In the first test of their independence, India's new telecommunications regulators have shown they have teeth and are willing to use them.
In a decision announced last week, the Telecom Regulatory Authority of India blasted the government Department of Telecommunications for ignoring "basic principles of economics" in huge price increases for certain cellular phone calls. The decision has been welcomed by industry groups fighting to get the government to speed up telecom privatization.
In February, the department increased the rates users of standard telephones paid to call mobile phones serviced by private companies. Except in four cities - Bombay, Calcutta, Delhi, and Madras - users would have to pay top-rate, long-distance call charges, instead of local call rates, regardless of where the mobile phone was actually located.
This increased the rates from about 4 cents for a 3-minute call to between 17 and 78 cents. The department's justification was that it didn't know where the mobile subscriber was located. Even if the subscriber were in the same city as the caller, the department reasoned, the call was probably routed through a long-distance line to a gateway between the mobile and land networks.
The Cellular Operators' Association of India accused the department of inventing the plan to protect its long-distance revenue against competition from the cellular industry. The association also complained that the department's insistence on using a single gateway to route calls from private networks into its land lines in 18 regions around the country is both inefficient and costly.
Expectations for the telecom authority's independence have not been high. They did not rise when the government appointed a lackluster trio - a judge and bureaucrat without telecom backgrounds and the retiring chief of the telecommunications department's Bombay and Delhi operations.
Surprise was the rule last Friday when the authority ruled on the cellular association's complaint. In addition to repealing the price hike, the panel ordered the agency to begin work immediately on providing multiple points of connection to its land lines and to report in 30 days on how quickly that project is progressing.
The ruling was welcomed as a "breath of fresh air" by Ashish Paul of the Telecom Industry and Services Association. Said Dr. Chiranjeev Kathuria of Koshika Telecom, one of the cellular operators that complained: "[The verdict] will lead to increased investment in the telecom sector in India, as it will send a positive signal to investors all over the world."
