: May 26, 2012 |
: Company Law
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This legislative comment makes an humble attempt to study the Telecom Regulatory Authority of India as a regulating body, with the help of the rules and regulations laid down in the TRAI Act 1997 and the TRAI amendment Act 2000. It begins with an introduction of the telecommunication sector and the Indian Legal framework with respect to telecom infrastructure made up of five main acts and briefly mentions the significance of TRAI amongst them. Subsequently, it talks about the genesis of the TRAI Act, 1997 and the Hon’ble Supreme Courts view regarding its authority and scope of power in comparison to the National Telecom Policy. This is followed by the Legal framework of the TRAI Amendment Act 2000 wherein the functions of the original TRAI have been divided into two bodies: The Telecom Regulatory Authority of India and The Telecom Disputes Settlement and Appellate Tribunal which take care of Recommendatory and Regulatory functions and dispute settlement functions respectively. There is a specific mention of certain exceptions to the jurisdictions of the Telecom Disputes Settlement and Appellate Tribunal. The brief discussion of the above mentioned functions give an insight to the working of two bodies and its impact on the telecommunication sector. This Legislative Comment also analyses the problems that existed from the inception of TRAI i.e. the Legal battle between The TRAI and Department of Telecommunications (DOT) with a brief mention of landmark cases like M/s Bharti Cellular LTD & Another v. Union of India and Union of India v. Telecom Regulatory Authority of India. This analysis also shows that how, without any support from the government, TRAI, through its effective legal framework, has been able to create immense foreign direct investment in the telecom sector. Finally the Comment ends with a brief conclusion including personal views of the authors.
Telecommunications” as an infrastructure sector brings within its ambit the widest range of services under one single infrastructure sector. In the Indian Legal framework, owing to wide and over reaching definitions of certain terms used in statutes governing telecommunication sector, various services like internet, radio paging, voice mail, V sat communications, E Commerce, broadcasting services etc. would fall under the telecommunications sector
“Telecommunications” falls under the legislative competence of the Union and not the States. Consequently the Legal framework governing Telecommunication Sector is within the control of the Union Government and the Parliament. This Legal Framework is provided by:
I. The Indian Telegraph Act 1885 and the rules made there under.
II. The Wireless Telegraphy Act 1933 and the rules made there under.
III. The Telegraph Wires (Unlawful Possession) Act 1950, and the rules made there under.
IV. The Cable Television Network (Regulation) Act 1996, the rules made there under.
V. The Telecom Regulatory Authority of India Act 1997 the rules made there under.
Telecommunications is an infrastructure in which rapid technological advance has been occurring and the risk of obsolescence is comparatively higher than any other infrastructure sectors. In this sector the facility is never really achieved because the network established has to be either constantly expanded or constantly upgraded to provide latest services possible.
One point of view can be that the legal framework regulating this sector lags behind in the regulation of the technology and services actually available in the sector. It can be stated that one of the lacuna of the relevant legal framework is that it attempts to deal with specialized form of telecommunication services under a single umbrella legislation. (For example: The Indian Telegraph Act, 1885). Such features of the Telecommunication Sector raise certain issues like financing of its projects and more importantly nature of the legal and contractual framework required to regulate the sector.
Over the years of implementation of Legal Framework, Telecommunication Regulatory Authority of India is the only body that has gained reputation of an independent, competent and assertive regulator performing its recommendatory and regulatory functions in an impartial manner.
The Telecom Regulatory Authority Of India Act 1997
The genesis of the Telecommunication Regulatory Authority of India (TRAI) lies in the bidding process for the grant of cellular licenses and the litigation that followed the grant of the first set of cellular licenses under the Telecom Policy of 1994.
In the litigation that followed the award of the licenses, one of the grounds of challenge of the Telecom Policy 1944 was that, the policy neither provided for the creation of separate telecom regulatory authority, nor did it provide for the delegation of power by the Central Government to such an authority to supervise the functioning of Telecom Policy of 1944.
The Apex Court strongly emphasized that:
The existence of a Telecom Regulatory Authority with the appropriate powers is essential for introduction of plurality in the telecom sector….. The National Telecom Policy is a historic departure from practice followed during the last century….The Central Government and the Telecom regulatory Authority should not behave as sleeping trustees but have to function as active trustees for public good.
In the light of what was laid down by the Supreme Court, it was quite ironical that the first major dispute, entered into by TRAI, was between itself and The Central Government. In Union of India v Telecom Regulatory Authority of India it was clearly held by the High Court of Delhi that the question of grant or amendment of a license by the Central Government acting in its capacity as the licensor falls outside the jurisdiction of the powers of TRAI.
The TRAI Act which was amended and passed in 2000 and the framework relating to the TRAI currently in force have been analyzed subsequently.
Legal Framework Of Trai Act (Amended) 2000
According to the TRAI act amended in 2000, the functions of the original TRAI have now been divided between two separate bodies namely:
i. The Telecom Regulatory Authority of India (TRAI)
ii. The Telecom Disputes Settlement and Appellate Tribunal
The Recommendatory and Regulatory functions are vested with the TRAI while dispute settlement functions are handled by the Appellate Tribunal.
v Recommendatory Functions of TRAI
TRAI has the power to make recommendations either on its own initiative or on a request from a licensor on the following matters:
i. Need and timing for introduction of new service provider
This recommendation covers the analysis of the existing scenario in relation to a specific telecommunication service in a given region.
ii. Terms and Conditions of license to a service provider
The license given to a service provider is governed by Sec. 4 of The Telegraph Act 1885. This recommendation requires TRAI to recommend the actual terms on which a license should be granted under Sec. 4 of the afore mentioned act.
iii. Revocation of license for Non-compliance with its terms and conditions
This is a very important provision because revocation of the license should be made only as a last resort with respect to any telecommunication project, but is very necessary if there has been a breach in complying with its terms and conditions.
iv. Measures to facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services
The purpose of this provision seems to be to make TRAI a supervisor of the telecom sector as a whole and continuously analyze the commercial developments occurring therein thus making the legal frame work more responsive to the commercial developments in the telecom sector and to ensure growth in the sector.
v. Technological improvements in the services provided by the service providers
The main intention of this provision is to ensure that TRAI becomes an observer of the telecom sector, so that the legal frame work responds to the commercial developments in a better manner.
vi. Type of equipment to be used by the service providers after inspection of equipment used in the network
The purpose of this provision is to provide for actual inspection of the equipment being used in the network. But it is unclear as to whether it is intended only with respect to a telecommunication service in general or can it be used for specific licensees also? This point is very important with regards to the difference in the phraseology of this provision with the subsequent one in which there is a specific usage of the terms ‘telecommunications industry in general’.
vii. Measures for the development of technology and any other matter relatable to telecommunications industry in general
This provision aims to provide for recommendations for boosting research and development with respect to the telecommunication sector in India.
viii. Efficient management of available spectrum:
The definition of the term ‘spectrum’ is not dealt with either in the TRAI act 1997 or The Telegraph Act 1885 or the Telegraphy Act 1933. Other than the New Telecom Policy 1999, this is the only provision in the entire legal framework which deals with the issue of management of the available frequencies and electromagnetic spectrum. It should be noted that it is not compulsory for the Union Government to take recommendations of the TRAI for the use and management of the frequencies.
However, the TRAI Act, 1997 makes it mandatory for the Central Government to seek its recommendation in relation to the need and timing for the introduction of a new service provider.
v Regulatory Functions of TRAI
The regulatory functions of TRAI are as mentioned below:
i. Ensure compliance of terms and conditions of license
The TRAI has two-fold options to ‘ensure’ compliance –
a. It can either issue directions or
b. Recommend termination of license for non-compliance.
TRAI has limited powers in this regard because any action under the license can only be taken by the licensor. But TRAI has the freedom to issue any kind of directions to the service providers.
ii. Fix the terms and conditions of inter-connectivity between the service providers, irrespective of the terms of the license issued prior to the TRAI Amendment Act 2000
This provision makes it compulsory for the TRAI to determine the exact terms and conditions rather than mere principles for interconnection between two networks and does away with the terms of the licenses issued by the Union Government in which it is specifically stated that the terms of the interconnection would be specified by the government. However, this interconnection agreement is still not being recognized as a commercial agreement to be reached between two service providers within the frame work provided by law. It would have been more beneficial if TRAI had been vested with the power to formulate principles on the basis of which interconnection agreements would be entered into between service providers and also act as a supervising body to monitor the agreement taking place between them in order to ensure a fair negotiation.
iii. Ensure technical compatibility and effective inter-connection between different service providers
This clause not only ensures technical compatibility between the networks, but also includes the function of making sure that there is ‘effective interconnection’ covering commercial aspects of interconnection as well.
iv. Regulate arrangements amongst service providers for sharing their revenue derived from providing telecommunication services
The scope of this particular clause is not clear. From a cursory reading of the clause it seems that the service providers do not need prior consent of TRAI regarding the above mentioned arrangements but TRAI does seem to have the power to direct the service providers to alter the terms and conditions agreed to between them.
v. Lay down the standards of quality of service to be provided by the service providers to ensure the quality of service and conduct periodic survey of such service providers so as to protect the interest of the consumers of telecommunication service
The function vested in this clause seems to collide with the powers of the licensor under the terms of the license agreements. The only specific guideline for the exercise of this function is the protection of the interest of the consumers.
vi. Lay down and ensure the time period for providing local and long distance circuits of telecommunication between different service providers
This function is linked with the function of drafting the terms and conditions for the provision of interconnection between the service providers and to make sure that there is effective interconnection between service providers.
vii. Maintain register of interconnection agreements and of all other matters as may be provided in the regulations
TRAI must keep a register of interconnection agreements and agreements relating to other matters specified in the regulations which are open for inspection by any member of the public on payment of such fee and compliance with such other requirement as may be provided in the regulations.
viii. Ensure effective compliance of universal service obligation
This is the only place where the term ‘universal service obligation’ is being used in a statute governing the telecom sector. There is no clear definition provided as to what constitutes ‘universal service obligation’ other than National Telecom Policy 1999. The concept of universal service obligation is to make available the economic and social opportunities being offered by modern communities to all.
ix. Levy fees and other charges at such rates and in respect of such services as may be determined by regulations.
x. Notwithstanding anything contained in the Telegraph Act 1885, the TRAI may, from time to time, by order, notify in the Official Gazette the rates at which the telecommunication services within and outside India shall be provided including the rates at which messages shall be transmitted to any country outside India. The TRAI may notify different rates for different persons or class of persons for similar telecommunication services after recording the reasons.
The Telecom Disputes Settlement And Appellate Tribunal
By virtue of the TRAI Amendment Act 2000, the adjudicatory functions of the TRAI are vested with a new body- The Telecom Disputes Settlement and Appellate Tribunal .The functions of the Telecom Disputes Settlement and Appellate Tribunal are:
i. To adjudicate disputes between a licensor and a licensee, two or more service provider and a group of consumers
Earlier the disputes between the government as a licensor and a licensee were not falling under the dispute settlement functions of the TRAI. But now, it is clearly covered by a quasi judicial authority which is a very positive feature of the new regime. However, there are exceptions to this jurisdiction:
a. A dispute relating to monopolistic trade practice or an unfair trade practice over which the Monopolies and Restrictive Trade Practices Commission has jurisdiction under the provisions of the MRTP Act, 1969;
b. Complaint of an individual consumer maintainable before a consumer redressal forum under the Consumer Protection Act, 1986;
c. Dispute concerning a
ny telegraph line, appliance or apparatus between the telegraph authority and the person for whose benefit the line, appliance or apparatus is or has been provided, which disputes have to be settled by arbitration under s 7B of the Indian Telegraph Act, 1885.
ii. To hear and dispose of appeal against any direction, decision or order of the TRAI
This is the appellate function of the Tribunal provided as alternative to filing an appeal in the High Court. An appeal from any order, other than an interim order of the tribunal, lies with the Supreme Court of India.
Legal Battle Between Trai And Dot
The newly appointed TRAI was plunged into a bitter confrontation between DOT and the Cellular operators. TRAI gave relief to the cellular operators who alleged that the DOT had unilaterally increased the tariffs for calls made from ordinary telephone to cellular-mobile phone. DOT took this reversal very badly. It appealed the TRAI order to the courts, inviting Delhi High Court to reconsider the case as a whole as well as to trim the TRAI’s scope and powers. This was the first collision between the regulator and the incumbent. In no time, within a year between a dozen and a twenty of these cases were waiting judicial clarification of the jurisdictions of TRAI and DOT.
Another highly contentious case was between M/s Bharti Cellular LTD & Another v. Union of India. Entrants challenged DOT and the government with respect to a unilateral decision to introduce MNTL to offer cellular services and framing an Internet policy without the recommendation of the TRAI and also challenged DOT’s threatened revocation of licenses without the recommendation of TRAI. While deciding these complaints, TRAI explained at length the relationship between a comprehensive telecom environment and an independent regulation and ruled that it was mandatory for the government and DOT to have before them its recommendation with regard to matters covered under the said provisions. Upon this, DOT was predictably unhappy and concluded that TRAI was systematically biased against the public-owned operators. Justice Usha Mehra found it difficult to reconcile the TRAI act 1997 and its expression of the powers of a quasi-judicial regulatory agency and set aside TRAI’s decision. This judgment was criticized on legal grounds for its failure to try to reconcile the two pieces of legislation. On appeal, the Division Bench of Delhi High Court upheld the decision of J. Usha Mehra and virtually made TRAI’s role “redundant”.
Inspite of not having support from the government, the incumbent, or the courts, TRAI was pro-competitive and was successful to a certain extent in rebalancing telecom rates. TRAI also went ahead with the consultative process with various aspects of the telecom industry to introduce more competition. The Telecom Sector provided $ 5 billion in foreign direct investment, one of the highest in the Indian Economy, since the market opened in the early 1990’s. As a result, the government had little choice but to take steps to untangle the problems.
The rules and regulations laid down in the TRAI Act yields many advantages for all the stakeholders. Not only does it reduce the capital expenditure needed for constructing dedicated infrastructure by the individual operator but also saves on operation cost. The operators can now provide mobile services to a much larger base at an economical cost. Owing to TRAI’s policies, the ultimate gainer will be the consumer who will be provided quality services at a minimum cost.
This Article is Jointly written by:
1. Shreya Dave, 3rd year Student, BSc.,LLB, Gujarat National Law University &
2. Shyama Nair, 3rd year Student, BCom.,LLB, Gujarat National Law University
# A separate proposed legislation ‘The Broadcasting Bill’ has been pending in Parliament since 1996, undergoing several stages of review and amendments.
# The Constitution of India, Seventh Sch., List I, Entry 31.
# This legislation seeks to regulate possession of Telegraph Wires and covers only copper wires as it defines telegraph wires to cover only copper wires.
# This Legislation seeks to regulate the provisions of Cable Television and under its terms, a cable television provider has to register itself with the main post office of the area within which it intends to operate.
# Hereinafter referred to as TRAI.
# Delhi Science Forum v Union of India AIR 1996 SC 1356
# (1998) VAD Delhi 209.
# Chapter III, TRAI Act 1997 provides for the powers and functions of TRAI and Chapter IV, TRAI Act 1997 provides for the provisions relating to the Appellate Tribunal.
# TRAI Act 1997, s 11(1) (a).
# See proviso to s. 11 (1) (a)
# TRAI Act 1997, s 12.
# TRAI Act 1997, s 11 (1) (a) (iii).
# Punishment laid down in TRAI Act 1997, s. 29 and 30.
# New Telecom Policy 1999, s 6.
# TRAI ACT 1997, s 11 (1) (b).
# TRAI Act 1997, s 11 (2).
# TRAI Act 1997, s 18.
# Aircel Digilink India Limited and Others v. Union of India and others (2005) 3 CompLJ 461.
# The telecom Regulatory Authority of India, New Delhi, 17 February 1998.
# Union of India v. Telecom Regulatory Authority of India and Others (23 July 1998) Delhi High Court, Usha Mehra, J.
# Microwave Communications Limited v. Union of India and another (12 October 1999) Delhi High Court, Arun Kumar J, & Manmohan Sarin J.
# Refers to both TRAI 1997 and TRAI (amended) 2000.
The author can be reached at: firstname.lastname@example.org
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