From IUC to call drop, here are Trai's norms that were challenged in courts

The entry in September 2016 of the latest mobile service provider, Reliance Jio, has not only disrupted the country’s telecom market but also, to an extent, led to the deterioration of relations between the older operators and the Telecom Regulatory Authority of India (Trai).

There are increasing instances of service providers challenging the orders of the regulator in the courts. Cellular Operators Association of India (COAI), representing the major incumbents — Bharti Airtel, Vodafone, Idea Cellular,  has expressed displeasure over some recent Trai orders. “The interest of the telecom industry as a whole has not been taken care of by the regulator,” says a senior executive from one of the older operators.

Telecom watchers say operators challenging the directions or regulations of Trai are not new. It is the frequency at which these are being challenged at the Telecom Disputes Settlement and Appellate Tribunal has taken many by surprise.

“Earlier, too, players would challenge regulations, which were hurting their business model,” says an industry veteran. For instance, interconnection charges have been a bone of contention since the start and any revision in the rates had always been challenged. In the early 2000s, it was state-owned BSNL that opposed the lowering of such charges, as it was in a dominant position and players like Airtel wanted to break into the market. The story was repeated in the late 2000s when multiple operators — Telenor, Videocon and others — launched their services. Incumbent operators then had opposed the reduction of the Interconnection Usage Charges (IUC).

In 2016, after Jio’s entry, the earlier operators have challenged the regulations on IUC and on predatory pricing. In both cases, the existing operators believed the regulations were tilted towards the latest entrant. Jio is also a member of COAI but its view on the regulatory changes by Trai have been different. Many existing players allege some of these changes favour the new player. 

Some companies feel the situation would have settled down over time, as in the past, if Trai had not imposed penalties for not providing enough interconnect points. On the issue of providing enough Points of Interconnection to Jio, it had ordered the penalising of the three existing majors for Rs 30.5 billion. Analysts say the older players could have challenged this in the courts but refrained as these were recommendatory. The department of telecommunications, nodal body to levy a penalty, is yet to issue any notice to operators. The incumbents say if any such notice is issued, it will be challenged in the courts.

According to Mahesh Uppal, director at ComFirst, a consultancy, most incumbents feel Trai has not played a sufficiently calming role to tackle the competitive situation. “Regulators typically want to promote, not thwart, competition. Their natural instinct is to anticipate and curb anti-competitive behaviour by incumbent players,” says Uppal, actively involved in the formative years of regulation and competition in the sector.

Several analysts feel the older operators also have to blame themselves for not factoring in the plans a new player with the size and aspirations of Reliance Jio would have. To which, analysts say, Jio is not a typical newcomer. “Jio is part of a huge conglomerate with deep pockets and a formidable balance sheet. So, Trai cannot justify treating Jio as a vulnerable new entrant,” says an executive from one of the incumbents.

The regulator, it seems, will continue to be in the crossfire till market forces settle.

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