Indian telecom regulatory framework in comparison with five countries: structure, role description and funding
| Pages | 62-77 |
| DOI | https://doi.org/10.1108/DPRG-06-2017-0035 |
| Date | 08 January 2018 |
| Published date | 08 January 2018 |
| Author | Giri Gundu Hallur,Vivek S. Sane |
| Subject Matter | Information & knowledge management,Information management & governance,Information policy |
Indian telecom regulatory framework in
comparison with five countries: structure,
role description and funding
Giri Gundu Hallur and Vivek S. Sane
Giri Gundu Hallur is
Associate Professor at
the Symbiosis
International University,
Symbiosis Institute of
Telecom Management,
Telecom Symbiosis
Knowledge Village, Pune,
Maharashtra, India.
Vivek S. Sane is based at
the Department of
Marketing, Symbiosis
College of Arts and
Commerce, Pune,
Maharashtra, India.
Abstract
Purpose –The purpose of this paper is to present a cross-country qualitative comparative analysis of
telecom regulatory frameworks of five countries with that of India. Adopting an institutionalist approach,
this paper contributes to understanding of how institutional frameworks in these five countries are
structured as compared to that in India so as to ensure division of the authority and scope of the
regulator vis-a-vis that of the ministry, and the bureaucracy; financial autonomy of the regulator;
redressal of grievances of individual consumers; and modification in the framework to cater to
convergence of telecom and broadcasting.
Design/methodology/approach –The study is based on literature review of research papers,
secondary research and documents published by the regulators of the five countries. The research
methodology used is qualitative comparative analysis case-based research of five countries. The
variables for comparison have been sourced from the World Bank Handbook for Evaluating
Infrastructure Regulatory System. The researcher has adopted qualitative research method to bring
forth the similarity, as well as the diversity in the regulatory setup of the five countries in comparison with
India.
Findings –Analysis reveals that there is an absence of clear role definition for policy formulating body,
the DoT and the regulatory body, the TRAI. The involvement of a number of bodies leads to duplication
of regulatory functions in the TRAI, DoT and the Telecom Commission. Secondly, with respect to
standards, compliance and spectrum management, the TEC and WPC function as divisions of DoT;
however, the TRAI is entrusted with ensuring interoperability among service providers as well as
spectrum management. This leads to duplication of regulatory functions and absence of a single
authority. Lastly, funding of the TRAI is done through the departmental allocation given to DoT alone with
no additional funds coming in the form of regulatory fees. This is seen to be specific to TRAI as other
sector regulators in India have been empowered to collect fees from industry participants. The Indian
framework shows two commonalities in comparison with the five countries; firstly, India has adopted
self-regulation through the setting up of the Telco-consumer group-led consumer redressal process.
The second similarity being convergence of the regulatory functions performed by the TRAI for the
telecom as well as the information and broadcasting ministries, although the two ministries continue to
function independently.
Originality/value –The paper furthers the understanding of the good practices in the design of
telecom regulatory framework. It brings out the similarity and diversity in these frameworks. And, most
importantly, it highlights limitations that the Indian telecom regulatory framework has in areas of role
definition for the regulator, its autonomy and regulation of telecom-media convergence.
Keywords Institutional framework, Convergence, Regulatory autonomy, Regulatory funding
Paper type Research paper
1. Introduction
For India, the telecom sector was liberalized in 1994, but it was only in 1997 that the
Telecommunications Regulatory Authority of India (TRAI) as per The TRAI Act of 1997 was
established. The Act granted the TRAI the regulatory and the policy-making powers for
Received 30 June 2017
Revised 10 August 2017
Accepted 16 August 2017
PAGE 62 DIGITAL POLICY, REGULATION AND GOVERNANCE VOL. 20 NO. 1, 2018, pp. 62-77, © Emerald Publishing Limited, ISSN 2398-5038 DOI 10.1108/DPRG-06-2017-0035
certain issues while the licensing continued to remain with the Department of
Telecommunications (DoT).
The telecom industry in India has grown from having tele-density of 1.94 per cent and
subscriber base of 14.8 million (TRAI Study Paper No. 2/2005) in 1997-1998 to 83.04 per
cent and 1,058.85 million in 2016 (TRAI, Press Release No. 97/2016), respectively. India
has predominantly followed the ministerial-bureaucratic process for policy formulation and
implementation. The regulatory process involves multiple bodies in the regulatory system,
namely, the DoT, Telecom Commission, TRAI and Cabinet of Ministers in the central
government. Since liberalization, the Indian telecom industry has witnessed numerous
irregularities in policy formulation and implementation. In 2007, India was ranked below its
Asian counterparts in parameters such as independence, transparency, consistency,
pro-competitiveness (Samarajiva et al., 2007). Industry leaders and investors opined that
the telecom sector was no longer an attractive option for investment on account of policy
uncertainty (Business Standard, 2009; Fitch, 2013; Business Standard, 2013). As a counter
argument to this point, it has been said that India under this regulatory framework during
the 2008-2011 period has shown exponential growth in cellular telephony. This spectacular
performance may be attributed to the fact that, in the initial stages of cellular licensing in
India, 2G spectrum was bundled with the license, resulting in low initial investment for
companies, and hence, the role played by political institutions seemed less important as
capital investments were low (Andonova and Diaz-Serrano, 2009)). However, the 2012
Supreme Court’s judgment on the 2G spectrum case has made auction as the mandatory
mode of spectrum assignment. This has resulted in increase the cost of spectrum
acquisition from around US$370m for 2G spectrum in 2008 (Jain (2010)) to around
US$3.5bn for a Telco aiming for pan-India coverage (DoT, 2010). Hence, the benefits of
low-capital requirements and asset mobility associated with cellular telephony have been
nullified to certain extent in the post-3G auction scenario.
The involvement of the Supreme Court of India in the 2G spectrum allocation case and the
subsequent cancelation of 122 licenses by it in 2012 has further worsened the regulatory
environment in India. All these factors seem to have contributed to the 85 per cent
decrease in FDI in telecom in India from US$ 2,000m in 2011 to US$ 304m in 2012-2013
(Hindu Business Line, 2013), which has increased to US$ 1,300 million in 2014. With
subdued participation of foreign investors, the state-owned banks were encouraged to
fund the Telcos in their spectrum bids, resulting in the overall exposure to the telecom
sector of around US$ 20bn (as per 2011 exchange rates) (TRAI Recommendations, 2012).
The fact that government institutions have invested in or lent to telecom firms serves as a
guarantee that government would not allow them to fail (Desai, 2006), leading to lesser
elbow room for regulatory action.
Since 2013, the government has allowed 100 per cent FDI in telecom, but there were very
few investments, with industry observers stating that lack of regulatory clarity is keeping
investors away from the telecom industry in India (Krishna and Machad, 2013). Although,
in 2015, largely due to the initiatives of the government, the telecom industry in India has
attracted FDI to the tune of US$ 2,895m (FDI in telecom DoT, 2015), the regulatory
framework remains unchanged. The attractiveness of the telecom sector should be based
on transparency and effectiveness of the regulatory framework irrespective of the
government of the time.
Considering all these points, the researchers felt the need to conduct a cross-country
regulatory systems comparison to answer how institutional frameworks in these five
countries are structured as compared to that in India so as to ensure:
division of the authority and scope of the regulator vis-a-vis that of the ministry, and the
bureaucracy;
financial autonomy of the regulator;
VOL. 20 NO. 1 2018 DIGITAL POLICY, REGULATION AND GOVERNANCE PAGE 63
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