Voi polloi

The last restrictions on the internet8217;s takeover of the telecommunications industry have hopefully been dissolved. The Telecom Regulatory Authority of India8217;s recommendations that restrictions on internet service providers ISPs prohibiting them from offering voice over internet protocol VoIP services be relaxed would, if carried out, have several beneficial effects both for consumers and for overall growth. Also excellent news is that the response of the department of telecommunications to Trai8217;s proposal appears favourable. The regulations, which only allowed calls from over the internet to domestic computers or to international telephones, were in any case absurd; it was impossible to control VoIP calls made to local phones, as they could effortlessly be re-routed through international exchanges.

Regulators exist to protect consumers8217; interests, not those of utilities companies. Trai has shown welcome recognition of that fact. It should be aided by giving it further teeth that could aid it in dealing with, for example, sulking GSM operators, who are refusing to offer interconnect facilities to another player. Trai should also consider rationalisation of licensing procedures 8212; universal licensing, in particular, should be given a fair examination and its impact on consumer welfare estimated. Consumers8217; interests will undoubtedly be served by a further reduction in long-distance tariffs, bringing regular STD and ISD calls firmly within the reach of even the poorest sections of society. Further, the reduction of transaction costs across the board, and particularly for small business, will serve as a further lubricant to growth.

The most hopeful consequence is that it will cause the provision and use of broadband internet to become more profitable and widespread. Study after study has demonstrated that an increase in such connectivity has large positive effects on entrepreneurship and the flow of information. Any regulation holding back its spread is counter-productive; government8217;s actions in this sector should instead be non-invasive, but must prioritise taking India8217;s communications network to the next level. If Trai8217;s suggestions and the DoT8217;s apparent approval are part of a coherent strategy to do so, then so much the better.