The telecom regulator explains how he's hobbled by government policy and clarifies some parts of his latest recommendations. Nearly half-way into his three-year tenure as chairman of the Telecom Regulatory Authority of India (Trai), Nripendra Misra finally agrees to break bread with Business Standard. Like most bureaucrats, Misra is a member of the ultra-elite India International Centre in the capital and initially chooses that as the venue. But while the IIC has class, its environs are staid, and the food boring. So I press Misra to change his mind. Fortunately, the 1967-batch Uttar Pradesh-cadre IAS officer relents, writes Siddharth Zarabi.
Misra opts for Machan "" the 24-hour coffee shop at the Taj Mansingh hotel. I have visions of digging into a first-rate raan, but my glee is short-lived when Misra choses Tuesday, the 4th of September (also the Hindu festival of Janamashtami, and therefore, a government holiday in these parts). I do not have the heart to tell him, that of all the days, this is one when I cannot eat any meat. Misra, of course, is a committed vegetarian and sparse eater, as I discover later.
We meet at the lobby and walk into the restaurant which, on good days, has a rather eclectic spread at the lunch buffet. We give it a miss and settle down at a corner table. The order is a bit of a breeze "" he chooses a Dutch East Indies crepe, while I settle for pan-seared silken tofu. We opt to split a beer (since Sir Karan Billimoria's Cobra is a bit of a marketing gimmick as well, the bottle has a cobra designed on it) and by the time it arrives, are well into the discussion. The backdrop is Trai's recommendations on reforming the telecom landscape, a set of rather sweeping policy changes that even before being accepted or implemented by the government, have thrown the industry into a tizzy.
Existing telecom operators, powerful companies with massive cash flows, have a well-oiled drill when it comes to lobbying the government. Unlike the situation in 1999, and even 2003, when the industry was in all manner of difficulty, mobile operators today enjoy the best margins among any organised industrial activity in the country. It is this combination of money and public interest that focuses attention on such technical and complex issues as spectrum allocation and the rules that govern it. Spectrum is at the heart of the debate, and as former BPL Mobile boss Rajeev Chandrasekhar famously describes it, the industry is all about lobbying for this scarce and under-valued national resource.
I ask Misra about the rapidly lengthening queue for mobile licences, and talk of how even a real estate company rushed its PR into announcing its decision to join the queue, days before Trai made its recommendations public (at last count there are over a dozen companies lined up and more are expected to join the race for just around 25 Mhz of spectrum that may be freed up in the next six months). Misra smiles and says he cannot understand what has prompted the rush, for as he explains, Trai has not pitched for a first-come, first-served principle for allocating the spectrum to operators.
Pointing out the error of this view, he states that a mere application by a new entrant does not guarantee that he will pip an established operator in the race to bag crucial spectrum. Trai has subsequently made it loud and clear that spectrum can only be allocated to an existing licensed operator and cannot be allocated to applicants who have not yet been granted a license. So much for the queue, I lament, having entertained thoughts of filing an application myself.
Misra picks delicately at his crepe, which looks suspiciously like a stuffed parantha, only far more stylishly presented and accompanied by barbecue sauce. I try and give him time, before popping the next one from a long list of questions. My tofu comes on a bed of oriental style pilaf and with liberal helpings of shitake mushrooms. It is easy on the tongue and being hungry, I dig into it with gusto.
The list is long and I know Misra will not duck a single query. He knows the subject of telecom policy and regulation well. After all, he was secretary of the Department of Telecom before being appointed to the present job. Set up over a decade ago, the Trai is a powerful regulator for the fast-growing telecom and broadcasting sector. It sets and controls tariffs for these sectors, recommends policy to the government, is vested with the power to make sure that consumer interests are protected and has to ensure that licence conditions are adhered to by the operators.
It also enjoys a very high media profile and successive Trai chairpersons have had to grapple with the media attention. Justice S S Sodhi, the first chairman, was a noted jurist whose media interactions were the first public lessons in the then nascent field of telecom regulation. Former banker Maya Shanker Verma and disinvestment specialist Pradip Baijal (also an IAS officer) both followed and left their imprint on the regulator.
I ask Misra why he chose to make recommendations like taking back unutilised spectrum from operators, or why he chose to shift the goal-posts for additional allocations. It turns out that Trai has already clarified to the DoT, that it has not asked for surrender of additional spectrum "" Misra says what seems like the Trai asking for spectrum being returned is not a recommendation. It is, though, a conclusion one can draw from the Trai's view that operators can service a lot more subscribers than they do from the spectrum they have at the moment. This sharp hike in the subscribers required for more spectrum, Misra insists, is guided by the need to ensure that this scarce resource is used efficiently.
Even as Misra has another go at the crepe, I try and challenge him on the one issue that he has virtually supreme authority on "" mobile tariffs. For quite some time now, the regulator has continued with what it calls 'forbearance' "" essentially, this means operators are free to set their tariffs. While this has given operators some more flexibility, especially in comparison with the earlier regime where each price plan needed regulatory sanction, many argue the regulator needs to step in once again and fix rates. This partly stems from recent developments "" some operators have hiked SMS charges in unison even though there is a huge disconnect between the charge for a message and its actual cost to the operator.
Misra responds that forbearance had stood the test of time and would continue, particularly on account of what he feels is the need to strike a balance between the investment needs of an operator and affordability of services. He adds that he has appealed to the operators to re-align rates, including those for roaming services, and adds that since it is yet to happen, the regulator would soon revisit the issue.
Since Misra's recommendation to retain the old subscriber linkage for spectrum allocation (though with vastly higher subscriber numbers needed) is a fallout of the government policy of not auctioning spectrum, I ask him what would he do if he was offered the chance to go back and frame policy at the DoT again. Without batting an eyelid, Misra says he would delink spectrum from the licence and evolve a policy where, after the first allocation, subsequent lots of spectrum would be given to those willing to pay for it, through an auction. Both of us are aware, of course, that you cannot revisit the past.
As I call for the bill, I ask Misra what he thinks the sector needs. He says consumer welfare is at the heart of his efforts, adding that this will be achieved through fierce and constructive competition. He appears confident that his remaining tenure will allow him to accomplish this and hopefully prepare the ground for another explosion in telecom services.
