In the late 1990s, the government wanted private investments to come into the Indian telecom sector. However, this could not have been achieved unless the sector had an independent regulator to face the Department of Telecommunications (DoT), which had a monopoly in the sector in those days. An independent regulator was needed to ensure that there was a level playing field for all players.
When I took over as chairman of the Telecom Regulatory Authority of India (TRAI), my team and I had a battle with DoT over trying to break its monopoly and to bring in competition. We believed that competition would not only bring in more private investment but would also benefit the telecom sector in reducing tariffs.
If you recall, back in the late 1990s, a person had to pay Rs 86 per minute to make a call to the US. For making local mobile calls, it would cost Rs 10 per minute. Additionally, the person who received that call had to pay Rs 6 per minute. This impacted the progress of the sector, which remained slow. Interestingly, within the first month of my taking over, we brought down the call rates.
We even cut back the rates for leased lines. The new companies that entered the sector did not have their own leased lines and were borrowing these from DoT. And DoT was charging them exorbitant rents; in some cases the rent was almost equal to the cost of laying a new line. We reduced those rates by as much as 90 per cent.
Of course, such moves took us through a lot of litigations with DoT. Fortunately, I had two excellent people on my team – B.K. Zutshi, a telecom expert who was earlier associated with the World Trade Organization, and N.S. Ramachandran, the former chairman and managing director of Mahanagar Telephone Nigam Limited. (Amongst the three of us, I was the only one who did not know anything about telecom, until I took over….)
We also recommended that for mobile calls only the person making the call should pay, and not the one receiving it. DoT took us to court for this and later even won the case. It claimed that it would suffer significant losses if such a regime was brought in. We tried to persuade the bench and asked for six months’ time as we had already reviewed the situation and knew that the regime could be implemented, but it disagreed. We then decided to move the Supreme Court, but before we could do that, the law was amended and our team was removed.
Interestingly, “the calling party pays regime” did get implemented eventually. And when it was rolled out, almost four years after we pitched it, there was an explosion in the number of subscribers in the years that followed. It was in 1999 that we wanted to introduce this regime; however, it was implemented only in 2003. Just imagine what we lost in those four years.
Telecom, of course, has become a success story in India. But today, the regulator no longer has the independence that we enjoyed in our times. We very much did what we thought was right and the government mostly accepted it. But, of course, it also meant a lot of litigation.
Also, we believed in transparency and upheld that virtue, something that is rare to find in any government department today. For instance, we always published a study paper on a topic before coming out with a regulation. We solicited comments, encouraged industry suggestions and opinions. After receiving comments, we put up a proposal on what we planned to do and why. We again put up that proposal for counter-comments before finally coming out with a regulation.
We always put forth our thoughts in the open for everyone’s scrutiny and this, to my mind, is something that we must get credit for. Transparency in governance, especially in a democracy, is extremely important.
Going forward, we must continue to attract private investment. Look at the telecom companies now and how the government is trying to extract money from them. It has become a disincentive for private players to invest in the telecom sector in India.
We must continue to make use of emerging technologies. At the same time, we need to ensure that telecom services remain affordable for the people of this country. It is said that if teledensity increases by 3 per cent, it leads to an increase of 1 per cent in GDP; this is a big benefit for the country and must not be lost sight of. s
(Edited excerpts from a tele.net interview with Chief Justice S.S. Sodhi)