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Case of the sleeping regulator

Sunil Jain

One of the reasons why most of us who use telephone services don't really examine our bills in any great detail is that we have a telecom regulator to look after our interests, right?

Well, guess what, the telecom regulator, the Telecom Regulatory Authority of India, doesn't appear to have too great a record when it comes to protecting consumer interests.

So, the next time around, don't just examine your bills in detail, also make the effort to get copies of the TRAI's consultation papers and license agreements (most are available on the Net), and compare these with the bills you get. The comparison promises to be an eye-opener.

The most obvious case of the TRAI goofing up, of course, is the celebrated slap it got on its face from the Supreme Court last fortnight in the case of the WiLL-based limited mobile phones.

While it is true that technically the court's judgement set aside the decision of the telecom dispute settlement panel, for all practical purposes it was aimed at the TRAI as well.

For if the TDSAT was guilty of not examining the cellular industry's claim that WiLL-based limited mobility phones were not permissible under the original license of fixed line service providers, it was the TRAI that had originally said such phones were permissible.

This, by the way, despite the fact that the department of telecom had itself sent a letter to the TRAI in September 1999 saying that limited mobility telephony was not permissible.

But let's leave that aside for the moment, and look at some other decisions of the telecom regulator, like the one on tariffs for local long distance, or STD calls.

Thanks to competition and the regulator, STD tariffs have come down dramatically, from Rs 30 a minute for a call from Mumbai to Delhi in 1999 to around Rs 8 right now - and with Reliance Infocomm talking of providing local calls as for as low as 20 paise a minute, it's only a matter of time before calling long distance will be as cheap as calling locally. But, believe it or not, the TRAI has said that STD rates between Delhi and Mumbai can be as high as Rs 21.60 a minute!

So, if any telecom firms that provide long distance telephony want to collude and charge higher tariffs, our friendly regulator isn't going to raise a finger.

Of course, one can argue that the Rs 21.60 is really the 'economic cost', and all STD-service providers are actually charging customers much below their costs. This, by the way, is a standard TRAI argument - that since competition is driving down costs, the TRAI doesn't need to keep tabs on this.

That, however, is an argument completely without substance. Reliance, for instance, has based its 20-paise-per-minute rate on actual costs, the details of which it has submitted to the TRAI. Clearly then, the costs of STD calls are nowhere near as high as the TRAI would have us believe.

And if you think that Reliance is indulging in predatory pricing, how do you explain the fact that when Bharti Telesonic gave the TRAI the break-up of its costs on January 22, 2002, even these showed a sharp decline, from Rs 2.90 per minute in 2002-03 to Rs 0.36 by 2010-11 - that's an average rate of a little over a rupee a minute.

Interestingly, TRAI's own consultation paper of September 1998 says the cost of providing stand-alone STD services ranges between Rs 3.80 and 6.80 a minute. Since then, as we all know, prices of telecom equipment have crashed and so, logically, the tariff levels should also have crashed.

The same curious method of fixing tariffs applies to international telephone calls as well. While 'tariff accounting rates' for India and the US fell from $3 a minute in 1983 to $0.90 in 2000, the Federal Communications Commission of the US issued an order reducing this to $0.23 (Rs 11.50) by 2002.

Tariff accounting rates are the charges paid by international telecom firms to each other for carrying traffic between countries.

So, Rs 11.50 is the cost you pay for the call from Washington to say, Mumbai, which is one of the gateways from which international calls enter India. Having come to Mumbai, the call will have to travel on an STD route to Delhi - that's another Rs 1.08 if you go by the costs Bharti submitted to the TRAI.

Add 40 paise for the cost of a local call, which you've got to pay to the firm that carries the call within Delhi. All told, you're talking of a cost of Rs 12.98 a minute. The TRAI, you'll be happy to know, allows a whopping Rs 40.8 per minute for this route.

By the way, since India gets a lot more incoming calls from abroad than the outgoing ones, international carriers actually pay India for this, based on what is called a 'settlement rate' - in the year 1999-00, VSNL got an extra Rs 3,350 crore (Rs 33.50 billion) for this, in addition to what it charged you and I for the ISD calls we made.

Granted this income has come down dramatically with the 23 cent tariff accounting rate, but even this adds up to around Rs 800 crore (Rs 8 billion) of extra income to the country's ISD service providers. For reasons best known to itself, however, the TRAI has not taken this into account either.

When it comes to cellular tariffs, of course, the TRAI's batting on the side of the cellular operators is better known. In the initial round of licences issued in 1994, for instance, customers were to be charged a monthly rental of Rs 156 per month, Rs 1,200 as installation charges, and another Rs 3,000 as a security deposit.

Yet, since the licence was ambiguous on the point, cellular operators used to charge customers an additional Rs 1,000 for their SIM cards - the TRAI, however, refused to intercede on the matter.

In 1999, after the cellular industry pressed for relief, the TRAI increased the monthly rental to Rs 600 and even changed the billing or pulse-rate to suit the cellular firms.

Today, most cellular operators charge extra for services like itemised billing and call forwarding though these are usually included in the basic tariff in most countries - once again, the TRAI hasn't thought it important to fix ceilings on this.

What's equally shocking is the TRAI's silence on prepaid cards. That's right, while 60 per cent of all cellular customers today use prepaid cards, the TRAI has not even fixed tariff levels in this segment.

All that the TRAI has said, in the interest of the less-affluent customer, is that firms must issue prepaid cards of Rs 300 each. Yet, when you buy this card, you get airtime of under Rs 200, the rest goes towards some service charge. Whether this is exorbitant or not is not the point.

The point is that the TRAI has not even bothered to look at it. And this is the regulator that's supposed to be protecting our interests.

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