‘TRAI’L by Fire: What challenges await PD Vaghela

With PD Vaghela taking over as the new TRAI Chairman tomorrow, industry observers say they are hoping for a more stable regulatory environment

e4m by Ruhail Amin
Updated: Sep 30, 2020 9:34 AM
P D Vaghela

With the tenure of TRAI Chairman R S Sharma coming to an end today, he will pass the baton to PD Vaghela, a 1986 batch Indian Administrative Service officer, who is currently Secretary, Department of Pharmaceuticals.

Before handling pharma, Vaghela was Commissioner of commercial tax in Gujarat. He is also counted among the key officers who played a crucial role in the rollout of the Goods and Services Tax (GST) in 2017.

TRAI gets a new chief in Vaghela after five years. After completing his three-year term, Sharma was reappointed in 2018 till September 30, 2020. 

Renewed Expectations

Vaghela takes over amidst talks about the regulatory body supporting a tough regulatory environment. Both telecom operators and broadcasters for some time have been expressing their displeasure over the same.

In fact, as soon as news of Vaghela’s appointment went public, the Cellular Operators' Association of India (COAI) issued a statement saying it sought continued support of the telecom regulator and the government for a stable regulatory environment in order to ensure growth of the digital services sector.

COAI Director General S P Kochhar has been quoted as saying, "We heartily welcome Dr P D Vaghela as the new TRAI Chairman and look forward to working with him for taking forward the telecom industry's critical role in nation-building."

According to some industry insiders, with the tough regulatory environment continuing over the years, businesses have been forced to rejig operations in order to meet new compliance requirements, when they should’ve focused on improving quality of consumer experience and content.

The pressure to comply with stringent norms is said to have affected subscription and advertising revenues for broadcasters, leading to multiple channels being forced to shut shop.

The telecom sector, too, has been reeling under similar issues. It is well known that the Indian telcos have been competing with each other for a few years now, bringing down costs to record lows.

We reached out to some broadcasting and telecom experts to gauge their expectations from the new TRAI Chief.

Stable Regulatory Environment

According to industry observers, TRAI, which regulates both the telecom and the broadcasting sectors, has treated the latter as a little step-child that needs to be made to toe the line by wielding the rod. Some opined that contrary to the outgoing TRAI Chairman’s belief, industry observers believe a prescriptive regulatory mechanism has not allowed the sector to play to the market forces of demand and supply.

The industry is keenly looking for a more stable regulatory environment.

Monitoring Net Neutrality

Recently TRAI recommended the formation of a multi-stakeholder body, to be established by the Department of Telecommunications (DoT) for monitoring internet services.

To put things into perspective, in November 2017 the regulator first released its recommendations on net neutrality, which barred discrimination in internet access based on content. The discrimination of content includes practices like blocking, degrading, slowing down or granting preferential speeds or treatment to any content.

The government then accepted most of TRAI’s recommendations, and on July 31, 2018, issued principle directives on net neutrality. The DoT further amended licence conditions for service providers and introduced relevant requirements to conform to the principles of net neutrality.

The NTO Tangle

This year, TRAI locked horns with broadcasters on two occasions. In January 2020, TRAI issued new rules on the pricing of TV channels, packages, and cable and DTH services with the aim to bring down monthly charges and promoting choice.

While the cable and DTH operators largely implemented the new rules, broadcasters resisted and instead approached the Bombay High Court for an urgent stay on the matter. The matter is still pending in court.

Need for Crisper Norms

There is consensus across the telecom and broadcasting sectors that well-designed regulations should weigh the costs and benefits of interventions. The Economic Survey 2019-20 describes how poorly designed interventions can distort markets and negatively impact consumer and producer welfare.

If we look at the present-day broadcasting industry, deficiencies in regulatory design have trapped the TV sector in a vicious cycle of drafting regulations, litigating upon them, and amending them.

According to a report by the Koan Advisory Group, from 2004 to 2020, TRAI issued 77 regulations and amendments. These include 36 Tariff Orders, 21 Interconnection Regulations, 7 Register of Interconnect Agreements Regulations and 13 QoS Regulation. Some regulations were notified but subsequently withdrawn.

With Vaghela set to take charge as the new TRAI Chief, it needs to be seen how the regulator will tide over these tricky waters.

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