People's Democracy

THE CPI (M) has demandedthe immediate dismissal of the chairman of Telephone Regulatory Authority of India (TRAI), Pradip Baijlal, for a scam of more than Rs 2000 crore in the telecom sector. A detailed enquiry has also been demanded to look into the matter of illegal international call rerouting by private service providers. The private operators have been rerouting the incoming long distance international calls as well as long distance national calls through unidentified channels to evade the Access Deficit Charge (ADC), which they are supposed to pay to the government. This fraud has several important implications. Firstly, the goal of reducing the widening tele-density gap between urban and rural areas, which is included as an objective in the UPA government’s CMP, would be hampered because of this revenue loss suffered by the government. Secondly, there are ser-ious national security implications since these calls are shown to be coming from unidentified, unknown origins. Moreover, this is absolutely illegal and totally against the provisions of the Telephone Regulatory Authority of India Act, 1997.

The Videsh Sanchar Nigam Limited (VSNL) acknowledges in their Annual Report 2003-04 that TRAI’s ADC order is responsible for the emergence of the grey market and the size of the grey market is approximately 30-40 per cent of total ILD (International Long Distance) market which accounts for almost Rs 2000 crore annually. The TRAI chairman is acting in a fraudulent manner and in criminal connivance with private operators in the whole unholy game and therefore he should be dismissed as soon as possible. The CPI(M) has also demanded that the offence should be non-bailable since it may involve money-laundering and depriving the country of foreign exchange. If it is established from the probe that an authorised operator is abetting the business of grey traffic, the license should be terminated forever.

Our present United Progressive Alliance (UPA) Government is bound by the CMP to bring down the tele-density gap between rural and urban areas. If we look at the situation of tele-density gap between rural and urban areas according to the DoT & TRAI telecom service performance indicators, June 2004, we see that it is widening at an increasing rate. Of course, the last year’s figures includes mobile phones as well.

The private operators would not go to spread telecom service in the comparatively lower profit-earning rural areas at this hour. To provide more and more telecom connectivity to far-flung backward rural areas the Bharat Sanchar Nigam Limited (BSNL) has to be empowered with financial assistance, which are supposed to come from different private operators to the government as the access deficit charges (ADCs). Non-payment of ADCs at the prescribed rates stipulated by TRAI and ordered by Government of India (GOI) of an amount as high as more than Rs 2000 crores are pushing us away and away from the promise of reducing the rural-urban tele-density gap.

In the statement of objects and reasons of the Telecom Regularity Authority of India Act, 1997 it is clearly mentioned that "In the context of the National Telecom Policy, 1994, which amongst other things, stresses on achieving the universal service, bringing the quality of telecom services to the world standards, provision of wide range of services to meet the customers’ demand at reasonable price, and participation of the companies registered in India in the area of basic as well as value added telecom services as also making arrangements for protection and promotion of consumer interest and ensuring fair competition, there is a felt need to separate regulatory functions from service providing functions which will be in keeping with the general trend in the world. The consultation paper on access deficit review (consultation paper No. 13/2004) of TRAI on June 23, 2004 states in paragraph 87 that "The authority has thus decided to specify an access deficit charge of Rs 4.25 per minute for these calls (international calls) for both outgoing and incoming minutes. … This amount would be collected by fixed line service providers on their outgoing/ incoming calls as mentioned above in the method for collecting the ADC. For ILD (international long distance) calls to/ from cellular mobile and WLL (M) the ILDO will collect the relevant access deficit from the access provider for outgoing calls, and pay from its settlement rate for incoming calls, and pass on the ADC amount to BSNL."

There is a trade off between rise in local call rates or connectivity costs and lower access deficit charge on long distance and international calls. Little elaborately, the thing is that the access deficit arises in a network as the cost of connecting the subscriber to the local fixed network since the long distance calls can take place only if subscribers at the both ends are connected. If the long distance calls are not charged at comparatively higher rates to partially meet the cost of expanding the local network and some of its operating costs, the growth of telephone network would be hampered and the rate for local calls would be abnormally high.

The report and recommendations of the committee on the issues arises out of traffic by-pass through grey market in international long distance services and repercussions of IUC on the same clearly accepts the danger of the emerging grey market vis-à-vis international long distance calls at an increasing rate. It says "it is felt that the extent of this (grey market international traffic) traffic has increased significantly in recent times. Some estimate put it at as much as about half the international traffic. Such grey market traffic … also causes leakage of revenues away from the government and adversely affect the growth of our telecom infrastructure. In addition it is a threat to national security". The committee recommends that to address the matter to a large extent through certain policy initiatives, which relate mainly to monitoring, high penalties and lower arbitrage margins. Among others, one of the main observations of this committee is that the termination charge for ILD traffic through normal route is significantly higher in India compared to the charge for call termination for national long distance calls or the tariff for local calls (i.e. the amount paid by the grey operator when the call is converted into a local call and sent forward on local call basis).

If we look at the license agreement for international long distance service of department of telecommunication, Ministry of Communications and IT, we see that in section 18 it is mentioned that the licensee will charge the tariffs for service as per the TRAI Tariff orders issued in this regard time to time as per the provision of TRAI Act 1997 as amended from time to time.

On first December 2004 the honorable minister of state in the ministry of communications and IT Dr Shakeel Ahmad while replying a question regarding grey market operation in Lok Sabha officially acknowledges the national loss of approximate Rs 350 crores has occurred due to such illegal setups. But we see that BSNL has issued notices to M/s RIL (Reliance Infocomm Limited) alone to pay Rs 257 crores against which, M/s RIL has approached the Delhi High Court. Add to this the MTNL claim of Rs 341.27 crores against M/s RIL, then the amount adds up to almost Rs 600 crores. In two separate letters to RIL from Ministry of Communication & IT signed by Sukhbir Singh, director, dated October 4, 2004 and from BSNL signed by Mahipal Singh, Jt DDG (Regulation I) dated September 22, 2004 the allegations regarding illegal re-routing of ILD calls are made with proofs. It is a shameful act on the part of the government also that our honorable minister is also trying to underestimate the extent of scam that has taken place in recent past in the telecom sector. As a result of all these an amount of more than Rs 2000 crore is to be paid today by certain private operators to the BSNL via the government.

Apart from the issue of revenue loss of government, which was supposed to go to BSNL for the purpose of reducing rural urban tele-density gap there is a serious question of our national security. For example, till date the whole enquiry regarding the terrorist attack on parliament in 2001 was, to a great extent, dependent on the caller identity numbers of incoming calls to different mobile cellular phones carried by the terrorists and extremists and the links recovered from there. Because of re-routing, caller identity numbers are intentionally disguised by the private operators and as a result it is impossible to know the source of different incoming ILD and NLD calls.

Given this backdrop, TRAI is playing an even shameful role. Not only they are denying their responsibility for emergence of this huge grey market due to sheer negligence but also they are trying to shield the culprit operators. It comes out with a total untruth and misleading argument by saying that if they cancel the license of all the guilty private operators, the consumers will be affected. It has got nothing to do with the subscribers simply because of the fact that they are not service providers. Even after getting repeated intimation the TRAI did not take any action vis-à-vis such an important issue and completely failed to stop this gray marketing.

In spite of having so much power, the role played by TRAI is one of a meek observer to the unfolding of the scam. It is clear that this passivity was not unintentional. Different sub-committee reports and consultation paper have made recommendations repeatedly that immediate stringent punishment action should be taken, like cancellation of the license of the criminal operators forever, to reduce this grey market but no serious step has been taken yet. Quite intentionally and shamefully TRAI has cheated the common people of the country, which is an unforgivable crime.

Source: Indian Telecommunication Statistics, 2004.