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• Justice Sodhi interview • MTNL cuts Net rate • Citibank's Web service • Aptech raises funds

In this panoramic interview with Priya Ganapati, Justice Sodhi covers much ground, from the reasons for the existence of TRAI, through its many battles with the government, through its quibbling with the department of telecommunications, to the complexity of issues that arise as India begins deregulating and privatising its telecommunications industry:

In your perception what is the role of a regulatory body like TRAI? What kind of role should TRAI play?

TRAI is really required to be a kind of a watchdog. When the government decided to embark on the policy of liberalisation it did so, recognising that this sector requires investment, both domestic and international. In other words, they needed something to ensure investor confidence.

We have today, the incumbent operator, that is the DoT, the Department of Telecommunications. But the Department of Telecommunications plays three different roles. It is the policy maker, the licensor and it is the operator. To an extent, they are conflicting roles, particularly the role of operator and policy maker.

Now in this scenario, to expect a lot of private investment to come in is not being realistic at all. And this is what all the investors, I believe, said before we came on to the scene.

We must have a regulator, an independent regulator who would act as a watchdog. And that is what led to the coming into being of TRAI.

You say a watchdog? Do you mean a watchdog against DoT or a watchdog for the entire industry?

It is to ensure that there is a level playing field for all. And in the TRAI Act there are four main functions that TRAI has been given. It has a recommendatory role. It has a dispute settlement role. It has a tariff settlement role. And it is a body that would be available to the government for advice on any matter that will be referred to it.

In the recommendatory role we have three main areas where we can make recommendations. That is on the need and timing of the introduction of new service providers, what the terms and conditions of the licence should be and the revocation of a license for non-compliance with the terms of the licence.

Incidentally one of our other functions is also to ensure compliance with the terms and conditions of the licence.

Then, as far as dispute settlement role is concerned we have the powers that are normally given to the civil courts to enforce attendance in each session.

We have people who are qualified to decide. The Act requires that the chairman must be a judge of the Supreme Court or a chief justice of the high court. And the other members must be people who have special knowledge in accountancy and technology. And so we have a team that is equipped to take on this role.

Tariff setting, as you know, is something that we've recently completed. And this incidentally is perhaps the first such exercise done by any regulatory body in any of the developing countries and it is now almost a model for the other countries to follow.

And as far as matters for advice is concerned the government can refer any matter pertaining to telecommunications for advice.

How significant is the role of TRAI in context with the technological convergence that is taking place? In the sense that entertainment, broadcasting, computing are all converging into one...

Well, you know this is one of the issues that has to be taken up by the government. It hasn't at the moment... taken any concrete steps. We are confined only to telecom. We cannot travel out of telecom.

Broadcasting, if you see, is a separate entity altogether. And we have wireless and frequency... spectrum you know... that is with another entity. Then satellite is with the space agency.

So, at the moment all these are separate. But the day is not far when there will have to be a coordinating body.

What kind of coordinating body should that be?

Well, we will have to look at some other models. But it is really a decision for the government to take and not us. But in Australia, for instance, they have different regulatory bodies for all these activities but they have common membership.

Some members are common so that there is coordination. But this is just one of the models. There could be various other models. The government will have to make up its mind.

But, if you were given the choice, what kind of model would you go for?

Well, I haven't really given much thought to this part of it. Perhaps common membership could be a solution.

Today, cable operators are carrying Internet over cable lines. Companies that are broadcasting companies, for instance, ZEE Network is planning to provide Internet over their cable networks in Delhi. It is already doing it in Bangalore. Broadcasting companies will soon turn into telecommunications companies. But broadcasting has been kept out of the purview of TRAI. If there were a dispute involving broadcasting and the Internet business, under whose jurisdiction would it fall?

TRAI would have no role in it.

Whose jurisdiction would it be then?

Probably it'll go to courts.

Do you think that the courts could handle these complex issues?

The courts can handle all types of issues. But the problem with the courts is the delay. And in business, delay entails a price which business cannot pay. That is the problem.

Don't you think that broadcasting and telecommunications can no longer be viewed as two different issues?

No. There will have to be convergence. There is a convergence of technologies. This will have to be recognised and dealt with accordingly. But until it happens, we have to carry on as we are.

But don't you think that it is time for the government to think about bringing broadcasting under the purview of TRAI?

Well, it is a decision for the government to take. I don't want to be misunderstood on this issue as trying to grab power and authority. That is not our intention. But there is a convergence in technologies and this has to be recognised and dealt with.

Do you think that the TRAI should be more proactive and guide developments before the developments develop into disputes?

TRAI does try to play a proactive role. But it is of recent origin and as soon as we came in we were bogged down with so many issues.

One of the biggest handicaps that we faced was that the licences had been granted before TRAI came into being. It should have been the other way round. A proper study should have been made of the manner in which licences should be issued, how many players there should be and why.

These issues were not looked into and all this was done before TRAI came into being. And at the moment there is no proper appreciation of what the role of TRAI should be. That is why there are disputes pending in courts regarding the role of TRAI, which has held back the development of the sector.

We have often said this and publicly that the issues that are in court are really issues of policy that the government has to decide and not matters that the court should pronounce upon by manner of interpretation of the Act.

But for some reasons, reasons best known to the government, they prefer to wait for the courts to pronounce.

You have also said this in a recent interview...

Yes.

You have been quoted as saying that "there is a very unfortunate thing happening. The cases that are going to the courts are on the policy level rather than technicalities".

Yeah.

Why do you think this is happening and what is the way out?

I think it is lack of understanding of the proper role of the regulator. Now the dispute that arose was with regard to the entry of MTNL into the cellular market. All that we said was that it is incumbent upon the government to have before it our recommendations before it decides this issue.

We never said, and I emphasise this, we did not say our recommendations are binding. If they are not binding I don't understand why they were afraid of our recommendations.

But they instead chose to go to the courts and say this view is wrong... I mean that we can make recommendations but it is not mandatory for the government to have our recommendations before they allow a third operator.

Now the result has been that a lot of time has been taken up. It's almost a year and a half and this issue is still hanging fire. Assume for a moment, I mean if it had come to us in a couple of months we would have made our recommendations. Assume that our recommendations had been perverse or totally unacceptable to the government; all that the government had to do was say we disregard them for the following reasons and then gone ahead and done what they liked.

I can't understand the logic behind all this thing and the result is that the nation has had a very heavy price to pay.

What do you think is the way out of these kinds of problems? How do you think we can prevent them in the future?

That's what we have been saying to the government. Please look at it as a matter of policy. Do you, as a matter of policy, want us to make a recommendation after the event or before the event?

If, for instance, you have already allowed another operator to come in, then what is the point of our giving a recommendation whether or not they should come! The deed is already done!

Similarly, on the terms of the licence, if you have already granted the licence, what is the point of ours saying the licence... whether the terms of the licence should be this or that... Similarly, if you have already revoked a licence of someone where do we come in to say whether the licence should be revoked or should not be revoked.

The whole thing is that should we make our recommendations before the event or after the event.

What has been the government's response to this suggestion?

Unfortunately, their response has been to go to court rather than to give a straight answer to these questions that we've posed.

Don't you think that the government should have preferred to settle it out here rather than go to court?

I wish they had done that!

But Clause 18 of the TRAI Act allows TRAI's decisions to be challenged in a high court.

Yes...

Don't you think that this clause can be misused to delay the implementation of TRAI's decisions?

No. No. It is a safeguard. I mean there has to be some check. We are not infallible. We can also make wrong decisions. This is a safeguard for someone to correct our wrong decision and I welcome an appeal.

But don't you think that it can be misused to cause delays?

No. It can't be misused. The courts are going to deal with it and they are qualified people there, competent people there.

You have said that the TRAI has been playing a proactive role. Can you give any specific instances?

Well, the first issue that I would refer to must, of course, be tariff setting. Then the other issue that recently came up is about Internet providers being asked to pay for Rs 15,000 per line. And we stopped that. We said 'No. You must come and discuss it with us.'

Another potential issue of dispute which we visualise is the... what we've got from newspaper reports is about 'wireless in local loop' and DoT and MTNL saying that they will introduce this mobile service... a WLL mobile service in 17 cities.

So we've asked them about it. 'What is it this that you are doing.' And this is something that does concern us because it will have implications both for the basic operator and the cellular operator.

Now, this we have done before anyone has made any kind of complaint to us.

What kind of implications do you see?

If for Re1.20 you can make a call on a mobile phone on WLL technology will you ... who'll go to the cellular operator who's charging Rs 6 a minute!

But you can't stop technology. It can always subvert restrictions imposed on it. How long can you say no to technology because it affects the interests of a few?

I think here I haven't been able to explain myself. I share your view that we cannot stand in the way of technology. We cannot block technology. Our job is to ensure a level playing field.

At the cost of better technology?

Not at the cost of technology.

At the cost of better cheaper options to consumers?

Not at the cost of technology. We want the consumer above all... all these services are for the consumer. We want the interests of the consumer to be served. And experience the world over has shown that never have the interests of the consumer been better served than by competition.

If we do something that kills competition it is something that is against the interests of the consumer. If tomorrow such a situation arises that DoT and MTNL buy technology that they employ for themselves and deny it to others and bring about a situation that it kills our competition then we have brought monopoly back.

And once monopoly comes back consumer interests fade into the background.

In the TRAI Act, under Section 25, power to give policy directives has been retained by the government. Do you agree with the view that this reduces the role of TRAI to an organisation that merely implements government directives rather than act as an autonomous policy and decision maker?

But, you see, the only time that the government invoked this was with regard to the tariff order. And as you know they had to withdraw that. And we have a right to be heard and to be consulted before they give any policy directives. So there is a safeguard.

But the decisions made by TRAI are not binding on the government. Even the recommendations are not...

The recommendations are not. But the dispute settlement decisions are binding on the government.

Okay.

And they are binding to the extent that under Section 13 we can issue directions and they have to comply with them. If they don't comply with them then penal consequences flow from it and those penal consequences are against the officer concerned and not the department. And they go up to a fine of a lakh (Rs 100,000). And if they persist in default then it is a lakh a day.

Don't you think there is a need for an autonomous and independent policy maker separate from the government? Policy needs to define the focus and direction that the industry should take for a few years to come.

No. This policy-making role has inevitably to be that of the government. After all, we are a democracy and if we are a democracy then we are answerable to the people. Who are answerable to the people? It must be the elected representatives. People who are appointed to the TRAI are not the elected representatives. Therefore this role of policy making must be that of the government and no other entity.

Okay. But perhaps when it comes to foreign and home policies, frequent changes might be okay. But in telecommunications can we afford frequent changes in policy with change in governments?

If you are looking for investment then there has to be a very clear direction in policy. If there are frequent changes then it affects the credibility of the policy itself and therefore it is very essential that there must be a clear-cut and definite policy and it must be common to all.

Do you think that the government can handle this role, as there are complex technological issues involved?

Yes. Yes. The government has the expertise and don't forget the DoT. They have some very competent people there. And for us, the viability of DoT is very essential.

Why?

Because it is the very foundation of the telecom sector in the country. Without a stable and a viable DoT telecommunications services cannot survive.

What would happen if DoT isn't there or DoT collapses?

If DoT collapses what would be left? Yes, we have private operators today. There are 21 (telecom) circles and in only 6 circles do we have 1 private operator. And out of those 6 only 2 have gone into business. And they have gone into business in just a couple of cities. The rest of the country would be without phone services if DoT were not there.

So, it has led to a situation such that for the telecom sector to survive DoT must survive...

It has to... it must be there. The viability of DoT is vital for the telecom sector.

A section of the industry has alleged that the tariff proposal is structured to benefit DoT. Do you agree?

Benefits DoT?

Yes.

(I think it) Benefits industry rather than DoT. In fact DoT is the first people who have been most vocal and unhappy about it because we brought down long-distance call rates and that is where most of their revenue came from. And most of the industry by and large is very happy about it.

But the consumers aren't...

The consumers... who do you mean the consumers? If you are meaning the consumers, people who make no STD calls...

Say consumers who make a few STD calls...

No. If they make few STD calls they are gainers. If they make no STD calls then that group of consumers who make 3, sorry... 2 to 500 calls, they are the ones who will have to pay extra.

And remember it is after six years that these call rates have been changed. And in six years the inflation rate has gone up, the income of people has gone up. You should keep that in view.

What we have raised for this group is something from Rs 60 to Rs 120 a month and over a six year period. When you compare with any other item whether it is vegetable, fruit or cloth or whatever, this rise is much less than what has taken place in these commodities.

What percent would you estimate these group of consumers to be?

I wouldn't try to hazard a guess. There is an exact figure that you can get from our economic adviser. I suggest you get it from him.

Though you have brought down the STD/ISD rates, you have increased the local call rates as well as rentals. Do you think this will impact the already low teledensity in the country? Don't you think this will affect that group of consumers who have recently acquired a phone and consumers who make few calls but end up paying huge rentals?

Well, we have no evidence to show that the potential phone users will be put off by high rentals. Perhaps one of the yardsticks would be to count those who have phones, have they given up the phones on account of the high rentals? Nobody has given it up.

And how much have we raised it (rentals)? In the rural areas where the rent was Rs 50, we had proposed that it be raised to Rs 70. Now the government has said no, in the rural areas it will be Rs 50 because what we said was the maximum. You can come below that. The maximum raise in rent is Rs 60 and that too in the big cities. And Rs 60 rent being raised after six years is something well within affordable limits.

Do you think it will adversely affect the Internet penetration in India because Internet penetration depends on local call rates that have been hiked?

Internet has been greatly helped by the sharp drop in lease line charges. You have to see it as a package. Lease line charges have dropped by as much as 80 to 90 per cent and that is why if you read the papers you will find every other day Internet charges coming down... coming down. And they are going to come down even more.

But what about the dial-up subscriber?

The dial-up subscriber... the problem is with the connectivity. The quality of service is not there. And that is an aspect that we are involved in at the moment and we are taking it up very earnestly now and we want to ensure that the consumer gets that quality of service that he is entitled to.

The TRAI had released a paper on quality of service. What is the status of it?

We are working on it and we will be coming out with some directions now and some later.

For us, the most important project was tariff. Now that tariff is not there the next important subject that we are working on is quality of service.

And there is hardly any subscriber who doesn't have a tale of woe to tell against any department. We are very conscious of that and that is what we want to do.

We wanted to bring in standards and not standards that are written merely in the rulebooks. But we want to bring in a mechanism to ensure that standards are maintained, which means bringing in accountability. It also means payment of compensation for the person who is denied the quality.

TRAI had also floated the concept of an ombudsman who would take care of consumer complaints. What has been the government's reaction to it?

The government... the DoT... and their response hasn't been too happy about it.

They said you can't do it or something to that effect. But regardless of what DoT says this is a concept that we are committed to and we will be proposing this concept.

Whether we can do it or whether it requires legislation by government is a matter, which needs to be looked into. But unless... it's no use putting down the rules that these are the standards that you must maintain unless you can have a mechanism to ensure that those standards are adhered to.

And what is that mechanism? If I have a complaint against DoT that my telephone is not working well and I take my complaint to an officer of the DoT what relief can I get from them? I need to go to some other authority that will see that the orders are carried out and compensation is awarded... That somebody is held accountable.

Do you think TRAI itself needs to get more involved in consumer disputes and be an organisation that consumers can turn to?

It is a very dangerous thing because consumer complaints are so large in number that if TRAI were to deal with consumer complaints it would have no time to do anything else.

It won't even be able to cope with all of that. It would only be able to cope with a fraction of that. That is why, what we have in mind is an ombudsman in each circle.

We may need more than one ombudsman depending on the number of complaints. And even the consumer courts which is where the consumer can today go, they are cluttered and it takes ages for cases to be disposed off there.

Therefore, for telecom, a separate entity has to be created and that is the ombudsman.

And what will be the profile of the ombudsman? Should it be a single person or should it be a bench?

Well, these are aspects that we now will be looking into and we have to have further consultations on these issues. We haven't made up our mind on this. We just... all we have set upon is the concept.

The inter-ministerial group called the Wireless Planning Coordination Committee does the spectrum management in India. However, the disputes arising out of the committee's decisions are adjudicated by the TRAI...

TRAI does not adjudicate any of those disputes. We do not figure into that at all.

But what would happen in case of disputes, say for instance, if broadcasting networks had to give up bandwidth but refused to...

TRAI has no jurisdiction.

Then who would have the jurisdiction?

I suppose that would be the courts.

Do you think that spectrum management is something that TRAI should be actively involved in?

Spectrum management should really be with an independent entity.

What kind of independent entity?

That is for the government to decide.

What kind of role should the policy maker adopt? Should he concentrate on creating policy that catalyses the growth of the industry or should he concentrate on policies that will not obstruct the natural course that the industry takes?

It is a very hypothetical question.

But what is your perception...

I think you should put it to the policy maker...

If you were given the choice how would you do it?

I'd be encroaching on another man's territory, which I'd rather not...

Entirely in your perception, how should policymaking be done?

Depends upon case to case...

There has been a lot of friction between DoT and TRAI. The relationship between the two has never been smooth. Some of the biggest obstacles to the implementation of TRAI's decisions come from DoT. Specifically, the charge has been that DoT delays implementation of TRAI's decisions. Why do you think this happening?

DoT has to carry out any directions that are given to it by the TRAI and DoT does carry them out.

But maybe DoT delays implementing the decisions...

No.

Do you think that the relationship between DoT and TRAI needs to be improved?

Yes. There is a lot scope for more interaction and dialogue than what has been so far.

How do you think relationship between DoT and TRAI can be improved?

Ask DoT!

How would you like to do it?

Really, the ball is in their court.

Do you think that you have always extended a friendly hand and been ready for any discussions while the response from DoT has not been equally responsive?

We have always been available for dialogue and discussion but they have not been so forthcoming...

Why are they delaying?

I don't know. You ask them.

What is your perception?

No. No... you ask them!

Do you think that the TRAI has been involved more in settling disputes than in fulfilling some of its other objectives like protecting the interests of consumers or monitoring the quality of service and conducting periodical surveys of the service provided to consumers? The image of TRAI has become that of an arbitrator...

That is the media. The media tends to report the disputes that we have been involved in more than the other work that we have been doing.

And we are involved in very important work. Somehow the media doesn't seem to be interested in it.

Could you give some instances?

Quality of service. They haven't mentioned quality of service. They mentioned our tariff paper only when the controversy over it arose, not otherwise. And now we are working on the calling-party-pay regime. We are working on the opening up of long-distance (services) to private competition.

We are working on a numbering scheme... a numbering scheme where if you have competition the consumer must have a choice whether to go to operator 'A' or operator 'B'. And if he has to have this choice he has to be able to carry his number with him. If you switch over from operator 'A' to operator 'B' and you lose your number it is a kind of a barrier to you to switch over.

So, what is the way out?

That is what I mean when I said a numbering system. We are working on it. And there are a whole lot of issues that we now expect to have... This revenue sharing, what should be the share price? Policy says that TRAI will decide what will be the share of the revenue to be taken, what will be the entry fee. These and several other issues will come up.

Are you satisfied with the powers given to TRAI under the TRAI Act?

Yeah. We are quite satisfied.

Do you think that any modifications need to be made in the TRAI Act?

Modifications... I would say only to the extent that we need greater financial independence than we presently have.

What is the financial arrangement now?

At the moment we have money coming from revenues of the state and our financial dealings are through DoT. We would prefer to have financial independence.

The TRAI was set up as a regulatory body. But where do you draw the line and prevent a regulatory body from becoming an autocratic one?

We are not the body to say when we are regulating and when we are autocratic. We will always say what we are doing is we are regulating. From someone's view we are being autocratic. But we ourselves can't draw the line. If we were to draw the line we wouldn't be autocratic.

When you are making decisions how do you try to maintain the balance?

Take the overall national interest... I try to keep that in mind. And that's our restraint.

You have said that you do not want any modifications made to the TRAI act. But the new telecom policy says "The functions of licensor and policy maker would continue to be discharged by government in its sovereign capacity. In respect of functions where TRAI has been assigned a recommendatory role it would not be statutorily mandatory for government to seek TRAI's recommendations." Do you think that this clause is one of the biggest holes in the TRAI Act as it gives the government sweeping powers to overrule TRAI's recommendations and render it ineffective?

No. We don't want our recommendation... we are quite happy with our recommendatory role. We have never said that our recommendations are binding or need to be binding. These are government decisions. The government is the entity to take decisions.

But don't you think such a clause could be misused...

What we don't... I mean what I don't understand about this clause is that if our recommendations are not binding what is it that frightens the government from taking our recommendations?

Would this clause not be used to misused by the government like in the case of tariffs where the TRAI's recommendations were overruled by the government...

Perhaps, a better example...they say that MTNL would be the third cellular operator. But the policy says that the TRAI will recommend the need and timing of new cellular operator. Where the government is concerned they have taken it. And in some other cases they... but this is bound to have an adverse effect of investor confidence?

How would you like TRAI to evolve? What areas would you like TRAI to focus on and get more involved in the future?

It is a bit premature at the moment and we have a lot of work to catch up on and come to that stage where we can focus on that...

But isn't it better to...

I know... I know... but at the moment we have a lot on our hands.

The TRAI is working on terms and conditions for domestic long-distance licences. When will the terms and conditions of the licence be announced?

They will be answered by the government...

Have you already made the recommendations?

No. We have not made the recommendations. We expect issuing our recommendations before early next month. (Early July)

What is the stand TRAI will adopt? Will it impose restriction on total number of players in the domestic services...

I can't answer this question. It will depend on the recommendations that we make.

Do you think that the power to issue and cancel licences should also be given to TRAI?

We are quite happy with the powers we have.

Why do you not want to this?

We do not have a role to play because the Act says that we have to ensure compliance with the terms and conditions of the licence. Then we have the role of recommending revocation for non-compliance with the terms of the licence.

But do you not think that the power to issue and cancel licences would give you a greater role to play than just being a recommending authority?

It is your perception not ours.

You don't agree with it?

No. We are quite happy with what we have.

The TRAI has the power to decide on the rates of telecommunication services within India and outside India. Do you agree with the view that the market should be allowed to fix its own prices and thus allow the survival of the fittest rather than have a regulatory body do it?

This perhaps is a regime that can come into being once the network expands to all our villages and our teledensity moves up.

It is too low at the moment. If it is left for the market what will the private operators do. They will be cream skimming. They will go to the high users and leave out the others. Who will cater to the others? Who will take the phones to the villages? You won't get much revenue in the villages. But they are there. You only have to extend this facility.

When do you see market pricing finally happening?

It is years away.

How long do you think it will take?

I can't at the moment guess. Not for the next ten years.

That's a long time away....

No... a very short time... it's not long.

There is a feeling that in the present political situation telecom issues have taken a backburner. Do you agree?

Some things by their very nature cannot be done because we have elections round the corner. The Parliament is not in session. Some laws have to be convened which cannot be done now. To that extent there is a pause. But otherwise what can be done, will be done because the government is committed to it.

TRAI Act makes it mandatory for the chairperson to be a judge of the Supreme Court or a chief justice of a high court. There are many issues where understanding technology is important. In this context how important do you think it is for the chairperson to have a sound technology background?

Don't look at the chairman by himself. The chairman is one of the seven persons to comprise the TRAI. And the TRAI consists of people who have different talents and who come from different fields.

All these issues are discussed together and it is the collective wisdom of TRAI that is reflected. So the head has to be the person who is considered to be most senior. Now who would be the most senior? A judge of the Supreme Court or a chief justice of a high court. And in case of the members all the members have to retire at the age of 65. And whereas in case of the chairman this age limit is not there and rightly too. A judge of the Supreme Court would retire at the age of 65 and if he were to take on this appointment after retirement he would be past the age limit... collective wisdom of people coming from different walks of life, different professions, different careers...

When you started out as the chairman two years ago did you have problems trying to understand technology?

Yes. I had to study it.

How did you go about it?

I read as much as I could and I also sought advice from people who were in this field. And mind you as a judge I often had to deal with subjects I didn't know. And relying what the lawyers and experts would tell you and a certain amount of reading on your own is enough (laughs).

And the fact that I have been able to survive without making any great blunders means that somehow I have been able to manage.

Two years ago how involved were you in telecom issues?

Not at all.

How has your life changed now?

Technology is changing the fastest in telecommunications. And we don't know what will come tomorrow. So we have to keep that in mind when we look at policy issues.

Has it changed the way you work?

I had thought that I could sit back and relax but that is not happening (laughs).

Tell us what you think