Reasons why telecom operators and TRAI have failed to see eye to eye

It is an open secret now that the telecom industry is at loggerheads with the sector regulator. While the relationship has been steadily deteriorating over the last one year since the new chief took over, it has hit a nadir with the sector regulator wanting to put company executives behind bars. 

The relationship between the industry and regulator has steadily deteriorated ever since the call drop issue became an issue ahead of the Bihar elections with the Union Minister for Communications and Information Technology Ravi Shankar Prasad being called the "call drop minister". The die was cast at that time to bring errant telecom companies to book and the regulator has attempted to come up with regulations to hem the operators in.

Last year, the department of telecommunications (DoT) asked the Telecom Regulatory Authority of India (TRAI) to come up with a design to arrest the "call drop" menace. On the day the new chairman Ram Sewak Sharma took over as chairman  of TRAI, he said the issue would be dealt with on a priority. 

 

Sources within TRAI claim that the relationship between the regulator and industry started going downhill soon after the operators were informed about the call drop penalty and were told to "fall in line".  The regulator, industry sources claim, was in no mood to listen to any reason and stayed adamant even though it was clear the order was not a fair one. Even as operators admit that there is a real issue and that the customer ire is justified, a more reasonable approach from the regulator was the order of the day and not an arbitrary order that refused to take into account that operators in India are spectrum starved and there are real issues as far as getting cell sites are concerned. 

Independent observers claim that the operators decided to move court as the order was arbitrary. With Supreme Court quashing the regulation, the regulator has been smarting and as a result has been looking for ways to put the operators down. The recent drive test conducted in the troubled areas of Delhi was another case in point. There are several instances that show how conversation has completely broken down. The regulator banned differential data pricing but introduced a loophole under the closed electronic communication network (CECN) but refuses to clarify as to what operators can do with it. One senior official at a telco says, "For any relationship to be healthy, you need to start with the premise that there is no bias." And in this case, the industry believes the regulator has a bias against the rest of the players and so long as that is there, discussions cannot be healthy or productive. 

And the latest salvo that has come from the regulator - that it intends to levy a penalty on operators for not complying with regulations and also put executives behind bars if they fail to fall in line. Clearly, this is no way a regulator can hope to improve the health of the industry.

Trai's move has not gone down well with the investor community either, as they blame government's poor spectrum policy for the call drops. To make matters worse, TRAI's call drop did not allow for the two per cent dropped calls across the licensed service area. When the operators attempted to reason, the regulator got tough. That is where the entire relationship broke down. 

In fact, international brokerages have keenly viewed this entire debate and come out strongly against the call drop regulation. HSBC Global Research in a note late last year said, "In our view, call drop is an outcome of poor spectrum policies, supported by the fact that Indian telcos are way below the global average on spectrum allocations."