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Dial Reform

At a seminar in Delhi recently, the Chief Technical Officer of Motorola — she is an Indian, Padmasree Warrior, a graduate of the Delhi ...

At a seminar in Delhi recently, the Chief Technical Officer of Motorola — she is an Indian, Padmasree Warrior, a graduate of the Delhi IIT — disclosed that soon Motorola will be coming out with a new instrument. When you reach your home, this instrument will function as a cordless phone. When you step out of the house, it will function as a cellular phone. When you reach an area — the mountains, say, or the Arctic — that are not covered by cellular services, it will function as a satellite phone.

But in India the cordless phone that you use within your house works on the network of a Basic Service Provider — the one who provides fixed-line service. To provide cellular service — over which you may use your cell phone — an operator has to get a separate license, through an entirely different process of permissions, regulations, fee-structures. And to use a satellite phone, you as a consumer have to seek special permission that only the Department of Telecommunications can give. In a word, to use that one instrument you will not just need access to service providers who have set up business in three strictly separated silos, you will have to get the DoT to anoint you among the select handful who are allowed to use satellite phones. But we don’t have to wait for tomorrow.

Our regulations for apportioning the amount the customer pays between the different service providers who come into play when you phone someone — the fixed line service provider in Delhi who has provided your phone, the provider of the network over whose lines etc. your call travels to Kanpur, the owner of the cellular service whose network your friend in Kanpur is using — is based on a host of distinctions: transitions, handover points, gateways etc. But with the changeover from the circuit switched network to packet switched network, these distinctions are erased. The network becomes seamless as well as ubiquitous. The same thing holds at your end — that is, that of the consumer. It is already possible to have a single socket in your house deliver voice, data, Internet, as well as radio and TV broadcasts. But our licensing system insists that each of these be a separate service.

Even a single mode can now do many things. We make a sharp distinction between telephony and broadcasting, between radio and TV. Mobile instruments are now available through which you can receive radio programmes, through which you can transmit and receive videos or movies, through which you can transmit TV programmes that you have recorded, through which you can surf the Internet… Soon, they will be able to receive videos and TV broadcasts. The other day I was invited to inaugurate a new service of MTNL. We were at Ashoka Hotel. At the MTNL headquarters, they started a film on Begum Akhtar that they had financed. The film was received at Ashoka Hotel in an ordinary phone, that phone in turn had been connected to a computer, and the entire film was projected on to the full screen — as it would be in a cinema hall. Was this telephony, or broadcasting, or a cinema-show?

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A sharp distinction is made today between cellular and WLL services. The former uses GSM, the latter uses CDMA technology. Ferocious litigation has been going on between the two sets of operators. TDSAT has directed Government to keep the services distinct. And that because that is how the licenses were given. What is the position in technology?

The infrastructure of one can provide all the services that the infrastructure of the other can provide.

At the other end, the consumer can now buy a handset that gives him the freedom to access both CDMA and GSM services.

Competition has ensured that tariffs too have converged.

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Each of these two technologies can provide either type of service: mobility within a limited area or over an unlimited area.

But our licensing system insists that the operators using CDMA technology ensure that the person is able to use his handset only within a tehsil. Make sure that this bolt of lightning stops at 17.5 kilometres, it says in effect!

Remember what happened when cordless phones first came out. They were illegal — for they were wireless instruments, and transmissions without wires were governed by the Indian Telegraph Act. Of 1885, thank you! But once a thing becomes available, people adopt it, and the law has to reconcile itself to the new state of affairs. That is what happened. People installed the cordless instruments in their homes, and eventually the law recognised their use as legal.

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The same sequence has been repeated again and again. Till two-three years ago, youngsters were being arraigned by our enforcement authorities because they were calling their friends over the Internet: the Internet is meant only for data, not voice, said our licenses. But a few months ago, Government allowed Voice over the Net.

In that allowing too there is a lesson. Voice over the Net has been permitted, but only for international traffic, not for calls within the country. Even that distinction does not tell the whole tale: Voice over Net has been allowed for international traffic — but only for incoming calls!

Such recognition of reality-in-singles doesn’t end the complications, of course. Consider that last example for a moment. The Internet makes no distinction between your calling someone in the city in which you are, or someone in Mumbai, nor indeed someone in distant New York. You are charged a standard rate for accessing the Internet. But under our regulations there is a strict demarcation between local calls, national long distance calls and international calls. In rates of course. But also in permissions. Among the most contentious issues in the telecom sector has been who shall get a license for ‘‘national long distance’’ telephony as distinct from telephony within a city, who shall get a license for ‘‘international long distance’’ telephony as distinct from long distance calls within the country. Thus, while calls over the Internet are much cheaper, Basic, Cellular ‘‘National Long Distance’’ service providers are not allowed to provide telephony through this medium. Only those with Internet Service Provider licenses are allowed Internet telephony — and that too only for outgoing calls.

Nor is that the end: those who have licenses as ‘‘Internet Service Providers’’ have to pay no license fee for Internet telephony; those who have licenses as ‘‘International Long Distance’’ service providers have to pay 15 per cent of their adjusted gross revenue as license fee. Not just that. The Internet Service Provider is not required to pay any entry fee. The International Long Distance Service Provider is to pay an entry fee of Rs 25 crore! The consequences are obvious.

When technology enables people to avail of or provide a service and licenses prohibit it, the licensing regimes will be violated. The State’s first reaction will be to set enforcers on to users of the service and its providers. That will just foment corruption. And further technical sophistication — improved technology will make policing more and more difficult.

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When the same service can be provided through alternative technologies, but the rate structure is such as to make service through one route more expensive than through the other, a ‘‘grey market’’ will arise. People will just by-pass the more expensive route — it is reported that VSNL loses up to forty per cent of long distance traffic to this grey-market. All concerned agree that the operators who provide this by-pass are violating the law. Posses sally forth to catch the culprits. The occasional violator is caught. But that has no real impact on the scale of the diversion.

What is round the corner is manifest. Those who got licenses only for national long distance or international calls, for instance, will find their business drifting away as more people acquire access to Internet and as the ‘‘Voice over Net’’ technology improves. They will then either have to reconcile themselves to go on losing business, or invent ways to provide the same service surreptitiously or — our usual option — use the State apparatus to somehow delay Internet telephony.

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In the end, our regulations will adjust to the new reality — but after forcing the country to lose years, after entangling everyone in coils and coils of litigation.

There is the economic cost also. Not just for the consumer. Not just for the service provider. For the country itself. In the licensing system as it stands, separate licenses are required for ‘‘Basic’’, ‘‘Cellular Mobile’’, ‘‘Global Mobile Personal Communication System’’, ‘‘National Long Distance’’, ‘‘International Long Distance’’, Internet, VSAT, Paging, as well as other services. As a result, operators providing each of these services use separate infrastructure, the Guidelines require them to maintain separate accounts and bill customers separately for each service. Avoidable expenditure has thus got incurred on duplicating the infrastructure, and on support services. The customer is inconvenienced — he has to deal with a multiplicity of service providers.

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But the worst consequence is different. It is the habit that such structures and mental mores engender. Of shunning change. Of frightening each other about every new prospect. Of convincing ourselves that the opportunity that has erupted before us is actually a snare.

A coral reef

The drag that such regulations impose on the adoption of technology is one aspect of the matter. Another, equally harmful feature is that licensing systems are like coral reefs. They have grown up bit by bit over the years. As a result, every system of this kind is riddled with incongruities entangled into incongruities.

Recall, the differences listed above in the entry fees and license fees that have to be paid for international calls by the Internet Service Provider and the International Long Distance fellow. Now, consider the area of operation. If you are in Ganganagar, Rajasthan, and make a call to Udaipur, or from Surat to Bhuj in Gujarat over your fixed phone, the call counts as a long distance call, and is charged accordingly. On the other hand, if you make the same call over your cell phone, it counts as a local call, and is charged accordingly! Reason? For cellular services, a state is a local area. For basic services — those of the BSNL, for instance — the unit of measurement is a construct called an ‘‘SDCA’’, a ‘‘Short Distance Charging Area’’. This is generally coterminous with the boundaries of a tehsil. So, under our regulations, if you have a cell phone and call anywhere within the state in which you are, that is a local call. But if you call over the fixed phone from your home beyond the tiny tehsil in which you are, it is a long distance call.

What if you call a cell phone from a fixed line phone in Udaipur? The charge then comes to depend on an altogether different concept: a Point of Interconnection. The call from your fixed phone is handed over at some point to the cellular network. If that Point of Interconnection is more than 50 km distant in another SDCA the call is charged as a long distance one; but if it falls within the same SDCA, and even though it is more than 50 km away, the call will be treated as a local call, and the long distance tariff will not be applied.

Around in circles

But, as always happens in regulations, the SDCA is not always just a tehsil! In Maharashtra, for basic operators, all of Maharashtra, including Mumbai, plus Goa is one service area. For cellular operators, Mumbai, Navi Mumbai and part of Kalyan are one service area for the purpose of licenses. The rest of Maharashtra is another service area. In Tamil Nadu, for basic operators, the entire state — including Chennai — is one service area. But for cellular operations Chennai plus Mahabalipuram plus Malaimanar are one area, and the rest of the state is another area. In West Bengal, for basic operators the entire state is one area. For cellular services, Kolkata is one area, and the rest of the state is another.

In these states, therefore, there is one license for basic operators, and two for cellular operators. In Delhi the position is the opposite. As far as cellular operators are concerned, the service area includes Delhi, Gurgaon, Faridabad, Ghaziabad, NOIDA including Greater NOIDA. But for Basic Service Providers, these five areas constitute four different SDCAs in what are by the other reckoning three service areas!

Ghaziabad, including NOIDA and Greater NOIDA, is a curate’s egg by itself. It is a part of the UP (West) service area for Basic Services but a part of the Delhi service area for cellular services. As a result, if a subscriber residing in Ghaziabad uses his fixed phone to dial a cellular phone in the same premises, the call is taken to be an inter-circle call, and is charged accordingly.

In a word, in Delhi, for basic operators the Delhi metropolitan area, which is one SDCA, is the service area; for cellular operators the metropolitan area plus several adjacent areas are one, single service area. In Maharashtra, West Bengal, Tamil Nadu, the position is the exact opposite!

That the consumers — and readers, to say nothing of sundry ministers looking for the rationale of these distinctions — are left confused is the least of the consequences. Given that calls within a state are long distance calls when fixed phones are used but local calls when cell phones are used is certain to induce migration of vital business from an organisation like BSNL — one that is providing the basic service. Second, there is the disjunction: wireless signals cross tehsil boundaries but the licensing system requires them to be bottled within silos! That is one of the spurs to the interminable litigation between telecom operators that has become as much a hallmark of the telecom sector as rapid growth.

Entangled wires

Today it is almost impossible to take any step in this sector — even on the smallest matter — without being accused of doing so to surreptitiously help one side or hurt another. Ahmedabad and Gandhinagar in Gujarat are a continuum. Persons living in one part work in the other. Similarly, Mohali, Panchkula and Chandigarh in Punjab and Mumbai and Navi Mumbai in Maharashtra are in effect single conglomerations. But in each instance they are separate SDCAs. Therefore, they have different STD codes — though even in that there is a difference: BSNL has been allowed to treat them under one common numbering scheme; private basic operators however have been tasked to treat them under two different numbering schemes! But leaving that aside, businessmen as well as important political leaders asked me to see why the areas could not have one common STD code. The staff in the telecom department on the other side has been warning me that should the areas be treated as one common charging area, we will be accused of deliberately enlarging the SDCA to help the WLL operators — for they are allowed to provide mobility within an SDCA!

Here is another gem. Today basic and cellular operators are not allowed to connect to each other at the boundary of two service areas. Thus, if ‘‘X’’ has got a license for providing cellular services in UP and in Haryana, he can lay his network up to the border point of UP on one side and up to the border point of Haryana on the other. But he cannot join them! So, if one of his customers in UP calls someone in Haryana, even though the latter is also his subscriber, he cannot take the call over his network. He must ‘‘back-haul’’ the call to a designated point and hand it over to a National Long Distance Operator who, in turn, will carry it to Haryana! The fact, the cognoscenti tell me, is that ‘‘integrated’’ operators like ‘‘X’’ are in fact carrying the long distance traffic over their own network. The small operators have to depend on the ‘‘National Long Distance Operators’’ and pay the charges that have been prescribed by TRAI. But the moment you try to remove this anachronism — for it is being violated in practice; the violation is almost impossible to police; the step would make regional calls cheaper — someone or the other from among the ‘‘National Long Distance Operators’’ will insist that his interest is being hurt, and he must be paid a compensation! Else, courts, TDSAT, TRAI, plants in newspapers…

Every licensing regime thus leads to interests getting vested in maintaining things as they are. The moment you try to improve it, someone is bound to take you to court — and that happens even when the change is not liable to hurt the person may particularly: keeping the other from benefiting is an even stronger spur in India than wresting a benefit for oneself! Hence litigation has become as much a hallmark of this sector as growth. The litigation in turn foments uncertainty, and it encoils everyone in insinuations of the worst kind. Together, the brew deters further investment.

To be continued

(The article is based on the author’s valedictory address at the seminar on dispute resolution mechanism in the telecom sector organised by TDSAT in Sept 2003)

READ PART I, II, III & IV
Dial Reform
Licensed to crawl
Eyes Wired Shut
Who’ll take the call?

First published on: 15-10-2003 at 12:00:00 am
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