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Eyes Wired Shut

Decades ago, Arthur Clarke formulated two axioms about the advance of technology. One, whatever is thought possible — and much of what ...

Decades ago, Arthur Clarke formulated two axioms about the advance of technology. One, whatever is thought possible — and much of what could not even be conceived — comes to pass. Two, it comes to pass sooner than anyone had thought possible.

To these we can add lemmas from our own experience. One, the change comes to have effects that reach farther than anyone had imagined. Two, the new developments come as jolts even to entrepreneurs — for changes are ever so often triggered by mavericks experimenting away in their garages.

In any event, civil servants, judges, to say nothing of ministers are least equipped — by their training, their aptitude — to anticipate technologies that will break out and the consequences they will have.

We see the resulting tremors in the telecom sector every other day. On the one side the new technologies enable participants to digitise all data; they enable them to compress reams upon reams of it into unimaginably minuscule magnitudes; they offer ever-new algorithms to ‘‘code’’ it, to ‘‘packet’’ it. On the other, bandwidth capacity to transmit this data is widening by the month.

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The two developments together enable different services — TV, radio, Internet, telephony — to be provided through the same infrastructure. And to be accessed by the final consumer through the same instrument — the TV set, his desktop, his hand-held device, his ‘‘telephone’’.

The system — licensors, enforcers, regulators — can strive either to block such new capabilities or facilitate their being adopted swiftly:

Priority crisis

We charge heavy entertainment tax from cinema halls. But movies are now offered directly to the viewer from satellites. Soon we won’t need even our TV sets to see them. Computers, hand-helds, even phones will receive them directly via wireless networks maintained by the traditional telephone companies. Will the transmitters be evading entertainment tax?

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Recently the Digital Library of India has been launched. Some 30,000 books have already been included in it — you can download each of them directly via the Internet. Within a year, a million titles are to be digitised and made available through this site. Is the programme to be halted because, in a sense, it enables providers of those books and readers to evade sales tax?

The country’s wireless adviser has allocated 1452-1492 megahertz frequency band for digital audio broadcasts from 2004. Assume a company uses that band to receive the records of a hospital in Germany, and transmit back the data after processing it. Is the company violating the law?

But in the new technologies ‘‘data’’ in the traditional sense — a string of numbers or text — is indistinguishable from voice — both are transmitted in the same form. And if the rate that is charged for the use of the former frequency band is lower than for the latter, the firm will use it. Will we then bring the rates in line or will we set the CBI after the firm?

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n Today you can read almost all our newspapers online. When text-to-voice software improves a bit, you will be able to hear them. Would that be ‘‘broadcast’’ or ‘‘print’’?

The distinction between ‘‘broadcast’’ and ‘‘telephony’’ used to be that the former was one-way: as listeners we just received voice or images; telephony on the other hand is ‘‘interactive’’. But even today broadcasts — over both the radio and TV — can be interactive: listeners participate in quiz programmes and discussions by ringing up the studio even as the programme is on air.

Soon, you won’t need your phone to do so; you will be able to talk directly through your TV set. Will that be ‘‘telephony’’ or ‘‘broadcasting’’? Accordingly, will it fall in the jurisdiction of the Broadcasting Commission or the telecom regulators?

We have seen the spat recently over whether the set-top box must be used or not. Soon the ‘‘dish’’ for receiving signals directly from satellites will become so cheap — a TV company is already offering it at Rs 100 a month — indeed the capability will be routinely built ‘‘free’’ into the standard TV set and computer, that people will not have to go through cable operators at all.

Will we stall the introduction of those TV sets or computers so as not to ‘‘discriminate against’’ those who invested in set-top boxes? Or because the new capabilities will drive cable operators to bankruptcy?

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We do not have to wait till tomorrow for the converse case. Cable operators in the US, even in the so-much-slower UK have upgraded their networks so that they can offer telephony, and provide access to the Internet. In India we look upon telephony, Internet, TV-through-cable as distinct. Should we therefore prevent such upgradation?

That is the basic difference. Should we block the introduction of a new technology or practice because it violates the existing laws and regulations? Should we clutch on to those laws and regulations till they are disregarded into complete meaninglessness — as happened with those extortionate tax rates, with those elaborate industrial and import licensing systems? Or should we put the new possibilities to work?

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Today there are 90 million TV sets in the country. There are only 60 million phones. There are only nine million computers through which the Internet can be accessed.

We are constantly hectoring governments to increase teledensity, to ensure greater access to the Internet. And governments are in fact spending enormous amounts to set up the infrastructure to do so. But surely the quickest and least cost way to increase teledensity and Internet usage is to encourage the technology that will enable the TV set to provide telephony and Internet access too.

Orientation

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Nor are our laws and regulations the only impediment. Just as formidable is the orientation of our regulators. Almost all of our regulatory and dispute resolution bodies — from the inter-state water disputes tribunals to TDSAT — are headed by sitting or retired judges. The function of these bodies is viewed as being akin to that of courts. It is ‘‘quasi-judicial’’, we say.

Similarly, if one calculates the proportion of the total time of the hearings of a typical case by these bodies that has been taken up listening to lawyers, and contrast that with the proportion the body has spared for listening to, say, technologists or engineers, the former would far outweigh the latter.

As a result, the approach to every problem is of examining affidavits, interpreting sections of laws, regulations, rules and sub-rules, circulars. Seldom do these bodies search for what management experts call ‘‘design solutions’’ — the way by which the total quantum of the good in question — water in the reservoirs, the market for telecom services — can be multiplied so that all the contenders would have more to work with.

The entire approach is to assess ‘‘legality’’. The premise is that the matter is yet another zero-sum contest — what one contender gets, the other will necessarily forfeit.

The result is made all the more certain by the task that is set for the regulatory body. Thomas Balogh compared ‘‘mathematical economists’’ to a child who, having just discovered a hammer, suddenly finds everything worth pounding.

The simile applies to governance too. When you set up a body to watch over the environmental impact of projects — say, dams — from its point of view, the one important thing is that impact. It will enforce that particular requirement over and above, indeed to the exclusion of other considerations.

When you set up a Human Rights Commission, for it human rights are the overriding desideratum that has to be ensured. Those rights, in fact the alleged violations of those rights by organs of the state are its reason for existence. What the conditions in Punjab were at the time — how the judicial machinery, for instance, had itself evaporated — is no concern of the commission.

In the telecom sector today, ushering in new technologies is not the objective for which TDSAT, etc have been constituted, the courts even less so. They have been constituted to resolve disputes, to adjudicate between contending competitors and their lawyers, to ensure ‘‘level playing fields’’.

The background and lifelong training of the heads of these bodies, the specialisations of the persons they listen to, the very mandate for which the bodies have been constituted all work to ensure ‘‘design solutions’’ are kept far away. The licence says this, the regulation says that, in his letter X said this on date Y, but in the circular of date Z the department said …

The basic determinant is thus the orientation of the regulator. Does he view his task as being to enforce word X over word Y in some circular or licence? Or as being to use every dispute to nudge the system to the next technological advance, to use every occasion to maximise competition?

Today, the orientation is the former. That is why the bodies become a brake on technological progress.

The lessons are manifest

Regulatory bodies, especially in sectors in which technological advance is rapid, should have persons who are well-versed in technologies.

Regulators must be on the lookout for prospective changes in technology, they must assess what impact their decision is going to have on the adoption of new technologies.

They must devote a greater proportion of their time listening to technology experts, to inventors, and less to lawyerly arguments.

An effective way to induce this reorientation would be to place at the hands of the regulator a fund to sponsor and reward inventions and their adoption in the industry. Members of the body would then as part of their mandate be on the lookout for inventors and inventions.

They would be continually receiving information about what is round the corner. They will be coming into contact with persons who are different from lawyers, accountants, columnists!

In addition regulators must bear in mind the habit and the great skill of many of our entrepreneurs in using the licensing system and our courts to keep competition at bay. That habit and skill will be deployed in using regulators for the same purpose. There must equally be a certain reticence, so to say:

Missed calls

A regulator who tries to finetune the flood of technological change, who attempts to ensure that every detail is in order will tie the sector in knots.

Today there are close to six hundred price cum credit cum security cum service packages on offer in telephony. How many can the regulator assess and police? Can he inspect every package to ensure it is not ‘‘predatory’’?

Instead, should he not go by some rule? For instance, that an operator who offers a low price shall not revise it upwards for three years? He may lower it further, but he will not raise it?

Will such a general rule not ensure that he will not offer a price just to kill competition and then, once the competitors have been eliminated, raise it?

Such efforts can only end in a wild goose chase. Assume the regulator decrees the price below which a cellular operator shall not peg his charge-per-minute. One operator circumvents this by offering handsets free. The regulator bans that or specifies the minimum

that the operator must charge for the handset.

The operator then keeps the charge for the handset at that level but adds features on to it. Or he offers a deferred-payment plan. Or he ties up with an insurance company and declares that anyone subscribing to his service can get the insurance policy at a concession …

These are normal marketing gimmicks today. How many will the regulator plug? And will it be the case that such practices will be outlawed in the telecom sector but be allowed in, say, the marketing of newspapers?

Regulators, like licensors, must not set out to decide what technology the entrepreneur is to use to provide which service. Nor is it their job to protect entrepreneurs from the consequences of the latter’s wrong decisions in regard to either.

Each of us can help the work of regulators: by subjecting their rulings to intense professional scrutiny. Such scrutiny is the hallmark of the American and British legal systems, and it is one of the principal reasons for the higher quality of their verdicts.

In India there is next to no analysis of judgments. The judgments are scarcely read. Has it gone in favour of or against the government? That is about the extent of concern.

Even our lawyers tend to head-note jurisprudence! Just the convenient sentence or two from a judgment!

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: 17-10-2003 at 12:00:00 am
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