TRAI: Destroying Telecom, The Only Indian Success Story

The Great Regulators. Killing the only Indian success story, in slow motion.

Leftists have grudgingly accepted that private businesses are more efficient. But, control freaks as they are, they have saddled more and more businesses with regulators, to guard the “public interest.” But most regulatory bodies are staffed by bureaucrats, retired and serving, and soon become just another government department, with all the dead weight of a government department, and all the lag time in decision making, and all the irrationalities and inefficiencies in decision making.

And story is no different when it comes to regulation of telecom sector of India.

Call drops, slow net speed, unsustainable debt, it is all happening, under the watchful eyes of wise regulators.

If govt goes into price control. The business will die.

Telecom companies of India are in deep trouble. because TRAI won’t let them increase rates. A regulator should not have had powers to control rates also, but it has, and it is killing the only Indian success story of liberalisation.

First, the telecom companies were milked to the bones in spectrum auction. Spectrum auction was nothing but confiscating future earnings of companies. But TRAI through its rate control is not even allowing earnings.

Can TRAI not examine the Books of the telecom companies? How does it arrive at the call rates it approves? Does anybody expect a company to survive loss for any length of time?

The problem is that most Indian regulatory bodies are manned by the ex-bureaucrats, who are very averse to take any decision that would “benefit” a private body. Fear of being accused of benefitting a private company gets into the DNA of a bureaucrat.

If we are not ready to pay for a service what it costs to the provider plus his profit, the service would die. If we start funding it out of tax revenue, it will last, but it will become inefficient.

Regulating a business with known cost components should have been the easiest task. But once the regulators start regulating price in accordance with the mood of public, and not in accordance with the costs, it is downhill only.

In fact, in case of telecom companies, rates should not be regulated at all. If companies increase rates, people would talk less, and revenue won’t match the increase. An ideal rate would be achieved very soon.

The whole working of TRAI needs to be gone into, before we are left with only handsets, and no signals.