are bound to be problems on several fronts, the march of technology will not wait for divisiveness in the polity and industry over key issues. Cable TV companies have already started offering Internet and phone companies are in the process of offering broadcast services. On the global level, Yahoo Messenger and Google Talk have also started offering free PC-to-PC calls.

TRAI has sought to meet the challenges by recommending a unified licensing regime in the later part of 2003 and the first of the two-stage process has already been implemented. TRAI gave its recommendations for implementation of the second phase of the unified licensing regime exactly a year ago. Such a licensing regime will enable a licensee to provide any or all telecom services by acquiring a single licence.

To be fair, most of the issues have arisen because the telecom and broadcasting sectors in India have been evolving over time and have given rise to business interests that will be disinclined to migrate to a new system. However, as examples elsewhere have shown, it will be in their interest to shift to a unified system after a thorough consultation process instead of allowing technological progress to overtake their existing revenue earning models.

Sandeep Dikshit

in New Delhi

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