The point of interconnect regulation is sacrosanct, we will enforce it: RS Sharma, Chairman, TRAI

In a chat with ET Now, RS Sharma, Chairman, TRAI, says will take action against all those who have violated quality of service norms. Edited excerpts

ET Now: This is the height of the telecom battle but if one really were to look at it, there has been a dozen operators who have participated in the market. They were slugging it out for the customer share but never ever has there been the kind of turbulence, the kind of acrimony that exists right now in this sector. To what would you attribute this? Would it be attributed to the nature and the scale and the size of the new entrants? What is it that is causing the present turbulence in the sector?

RS Sharma: Let me not go into those questions. Let me first answer this part that for us, the consumer is king. Consumer is the most important stakeholder in this whole game and our attempt or efforts are to see that his interests are protected. One of the issue which is arising is the point of interconnect and both sides are in a way saying that this is what you need to provide, this is what we have provided, etc, etc. We have said we are not going into that question. What we are going into is the question as to how much is the call failure at the point of interconnect because that is what makes the customer suffer and there are quality of service guidelines which basically prescribe that the failure rate cannot be more than 0.5%, five calls in 1000 can at the best fail, at the most fail and that is what is our job to monitor. License conditions also provide that adequate amount of interconnect will be provided so that there are no call failures on the point of interconnect and our job is to ensure that the quality of service norms as also license conditions are followed so that customer does not suffer.

ET Now: But if one were to just talk about the allegations and the counter allegations that are flying thick and fast, as the regulator would you think that it is best to step in and ensure all issues are resolved or would you rather take a backseat and let the operators themselves resolve their differences?

RS Sharma: See there are certain things which a regulator will have to do as it is a part of its job. So one of the things is to ensure that quality of service norms are maintained. With regard to the other kinds of business allegations, the regulator does not have to interfere. That is not my job. My job is to ensure that the regulatory regime or regulatory framework is robust, is followed and if there are violations, those violations are appropriately taken care of. And this is what we are doing. We had during the last few days, called all the operators as to what is the call failure rate on the point of interconnect and we had called for the data from 15th of September to 19th of September. We have got data from almost everybody except maybe one or two operators who are yet to give the entire data and on that basis we will take appropriate action. As to if there are violations of those quality of service norms, we will take appropriate action against all these people who have violated these norms.

ET Now: In fact, I was coming to that. A POI, IUC, QOS at the end, they are all, of course, interconnected. But, if one were to really talk about the issue of point of interconnect taking one by one, how soon do you think this entire issue could be resolved because both parties continue to slam each other and they say that no progress has been made.

RS Sharma: Let me put it this way, as far as the point of interconnect legislation or the regulation is concerned that is a very, very sacrosanct regulation because it also protects the customers. Therefore that is the one which we will enforce. That is what we are doing.

ET Now: In your assessment, how soon do you think this entire issue could be resolved because at the end of the day as you mentioned customer also stands to get hugely impacted because quality of service gets impacted?

RS Sharma: I am hopeful that this should be resolved as soon as possible but as I said, my view is more customer centric and that is what we will see. Hopefully, all the players in this space will realise that ultimately this is the direction in which they have to proceed which is basically to make this network because ultimately point of interconnects are at the heart of the entire telecom sector. This is the main thing because otherwise there is no network. If you are customer of let us say telecom service provider A, then if there is no point of interconnect, then there is a disjoint group of all these people. Now you cannot have these silos. When you want to talk, one customer of one service provider wants to talk to another customer of another service provider.,The interconnect is most important. Without interconnect, they will not be able to talk and therefore there are very stringent laws on that subject and those laws will have to be followed.

ET Now: But is not that a classic case for you to intervene then because it is sacrosanct…

RS Sharma: Because we are intervening, I mean I told you that Reliance Jio for example started their services on 5th of September this issue came in and immediately we asked the operators to give the data from 15th to 19th September. Otherwise, that data is not asking how many points you have given. Essentially I am asking how much failure is taking place and that data will determine the adequacy or otherwise of the POI’s.

ET Now: How soon can we expect an action and how stringent can be the action from TRAI?

RS Sharma: I cannot say whether it will be stringent. It will be according to law. That is what I can say. It will be according to regulation, it will be according to the licensing conditions. That is what we will do.

ET Now: So if one party is found to be in violation of the license conditions, then what could be the kind of action that TRAI can take?

RS Sharma: Let us not enumerate those actions which TRAI could take. Let us first go to the first process. We will probably call for their explorations as to why this is happening and then they will respond and thereafter we will take actions. Do not worry. We will be quite swift and quick in taking action. I mean we are working on a day to day basis. We call for 15 to 19 data, the data is here today. We will shoot out the letters may be tomorrow, basically further find out as to why this has happened.

ET Now: Has that data been studied?

RS Sharma: Yes, data is being studied.

ET Now: Does it back any claims of any…

RS Sharma: It is not a question of backing the claims. What I can say is that the call failure rate is extremely high which is completely unacceptable and that is where we will proceed forward.

ET Now: So you will have to take some sort of a decision?

RS Sharma: We will proceed further.

ET Now: Since you have mentioned that there is a high call rate failure, it is incumbent on me to ask you what could be the kind of action or what could be the kind of further action that you will take?

RS Sharma: As I explain to you, licensing conditions for the UL provide that service providers will make adequate arrangements to ensure seamless service to the customers. Similarly, quality of service norms also provide certain 0.5% as a maximum rate of call failure.

ET Now: But you mentioned it is much higher than that…

RS Sharma: It is much higher than that certainly much higher than that.

ET Now: So you will obviously have to act as fast as…

RS Sharma: We are…

ET Now: You will have to be nimble ...

RS Sharma: I can assure you that.

ET Now: But that still makes me wonder as to what could be some of the stringent penalties? It would be…

RS Sharma: It is not appropriate for me at this stage to spell out penalties when the reasonings or the show cause or the kind of explanations from the cell providers have been received.

ET Now: So you will issue a show cause notice?

RS Sharma: We will issue a show cause notice in case of any violation of any of the licensing conditions or the what is called the quality of service norms. The first step is to issue a show cause notice.

ET Now: Fair enough. That is something that of course you will have to take care of. The other leg of this entire debate is the IOC regime which of course you are currently examining. TRAI is in the process of coming out with recommendations. Do you find merit in the argument that incumbents are saying that this regime or this 14 paisa held fine till the time there was no Rel Jio because there was no Tsunami of traffic one way? So you think now that there is merit in the argument that they are saying that 14 paisa is too less simply because the entire situation has changed?

RS Sharma: Let me put it this way. May be more than a month ago, we have issued a consultation paper on the interconnect usage charge and there are various types of IOC charges which are levied and we have issued this consultation paper to review all these things.

We have also provided the reasons as to why we are issuing that consultation paper. In fact, the immediate reason for issuing that consultation paper is a proposal of the BSNL where they were providing what they called fixed mobile telephony wherein they said that if you have a phone at your place and if you have downloaded an app in your mobile, then through that app you can call your phone and then through that you can call any mobile and the charges will be basically because fixed line to mobile telephony charges are zero. Therefore they will be able to provide a service at much better sort of rate to the customer.

The telecom service providers had raised an objection on that saying that you cannot have this kind of hybrid regime where the call from mobile to the fixed line telephone is going on the internet protocol. So essentially they had said that this cannot be done and this was so therefore what TRAI did, TRAI told the BSNL to put the service in abeyance and then we said let us review this whole interconnect regime in situations where you have internet protocol telephony and you have kind of products coming out as to what should be the method of IOC charges.

So this was the background and this was issued. Having done that now of course some stakeholders had called for time. So we have given them time also. We have extended the deadline to submit the sort of responses but at this point when we have issued the paper, the way it happens is we provide both the view and the counterview. There was a proposal X what are the proponents of acts, what do they say and what are the ones who oppose X and what do they say. We have described that in our IOC paper thereafter both the views will come.

There are ones who say it should not be increase, there are ones who say it should be increased. There are many views. What we are saying is we will consult all the stakeholders and then come out with the recommendations. So it will not be appropriate for me to provide the rationale or logic whether this argument is good or that argument is bad.

ET Now: But the premise of the entire argument is the argument is the asymmetric traffic that they have been talking about. They say that now the traffic symmetry has been completely disturbed by the fact that Reliance Jio is offering freebies and there will be a tsunami of traffic on their networks and therefore this price is absolutely unjustified. I just wanted your view on that?

RS Sharma: That is not really a correct argument. Let me give you two part answer to this; a) if the traffic was symmetric, if you were receiving as many calls as you were sending outside, then there was no need for a termination charge because the net was zero. Therefore, termination charge obviously will apply or will have any meaning in situations which are essentially asymmetric. b) When this 14 paise/minute is fixed, there is no stipulation with regard to the asymmetry and the extent of that asymmetry. Therefore to say that this situation is something which had not been envisaged, is not appropriated. This part is not correct and in any case, as we said, the asymmetry is probably inherent and we can study as to what is the level of that asymmetry, what was the level of asymmetry earlier, now, etc, etc. That is a different issue.

But essentially on very, very strict legal interpretation, one is asymmetric is the basic reason for having the termination charges. Otherwise, it would have been zero. The second thing is asymmetry has not been quantified. There is no condition relating to asymmetry and the extent of it for fixing those termination charges.

ET Now: So their argument has no legal basis right?

RS Sharma: Let me not try to enter into that debate, I am saying basically that this...

ET Now: The regulation has already envisaged what they are talking about?

RS Sharma: Regulation is very, very clear on this issue.

ET Now: That asymmetry of traffic has already been taken into account in the regulation?

RS Sharma: Asymmetry of traffic is essentially the basis of that regulation.

ET Now: So would it also be fair to say that even-- the only recourse from the incumbent’s point of view could probably be at best a legal recourse because the regulation already takes care of that?
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RS Sharma: I will not say that. I will only make motherhood statement that everybody in this country is free to take legal recourse. That does not really add or subtract anything, I suppose.

ET Now: Moving away from that, you have made your point clear on the asymmetric traffic but if one were to talk about the Reliance Jio freebies that are being given, it is very good for customers like you and me, it is great that we can have free calling, free data but from the company’s point view since you also have to take care of the interest of the sector as a whole is there a worry that it could just be a race to the bottom and the financial health of the sector maybe under doubts?

RS Sharma: Let me put it this way; as of now, the tariffs are under forbearance. So we are not really interfering in the tariffs as of now, except the interconnect. Obviously, it has to be determined. Now, I do not see any cause at this point in time to really enter into this forbearance nature. I do not see at this point of time any reason to get into that.

ET Now: But it is only natural to assume that others will also have to respond because it is a game where it is reactive, customers will want the best?

RS Sharma: It is based on competitive and the market forces will determine the level to which the customer will get the tariffs. I do not think at this point in time there is a need to intervene in that.

ET Now: What about anti competitive pricing? That is an allegation that a lot of people have said is something that TRAI must look into. Does that argument have any merit?

RS Sharma: I have not really-- nobody has formally...

ET Now: nobody has come to you saying that the Reliance Jio pricing is anti competitive?

RS Sharma: As far as I remember, not but in case they do come we will have a look into it.

ET Now: You will examine it then?

RS Sharma: Anything-- any stakeholder comes with any issue we will examine, obviously.

ET Now: Sunil Mittal in an interview last week to ET Now did make a mention that the pricing by Rel Jio is very predatory in nature and no one in the world is it that when a new player comes in there is no minimum threshold of tariffs that are put in place simply because there will be a huge value erosion for the remaining players, is that something that that has also been communicated to you at any level by the companies?

RS Sharma: No, I will not like to comment on what Mr. Mittal said. I have explained my position to you saying that the prices at this point of time are under forbearance.

ET Now: And there is no predatory pricing or anti...

RS Sharma: Let me not enter into those kinds of terms or domains. Sincerely, I do not see any reason to interfere at this point of time.

ET Now: If one were to really talk about the fact that there was a section of the industry that did call you biased, I mean, it was probably a first when they went out so far to call you actually biased, did those allegations pain you and hurt you because at the end of the day the entire working of the regulator was questioned?

RS Sharma: I have already made my position clear that the allegations of bias were completely baseless, that much is one part. Secondly, I think on a larger note browbeating the regulator is not a great thing from the industry’s perspective also. So I hope better sense will prevail.

ET Now: What would you tell operators who believe you favour one over the other?

RS Sharma: No, as I said I will say these are baseless allegations. That is all.

ET Now: Spectrum auctions are around the corner, in fact in a couple of days they will begin, a lot of analysts, a lot of industry watchers have said that the pricing is extremely high and there is no case for such a high price. In hindsight, do you think that pricing could have been revisited?

RS Sharma: I think you know such kind of speculations, such kind of assertions, why do we really indulge into that? The auction is going to take place in a couple of days. We will see what happens then.