Trai needs to get its focus right

<div class="section1"><div class="Normal" style="" text-align:="" justify="">The telecom sector is a very important one not only for its economic (the business success of IT rests largely on improved communication) and social (being able to talk at affordable rates) connotations but also because of investment implications for India. Last week, in a significant market transaction, Warburg Pincus sold 6 per cent of Bharti Televentures for Rs 2,500 crore.After this deal, it still holds 6 per cent, and has made, in all, a profit of over $1 billion on the Bharti investment. <br /><br />This, combined with depth of market that provides an exit to investors, will encourage direct investment. The regulator has done excellent work, especially in untangling the mess prior to introduction of unified licensing. Call rates have dropped, thanks to allowing greater competition (there are six operators per circle). However, Trai needs to focus more on consumer welfare, especially since telcos are highly profitable and have been given permission to dilute promoter stakes. <br /><br />It can do so by doing two things: One is not flip-flopping mid way, and the other is by introducing number portability. A recent report suggests that Trai wants fixed wireless telephones (FWTs) to be fixed to the wall! It had some operators (Reliance, Tatas) to introduce FWT a year ago and thousands of consumers have booked the phones and given out their contact numbers. <br /><br />Now Trai belatedly wants to protect the interest of some operators who ought to get access deficit charges, which are to be paid by wireless operators, and so, wishes to nail the instrument to the wall. When technology confers on consumers an advantage, why should legislation take it away? Trai places interest of operators ahead of consumers, forgetting that it itself had cleared plans. It cannot now ask consumers to either forgo the wireless option or switch operators.<br /><br />The problem wouldn''t arise if Trai introduced number portability. The US has it; India has been slow because it is unwilling to bell the cat (read, who''ll bear the cost of introducing it. Under number portability, it is the consumer who owns (hence, retains) phone numbers and not the operator. This will introduce true and full competition. Till now, competition has been for customer acquisition and not for customer retention. Once consumers are free (albeit after paying a cost for transfer) to switch operators, there would be full and fair competition. If Trai has consumer interest in mind, this must be introduced forthwith.<br /><br /></div> </div><div class="section2"><div class="Normal" style="" text-align:="" justify=""><br />Although largeness of the Bharti deal proves the depth the market has achieved, in large measure this depth comes from FIIs. Other foreign players picked up the stake, not Indian firms. This was evident when foreign funds sold more than they did last week, causing the Sensex to slide 184 points, to hit 6,669 before adding 31 on the last day to end the week at 6,700 for a weekly drop of 153. <br /><br />Jet managed an opening day''s closing of Rs 1,305, 19 per cent above what most considered was an aggressively priced IPO price of Rs 1,100. UTI Bank raised $275 million in a London-based GDR issue, for which it got bids for $1 billion. The market is swinging to foreign demand. This will resurface, given that India story looks good, perhaps after another small slide. Buying into dips is advocated.</div> </div>