A recent decision by the Telecom Regulatory Authority of India (TRAI) to recommend imposing a penalty of Rs 3,000 crore on the three large incumbent operators does not bring glory to anyone - David, Goliath and the referee. It tells a sorry state of affairs in the telecom sector where instead of competing in the market place, the players are fighting regulatory war.
In the fight between David and Goliath, it is the referee who appears to be in the bad light.
The regulator recommended imposing a penalty on three incumbent operators for not giving points of interconnection (POIs) to Reliance Jio. POIs are very important in telecom. Whenever a subscriber of one network (Airtel) makes call to a subscriber of another network (Vodafone), the call travels through POI. All the networks are linked through POIs.
Reliance Jio won spectrum for 4G services in 2010. The company has launched its services after six years of winning airwaves. For last few months, it was offering SIM to customers for trial. Now it has announced commercial launch but it will start charging customers only from next year.
In such a scenario when it sought 12000 POIs from the incumbent operators - Bharti Airtel, Vodafone and Idea Cellular, they had suspicion that Reliance Jio wanted to choke their networks. After all, the company has not yet started charging from its subscribers.
The incumbent operator say there will be ‘tsunami’ of incoming voice traffic as the services were free. Moreover, the voice will always be free so their networks would be choked. It is to be noted that all the networks are facing scarcity of spectrum.
Presently, per minute realization for an incumbent operator is 30-40 paise, it will decline to 22-25 paise when Reliance Jio launches its services, claim incumbent operators. Moreover, the volume of traffic will be such that the quality of services will be poor and the networks may collapse altogether.
It is basically a fight between a new operator and incumbent operators. TRAI’s role becomes important in such cases. It should be neutral. However, its decision to impose a fine of Rs 3,000 crore on incumbent players on a subjective manner like the number of POIs does not project it in good light.
If the department of telecommunications (DoT) accepts this decision, chances are very high that it may be meet similar fate as that of TRAI’s earlier decision on call drops. In May, the Supreme Court had struck down TRAI’s directive imposing penalty on telecom operators for call drops.
By any standards it is a very harsh decision. There are arguments and counter arguments of both sides. TRAI should try to solve such issues amicably. This decision creates a perception that the Regulator is not neutral and is biased in favour of one Operator. This is not a good situation for the telecom sector.