How Policy & Regulation Are In Step With Telecom Technology

New Delhi | Updated: Nov 5 2003, 05:30am hrs
The recent government decision to free the telecom sector of licensing regime, or more specifically bring forth an universal access license has again brought many questions about the role of regulator to the forefront. While the supporters of unified access license regime point out many reasons in its favour, those against it are equally vocal. In this backdrop, we take a look at what propelled the regulator and the policy maker (both of whom have worked hand-in-hand in this issue) to take this step. Have the priorities of the regulator changed

We start with some numbers which Telecom Regulatory Authority of India (Trai) chairman Pradip Baijal puts forth. India had 12 million wireless subscribers during the last six years. And during the last six months, an equal number of wireless subscribers were added. Thus, the industry has grown faster. During the period, telecom tariff levels are down to half of what they were at that time. And, telecom operators have not gone down under. In fact, Bharti made its first profits during this period and some other operators would be making profits, he said. Pertinent, but it may be mentioned that the current members of the Trai took over around seven months ago.

Regulators Changing Priorities

Coming back to controversies surrounding the unified license, we look at what constitute the basic functions of the regulator and in what order. Says Mr Baijal, Our first priority is consumer and to make the best possible tariffs available for the consumer. Second, is the growth of overall sector. Gone are the days when a government or the regulator decided the quality of service. By promoting aggressive competition, mobility of consumer between operators can be ensured. Third is industry viability, which has to be seen within the prism of consumer benefits and overall industrial growth. Well, this shows a greater clarity from his perception that industry viability had to be taken care of in order to ensure service for consumers.

The role of the regulator has evolved. According to Trai member Dr DPS Seth, During early days of liberalisation, the emphasis was on creating conditions for competition and tariff fixation. Now the requirement is to sustain the competition and optimise it in a manner that the consumer gets the benefits.

Growth Model Adopted

Our model has been different. Earlier, the industry was viable, but the subscriber numbers were not going up fast. We could have waited for tariffs to come down. However by encouraging competition, not only have the tariffs come down, but they are also sustainable as can be seen from the financial results simply because cost per subscriber has also gone down, said Mr Baijal.

However, telecom expert Mahesh Uppal took an opposite view. He said, Regulators need to intervene only when market does not work and rely less on detailed regulation of everything.

Now, we look at what propelled the government to a different telecom policy regime. Communications minister Arun Shourie said: Indian telecom sector is laden with litigations. Limited mobility has again been taken to courts. At a time when the country is witnessing such high growth rates in the sector, as have never been witnessed before, it is important to concentrate on the growth path rather than get into legal battles, which ultimately harm the sectoral growth.

Keeping Up With Technology

Additionally, the communications minister as well as the regulator have pointed out that the march of technology cannot be curbed. It is important for policy to be in pace with technological advancements and let full benefits of any technology trickle down to the consumers.

Trai in its recommendations on unified licensing starts with, Technological developments are rendering service based divisions of telecommunications redundant. Opined ICRA Limited executive director Amul Gogna, It may be reasonable to say that policies in India are now more in tune with changing technologies and markets than previously. The recent initiatives towards unified licensing seemingly recognises the reality that both consumers and providers would over a period of time benefit from market expansion.

Telecom expert Mahesh Uppal agreed, By and large there is no bar in use of technology in any telecom service post NTP 99. However, he also adds, Our requirement, till 1999 that only GSM be used for mobility although right at the time, created an incentive for its competitor CDMA to choose an unorthodox route to enter the market, via fixed services.

According to Dr Seth, Because of developing technology, newer application services have come due to which telecommunications has become a non-zero sum game. Thus, you can have a win-win situation for various players provided policies are correct. ICRAs Mr Gogna adds, Regulatory policy in India is now more in tune with the fact that licensing policy should encourage much-needed investments and technological developments, as regulatory restrictions have the potential to impede network expansion and technological progress, restrict the flow of financial resources, and encourage operators to find loopholes.

Some Distances To Be Covered

However, as the regulator and policy maker talk about letting the end customer enjoy the full benefits of technology, there are many areas where regulatory hurdles are keeping them from being fully implemented.

For example, Trai also mentions in its recommendations that NTP 99 had created a category of access provider having recognised the ability of various media like wire-line, wireless and cable TV to provide access to a subscriber for voice, data and video by a variety of media such as wire-line, wireless and cable TV.

In this context, Cellular Operators Association of India director general TV Ramachandran had asked, Since Trai is talking about an universal access license and increasing teledensity, why are cable operators, who have access to around 50 million homes, not being allowed to provide telephony services On this Dr Seth said, There is no stopping the cable operators from offering telecom services. They just need to buy a license and offer them. Such eventualities need to be avoided by migrating to unified regime where the operator is always free to use the best service and technology route.

Points out standalone ILD operator Data Access managing director Siddharth Ray,If long distance operators could be allowed to sell calling cards that allow the use of toll free numbers to place long distance calls, then subscribers could get the benefit of the whole-sale rates that an ILD operator gets.

Similarly, since IP telephony is not yet mandated on the national numbering plan, full benefits of IP telephony do not reach the end-customer. IP telephony, as a technology, would make telephony much cheaper as one need not build various levels of switches as in other conventional telephony networks. This in turn enables the service provider to save a lot in terms of investments, says Mr Ray.

Adds Mr Gogna, One area where more policy initiative may benefit the users is the provision of Internet and broadband services. The development of broadband access to the Internet is now increasingly gaining critical importance. Already, new and advanced communications services such as the Internet and wireless networks have played a critical role in enhancing productivity and boosting economic growth in many countries since the late 1990s. However, many bottlenecks continue to constrain the growth of Internet and broadband services in India.

Additionally, Mr Gogna gives examples where benefits of technology are not percolating due to lack of industry adaptability. In fixed networks, two attractive technologies are Digital Subscriber Line (DSL) and Fibre to the Home (FTTH). xDSL represents a broadband technology that enables fast data transmission over already existing copper lines that telephone companies have connected to homes and businesses, said Mr Gogna. There is potentially strong demand for xDSL based services. But, in India, DSL deployment has been hampered more by technical problems than regulatory hurdles. Substantial investment may be required for operationalising xDSL services.

Mr Gogna adds, FTTH presently represents, arguably, the best medium for transmission of digital information. The limited but rapidly growing amount of OFC that is reaching all the way to user premises today is mostly to serve business consumers. There exists a greater challenge of bringing OFC to residential and small business customers. While the hurdles in this case are more on the technical and financial front, policy can innovate ways of incentivising or catalysing the deployment of OFC.

Says Mr Uppal, The most important technologies, benefits of which are not percolating down, include 802.11 series of WI-FI technologies that have immnese potential becasue of their very low cost and immense technical superiority. The radio spectrum for this is still not readily available.

Similarly, policy doesnt allow the usage of Net telephony for PC-to-phone and phone-to-PC or phone-to-phone in the domestic long distance area.