Wrong Number, TRAI Again

Instead, Sodhi and his team now have to contend with mapping out survival strategies, define and seek out a role for themselves, something which they thought was elaborately defined under the trai Act, and share reminiscences on the tortuous year just gone by. This, even as they dodge-and on some occasions take on the chin-the sledgehammer blows from the establishment (read: the Department of Telecommunications-DoT-and minister for communications Jagmohan). Says telecom consultant Mahesh Uppal, who had been involved with the setting up of trai: 'Two years down the line, trai is still struggling to resolve its jurisdictional differences with DoT. And it just can't get on with the job it is supposed to do.'

The imprecise hierarchy between the two lies at the heart of the tussle. While trai-which is only the second independent regulator in the country after stockmarkets watchdog Securities and Exchange Board of India (sebi)-has had to encounter a hostile DoT right from day one, the establishment really upped the ante on March 11. That was when the regulatory authority received a terse three-line note directing it to put its two-day-old order on new phone rates (see box) in abeyance. That came as a rude shock to the trai officials.

Sure, DoT has been opposing them all along on other issues, and yes, the new tariff order had created a ruckus in Parliament, with even government allies like Trinamul Congress leader Mamata Banerjee terming it as 'anti-rural poor'. However, in all previous consultations between DoT and trai, DoT officials had accepted the broad contours of trai's order. Says a senior trai official: 'We discussed the issue with DoT on several occasions, had presentations with Parliament's consultative committee and the Parliamentary Standing Committee, apart from open houses for the public. And everything that is being raised now had been cleared at that time.' In fact, on October 20 last year, DoT's member (finance) A. Prasad had written to Sodhi: 'I would like to say briefly that we are in general agreement with the overall approach of trai that tariff should, as far as possible, be cost-based.' So, what caused this sudden U-turn?

'We haven't caused it,' says a senior DoT official. Instead, he lays the blame at the door of the politicians, who, he says, under pressure in Parliament got DoT to oppose the tariff order. But can DoT really oppose the tariff order? Says a senior trai official: 'Section 11 of the trai Act gives us full authority to decide on tariffs. Besides, the government hasn't clarified as to under what sections of the Act has it directed us to put our order in abeyance. In fact, on March 23, in response to our letter querying their jurisdiction on the issue, DoT wrote to us saying that the matter is being considered and we shall get back to you.'

Thus, sure that it was on firm legal footing, trai went ahead and issued an official notification in the gazette of March 15 in regard to its new tariff order, irrespective of DoT's note of March 11.'Now that we have notified the tariff order, it can only be denotified by the President or by us,' says the trai official. But even as trai was smug in its belief that it was going by the book, the establishment hit back the same day. In a move that can only be described as hitting below the belt, the government issued two gazetted notifications on March 15 and 16. The first related to salaries, allowances and conditions of service of trai officials. Here, instead of setting rules for the chairman of trai, it made different rules depending on if he were a retired judge of the Supreme Court, a retired chief justice of a high court or if he were a serving judge. It also cut down on the allowances for foreign travel, ostensibly in the wake of a recent Comptroller and Auditor General report. Retorts a senior trai official: 'Rules of service are set for a particular post. It doesn't depend on who is occupying the chair. And ever since trai came into existence, we have been requesting the government to set rules for foreign travel allowance. But since nothing came from the government, we benchmarked ourselves against the Centre for the Development of Telematics and sebi. So why are we being singled out, and why now?'

While the government is now questioning trai's authority to set tariffs, it has already undermined its powers in other areas. 'That's happened because the trai Act has some imprecise wording. And if there is a lack of legislative intent, interested parties can read it their own way,' says Uppal. Take for instance, Sections 11a and 11b of the Act, which state that trai will recommend the need, timing, terms and conditions for a new licence. This issue came up for hearing in the Delhi High Court last year, when DoT allowed mtnl to begin cellular operations in Delhi and Mumbai, without even a cursory acknowledgment of the trai. When private cellular operators objected to this, the court ruled that DoT need not ask for recommendations from trai. Says a senior trai official: 'It would have been a non-binding recommendation in any case. Why are people afraid of that? Just give us a reason for disagreeing with our recommendations and go ahead.' But the establishment won't give an inch. Throwing up the bigger question: can DoT act as the player and the umpire as well?

'The crux of the problem,' says Uppal, 'is that the government keeps extending the dividing line between policy and regulation. What constitutes policy is the government's responsibility and the nitty-gritties of it are regulation, which lies with trai.' The mandarins at Sanchar Bhawan, the DoT headquarters, have never needed to make this distinction in the past and are reluctant to do so even in the new liberalised telecom environment.

It is this successive hammering away at trai's powers that has investors in this sector worried. 'If frequent policy changes weren't a big enough worry for investors, DoT's attempt to defang the regulator is only going to further scare away foreign investment,' says Atul Chopra, managing director of the boutique investment bank Asia Pacific Capital. That, and a competitive telecom sector, appears to be DoT's last worry. For it, the issue is all about turf battles.