Friday, December 4, 2015


I wrote this about a speech of Arun Shourie, one minister in the Vajpayee cabinet who could think clearly and act decisively, in Business World of 1 January 2004.

An apostle of convergent hope

In October, Arun Shourie gave an important speech to the Telecom Disputes Special Appellate Tribunal (TDSAT). He began by describing how technology was obliterating distinctions between modes of communication and content. A telephone could also be a radio, a walkman, a diary, and an alarm clock. Messages could be carried by copper wires, optic fibre, or radio waves of different frequencies.
But government regulations conceived the telephone, radio and television industries as separate. Within telecommunications, the government gave separate licences for wireline, wireless and internet; within each it distinguished between local, long-distance and international calls. For transmission of the same message, the government imposed different prices to be charged by different operators – wireline, wireless or internet. It allowed the sending of a message by internet if it crossed an international boundary, but not within the country.
This conflict between technological possibilities and regulatory restrictions, between new types of business and legal prohibitions, led people to breach regulations –  to a conflict between them and administrators, to harassment of businessmen, and to the corruption of both. The illegal businesses took away markets of legal ones, which had paid heavy licence fees. And the frictions caused by the illegalities slowed down the industry’s growth. This is how India had earlier fallen behind other nations in industry; it was happening now to telecommunications.
Shourie then described the irrationality of policies made and modified over the 1990s. They made operators pay different amounts for the same licence and placed different taxes on them for the same service. They made it impossible for telephone operators to choose the shortest or cheapest route for a call or to match a competitor’s charges. They created a distinction between licences for wireline and wireless services, but then allowed a selected few wireline operators to offer wireless service. They allowed new entry into wireline but not into wireless services, although the two competed with each other. They gave some operators more spectrum than others without any reason. They imposed obligations that went under the same name – for instance, rollout plan, or universal service obligation – but differed in severity.
The irrationalities were unavoidable; technologies and government priorities changed, and the government learnt from experience. But they left all competitors with a grievance. They reneged on their contracts with the government; and went to court to obtain justice. That is how this turned into the most litigation-prone industry.
Courts and regulatory bodies tend to respect the written word: they read laws and contracts and give a hopefully authoritative, consistent interpretation. They are not empowered or qualified to redraft laws or rewrite contracts. The training of those who are appointed to the judicial bodies is adapted to their task; once they are appointed, they consult lawyers and are exposed to accountants and journalists - not to technologists who can work out optima. They do not look for a workable solution; they perpetuate the inherited complexities, and often add to them.
Shourie felt that the way out of this mess required a threefold change in attitudes. First, the state should avoid trying to regulate all activity, and should learn to leave order to emerge organically from practice. Second, the people should expect less from the government. Finally, people should abandon the view that it was the government’s duty to ensure equity to all.

After that talking-to he gave everybody, I thought Shourie would wait for people to change – and he could have waited forever. Instead, within six weeks he unified basic and cellular licences. When mobile operators complained, within another four weeks he compensated them. I do not know whether the resolutely wrong-headed people in the industry would still squabble and snivel and snitch. But here is a minister who deserves to win.