Trai moves lower confidence in the telecom sector: Neither Vodafone Idea nor Airtel plans really affect net neutrality

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Published: July 14, 2020 7:01 AM

Neither Vodafone Idea nor Bharti Airtel plans really affect net neutrality, so not clear why Trai should object to them

Even more worrying, Trai’s policies resulted in an artificial jacking up of spectrum prices; often, the last bid was made the floor price for the next auction.Even more worrying, Trai’s policies resulted in an artificial jacking up of spectrum prices; often, the last bid was made the floor price for the next auction.

It is not clear what the telecom regulator, Trai, had in mind when it directed Vodafone Idea to drop its RedX plan that offered higher internet speeds to premium customers, or why it has asked Bharti Airtel whether a similar plan it was launching violated the principles of net neutrality. As this newspaper has argued before during the net neutrality debate, it is not entirely clear that an Airtel Zero or a Free Basics was as bad a thing since, surely some form of internet is good for a nation with very limited access for hundreds of millions of people. But that apart, in this case, all that these companies were offering was faster services for a class of customers—those that paid more—there was no choking of, say, a Netflix or greater speeds to an Amazon Prime. And, if Trai was worried that internet speeds would fall for existing customers if the premium zones were given higher speeds, surely it has Quality of Service (QoS) parameters that deal with this?

What is especially worrying about Trai’s actions is that this is not the first time the regulator has made decisions that defy rationality. A few years ago, Trai decided to impose a one-rupee penalty on telcos for each dropped call—subject to a maximum of three in a day—despite the fact that shortage of spectrum was a major reason for the drops; amazingly, a few months after this, Trai came up with a technical paper on why the call drops were not the telcos’ fault though it still never dropped its recommendation for the penalty. After allowing RJio’s pricing to play havoc with the industry’s finances, the regulator floated a consultation on whether there should be a floor price for voice and data services; it even came up with a recommendation that predatory pricing should not be investigated till a telco had at least a 30% market share. At that time, RJio had a market share that was lower. And, when it levied a Rs 3,050-crore penalty on the older telcos for not providing points of interconnection (PoI) to RJio, it took data for just two days to measure the congestion though QoS rules mandate congestion be measured over 90 days. While the telcos are given 90 days by law to provide PoIs, Trai later had a consultation over whether the 90-day period was too long.

Hardly surprising that, on the issue of call drops, the Supreme Court ruled that the Trai penalty was “a legislatively pre-determined penalty, without fault or loss being established … (is) manifestly arbitrary and unreasonable”. And, in the case of the 30% market share being the floor before which predatory pricing could be investigated, TDSAT said, this showed “a degree of pre-determination to dilute the entire concept of Significant Market Power”, it said 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 that it provided “artificial protection to a TSP (telecom service provider) who may have the capability and intent to destabilise the sector through predatory-pricing”.

Even more worrying, Trai’s policies resulted in an artificial jacking up of spectrum prices; often, the last bid was made the floor price for the next auction. Indeed, even while Trai used various models to estimate what the correct reserve price should be for spectrum, as in 2018, it still junked these and used the last auction price, duly inflated using the SBI lending rate. If dealing with poor government policy isn’t hard enough, the last thing telcos need is a regulator whose policies are either arbitrary or not well-thought-out.

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