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COVER STORY: GUEST COLUMN
Regulatory Fiction
By Justice S.S. Sodhi
 Fixed
and mobile services are entirely different and cannot be substituted.
On the face of it, therefore, will or limited mobility is nothing but
a regulatory fiction-a backdoor entry for fixed-services providers into
the cellular arena and that too for a fee for licence and spectrum that
bears little comparison with what cellular operators have paid. A nationwide
licence for limited mobility via the fixed service route would cost around
Rs 460 crore while a cellular licence for Chennai alone is valued at Rs
828 crore. Formulating policy is no doubt the government's prerogative
but its credibility depends on how well informed is the decision-making
process. And there is perhaps no better safeguard against error than transparency.
Frequent changes in policy do not auger well for either investor confidence
or development of the telecom sector. With the got looking into the issue
of limited mobility, concerns arise. It would appear that a simple regulatory
matter is being treated as a policy while will is not a technology issue
but a question of competition. It is, however, an acknowledgement that
cellular operators have a
point against fixed-service providers being allowed limited mobility.
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WiLL
is nothing but a backdoor entry for fixed-services providers into
the cellular area.
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There is then the aspect of credibility. The
National Telecom Policy of 1999 did not provide for or permit limited
mobility and the then Telecom Regulatory Authority of India (TRAI) was
against it. Now, not only has the TRAI recommended it but the Government
has also proceeded to accept it. The Government thus knowingly took a
decision contrary to its own policy. When confronted, it sought ways to
amend the policy to make it conform to the decision taken. Wither credibility?
What should have happened before limited mobility was ever thought of
was to have in place the calling party pays (CPP) regime in cellular phone
services. If and when CPP comes into effect, mobile phones could outstrip
fixed phones in two years, particularly because of the low teledensity.
The TRAI, in its March 1999 tariff order, had proposed to introduce it
from August the same year. Later, at dot's instance, it was postponed
to November. Why it did not happen is a sad episode.
It needs to be recognised that such issues fall
clearly in the domain of the TRAI. But for it to perform well it needs
to be well informed and independent. Nothing can adversely affect the
regulatory climate more than the government undermining the role of the
regulator. The benefits of technology must flow to the consumer but under
a policy that ultimately promotes competition, which is where consumer
interests lie. The real issue in the controversy regarding will and limited
mobility-a mobile service limited to a radius of around 50 km-is whether
the policy will promote competition in the long term or kill it under
the premise of immediate gain to the consumer. The initial entry for players
in the mobile segment was on conditions of limited competition, while
the policy is on a transition to full competition. If the rules of the
game are changed midstream, it becomes the regulator's responsibility
to ensure that the long-term competition is safeguarded. At the moment,
limited mobility may seem to pass on the benefit of advanced technology
at an affordable price, but for how long and with what consequences for
the promotion of competition? The local call rate of Rs 1.20 is a subsidised
rate. It makes little sense to provide mobile calls at this rate when
it is designed for persons who cannot afford to pay more than Rs 1.20
for a three-minute call. One who can afford to pay Rs 10, 000 as deposit
and activation fee and also a higher rental hardly falls in the category
that invites cross subsidy. Mobile services were never intended to be
subsidised. Limited mobility can by no means justify being branded as
a "poor man's cellular phone". This may sound good as a populist
slogan but it cannot stand informed scrutiny. Further, the day is not
far when voice mail via the Internet will become common and long-distance
tariffs-major source of cross subsidy for basic or fixed services-will
fall. Not surprisingly, therefore, there is no precedent for limiting
mobility in a competitive environment. There also has to be a detailed
and transparent probe into the impact of the induction of fixed-services
providers with limited mobility on the incumbent operators of both fixed
and cellular services. Does the study on the basis of which the regulator
has made the recommendation meet these criteria? From what is known about
the study it is difficult to answer in the affirmative. TRAI needs to
come up with a more convincing rationale for its recommendation.
(Justice S.S. Sodhi is the former chairman of
the Telecom Regulatory Authority of India.)
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