Given how RJio is grabbing market share so aggressively, it is easy to dismiss Vodafone Global CEO Nick Read’s comments on the telecom regulator’s (Trai) decisions hurting all telcos except RJio as typical of a loser. But it is not just Read, Trai is accused of bias by the appellate tribunal (TDSAT) and the Supreme Court. And telecom’s highest policy-making body, the Telecom Commission (TC), has also found fault with Trai on many occasions; TC has asked Trai to explain how it reached the conclusions it had on spectrum pricing—the higher the reserve price, the more it hits telcos who are not as cash-rich as RJio—but Trai refused to do so.
One of the issues raised by the older telcos was Trai’s sharp 57% cut in IUC levies. While Trai had justified this by arguing that newer-generation networks—like RJio’s—had lower termination costs, this made little sense since India had legacy networks as well. While the telcos’ challenge to this is pending before various courts, what is amazing is that Trai never even shared its costing model with the telcos. How can a regulator be so opaque? At another point, Trai suggested heavy penalties for call drops and, a month later, it came up with a technical paper that explained why telcos weren’t entirely responsible for the call drops! When SC ruled on this, it said “a legislatively pre-determined penalty, without fault or loss being established … (is) manifestly arbitrary and unreasonable’; it went on to say ‘(Trai) must respond in a reasoned manner to (comments) that raise significant problems, to explain how the agency resolved any significant problems raised by the comments, and to show how that resolution led the agency to the ultimate rule… including a rational connection between the facts it found and the choices it made”.
In 2016, Trai recommended a `3,050 crore penalty on telcos for not providing enough Points of Interconnection (PoI) for RJio. TC pointed out that telcos had 90 days to provide PoIs and had done so within this period. Trai later came up with a consultation on whether a 90-day period for providing interconnection was too long. An internal committee of TC has come out against the penalty—which is why no decision has been taken on the penalty for so many years—making it clear even the government is not convinced Trai is right. And when Trai was examining the issue of predatory pricing, it said a telco must have a market share of at least 30% to be even investigated for predatory-pricing. While ruling on this, TDSAT said Trai’s definition of significant market power (SMP) showed “a degree of pre-determination to dilute the entire concept of SMP”, it was “arbitrary without any deliberation and effective consultation”, that it was “not backed by any intelligible and objective criterion nor any convincing reason” and so was “an extreme step and unnecessary abdication of its regulatory powers by TRAI”. TDSAT went on to add, that the Trai’s ruling provided “artificial protection to a TSP (telecom service provider) who may have the capability and intent to destabilise the sector through predatory-pricing”. Instead of asking Trai for an explanation when it was pulled up so often by the country’s courts, the government reappointed the Trai chief after his term ended. And, yet, telcos are expected to consider Trai a neutral umpire.
