RS Sharma: Amazon, Facebook are exclusive, not interoperable… Need creative destruction, more alternatives’

r s sharma, former Chairman of Telecom Regulatory Authority of India (Trai).

Sharma calls for a converged regulator for both digital, non-digital platforms, says steps have been taken to ensure Internet does not turn into a “walled garden”, and insists that while TRAI may commit mistakes, can’t be said it’s “against a particular operator”. The session was moderated by Principal Correspondent Pranav Mukul.

PRANAV MUKUL: You have spoken about the use of technology in governance. However, when it comes to public projects, especially in the digital space, whether it was Aadhaar or the Aarogya Setu now, people from the private sector get involved and make significant gains. Do you think there is a conflict of interest here?

I don’t think so… It is fine if the government makes a system and the entire country makes use of it. In the technology space, most of the services that are built, it is not that only X can use it and if Y uses it then its useability for X will reduce. For example, the authentication services provided by Aadhaar can be used by anybody and we have been having about one billion authentications per month. Now, if you have two billion authentications per month, it does not put any restrictions or burden on Aadhaar. Ultimately, what we have to understand is that the benefit is passed on to the customers only… If the private sector benefits from a certain government project, so be it, as long as it does not lead to losses for anybody. That’s my position.

PRANAV MUKUL: In the past few years, there have been allegations that the decisions you made as chairperson of TRAI ended up favouring a certain operator and led to disadvantages for the others. Also, some of the decisions such as allowing Reliance Jio to provide introductory services beyond the 90-day period, the tariff being lower than Interconnect Usage Charge (IUC), had to be deliberated upon by TRAI following complaints. Was TRAI unprepared for such a situation?

Well, I don’t think it is appropriate really to discuss these issues because they have been deliberated and decided by various courts. So, therefore, to justify something which has already been justified by the courts is not required at this stage.

Secondly, it is very easy to say that somebody is in favour of somebody else. It is a generic allegation, there are no specifics. You mentioned allowing free services by a certain operator. Let me respond to that first. In any regulatory system, you are regulating on the basis of rules and laws made for that system… The regulator comes in when the system is already functioning and if there are any aberrations, market deviations or distortions. The regulatory role or response is a little bit reactive rather than proactive. For example, somebody starts offering free services today. If there is no law which had envisaged that one cannot offer free services, can you just stop that service? No, if there is no law, you just can’t stop it. So essentially, when someone started providing promotional services free of cost, we had no way of stopping them because there was no law. We consulted the Attorney General of India, and we said look, this is what is happening, what do we do? He said this is not possible, and so we did not intervene. Where we had to intervene, we did, and then the matter went to court, which in our case is TDSAT, the Telecom Disputes Settlement and Appellate Tribunal. The TDSAT decided… You will see in that decision that the TRAI did commit no wrong in not stopping the free services. The decision was not appealed in the Supreme Court. Now to say that you did this and you did that is not correct. (Incumbent telecom operators had made representations to TRAI asking it to stop Jio from offering tariffs below the IUC — which is the basic cost incurred by a mobile company for a call to complete. However, TRAI said that tariffs were under forbearance and that it would not interfere with companies setting tariffs.)

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Every decision of TRAI, or non-decision or non-intervention, is also judiciable. For example, initially we started issuing penalty on call drops. It was upheld by the high court but trashed by the Supreme Court… We do commit mistakes, but you cannot say that the regulator was against a particular operator or against the industry as a whole. In our own fair judgment we thought that the customer needed to be compensated for inadequacy in service. That is how we decided on a fine for call drops. But it was declared that you don’t have the authority to do that.

TRAI as an organisation is unique because our decisions are not taken just sitting across a table. We have consultation papers, we have open house discussions, when we give a decision, we also give an explanatory memorandum. It is an extremely transparent process which is also judiciable. These allegations are unfortunate. Every decision of TRAI may benefit somebody, it may harm somebody… and so there are some who are tempted to make allegations that the regulator is favouring someone else.

SUNNY VERMA: There are concerns about the telecom sector turning into a two-three player market. Is it a good situation for a country like India where there are over a 100 crore customers?

World over, in stabilised and mature telecommunication markets, the number of players typically is 3+1. Telecom everywhere emerged from being a public utility run by the government to a utility which was privatised. The ‘one’ in 3+1 refers to the government entity which in some places is extremely strong. In India the share of the government BSNL and MTNL is not very large. But 3+1 is actually the norm everywhere. If you ask any expert on telecommunication, they will tell you that this is an optimal number because the more (players) you have, the more fragmented the spectrum becomes, especially mobile communication; I am not talking about the landline.

PRANAV MUKUL: Do you think our regulatory systems are strong enough to deal with issues such as dominance of one platform in the digital space?

The very nature of these platforms is that winner takes all. There was once a platform called Orkut, and there were many others too, but ultimately only one platform survived. Similarly, in every space you will find that only two-three players are surviving. For example, we are all on WhatsApp. Now, somebody wants to come on some other platform such as Telegram etc. Some people may join it for specific reasons but for all others one platform becomes the default platform. That being the case, only one or two platforms are surviving and it is natural for these platforms to become very big. Their reach is trans-national, and their whole approach may become arrogant, if I may use that term. They say that we are not governed by this country’s law because we are not here, we just have users in this country… That is the approach.

I think the arbitrariness of these platforms is something that people are realising. I have written about it in The Indian Express, about how we should develop a language of protocols for e-commerce and other areas, which are inclusive, democratic… It is required. If you ask these platforms to do so, they will say this is not our policy. So what is their policy? It is where they are the ultimate arbitrator of that policy. Unfortunately, no laws exist in this space. There is, I feel, inadequacy… These things are too new and the legal system for them is also evolving. The law for data privacy is about to come. It has taken a lot of time and it is still not a law… These things are taking time and actually there is a gap between development in the virtual space and development in the legal space, and sometimes one finds that laws of the physical world are not really translatable to or applicable in the virtual world.

ANIL SASI: Could Aadhaar have been better leveraged to attempt identification of migrant workers in the post-lockdown situation?

I think this government has used Aadhaar to a very significant extent, and certain statistics will prove that. One is that the authentications per month stands at one billion. The number of Aadhaar-enabled payment systems is about 700 million per month. Similarly, UPI (Unified Payments Interface), where too sometimes the authentication is based on Aadhaar, has clocked about 1.25 billion transactions per month. I think Aadhaar transactions have increased significantly. I believe we have only scratched the surface as far as applications of Aadhaar are concerned both in the government as well as the private sector. Wherever you have a requirement for proving your identity, you can use Aadhaar. It is a utility, which can be plugged into any service… The government has used Aadhaar, (but) there is more scope for using it and certainly more scope for using it in the private sector.

SANDEEP SINGH: You said that only one or two platforms survive in the digital space because of the nature of the network. Then, is it by nature that this business is going to be monopolistic? Secondly, in the last few years, we have seen that while firms such as Amazon, that make use of telecom services, are thriving, the service providers themselves are suffering. Why is that?

I don’t agree that the nature of the digital space makes it monopolistic. Look at it this way. The Internet is a network of computers through which you are connecting billions of systems. Some use Apple, some use Windows… Essentially, why is it able to connect disparate systems? It is because the guys who invented this thing, built an open API (application programming interface)-based system. Anybody who had those APIs could connect to the system. So, the system is very open, democratic and inclusive. That is why nobody owns the Internet. Everybody owns it. The Internet has not coalesced into a monopoly. Some people tried to do that… They said Internet is only Facebook, and there are countries where people feel the Internet is only Facebook because in the Operating System itself you put Facebook and that is the way through which you access the Internet. That is what was tried four-five years back in India, where they said Free Basics will provide you free Internet services, provided you go through this route. (Steps have been taken) to ensure that the Internet does not get cannibalised, that it does not get demarcated into certain walled gardens.

Now the second question is that if the Internet was based on these open platforms, why have the Amazons and Facebooks of the world become big players and why has everybody else got finished? It is essentially because they have their own APIs and these are not interoperable. Today, if I want to get my data back from Facebook and go to some other platform, I can’t do that. They are open, in the sense that you can latch on to any other system based on your Facebook identity. Imagine! At a global level, some players are actually opposing India’s Aadhaar system because they are saying we will provide identity, why do we need the Indians for that. (They say) you should use Facebook or Google identity. Because of the nature of these protocols, they (these platforms) are exclusive, they are not interoperable, they are proprietary, and that is the problem.

Now, it is possible to have protocols similar to TCP/IP (the Transmission Control Protocol/Internet Protocol). Let’s go back to the Internet again. Let’s reinvent Internet and let us have high-level APIs which actually are inclusive… I had argued for an alternative. I had said let us do a creative destruction in the sense that we provide alternatives and then let it become bigger. There could be multiple such protocol-based platforms which will flourish.

(On telecom service providers suffering) As a telecom provider, if you provide banking services, that is not correct, right? If you want to become a banker, you take a banking licence. So many telecom service providers have taken a banking licence also… Nobody is barring people… For example, let’s talk about WhatsApp free calls on the telecom infrastructure. Many people say that we are losing money and WhatsApp is making money. Now, telecom providers are also free to make WhatsApp type of calls. WhatsApp is converting voice to data and that is how communication is happening… I don’t agree with this philosophy that others are earning money. They are selling data, right? Voice revenues are falling, and data revenues are increasing. Any customer of data is their client in some sense. So you should not say that the customer is making money. Yes, the customer (Amazon etc) is making money but he has allowed them (service providers) to make money too. They have freedom to price their data.

KRISHN KAUSHIK: Going forward, what kind of regulatory framework do you see platforms such as Netflix, Hotstar and Amazon Prime come under? Do we need more laws?

… I think there should be a larger law that ensures digital sovereignty, orderliness and I think the data protection law, which is coming, should hopefully address that. And I think if the government thinks there is a need for an overall digital regulatory system, the government can do that… Over the years, convergence has taken place. One device can offer multiple services and one service can be offered on multiple devices. You can’t really differentiate between digital and non-digital… That being the case, we now need to look at this more holistically than earlier.

KRISHN KAUSHIK: Do you think it makes sense to have a larger regulator for all broadcasters, whether they are on TV or digital platforms?

One thing I would say that now, because of the convergence, there is a need to have a converged regulator too. If you artificially divide things in data and voice, where voice is just a derivative of data, then it’s very difficult to actually differentiate as to what is data and what is voice in some sense… There is a general consensus that there is a need for a converged regulator, which takes care of all these issues and prevents overlaps. Otherwise, if there is a decision on voice and that decision is not given for data, then it becomes conflicting. But I would like to qualify this by saying that it has to be dealt on a case-by-case basis to understand where the balance lies.

UNNI RAJEN SHANKER: When you look back on your four-decade-long career, what have been some of your most memorable moments? Are there any regrets?

Working on Aadhaar was certainly the most memorable period in my career. It was also very interesting… When I came to TRAI, it was already a well-established institution. Aadhaar was like a start-up. I met Nandan Nilekani (former chairman of the Unique Identification Authority of India) … He became the chairperson and after one week, I was appointed the CEO… I had no room and Nandan had a big room because he held a Cabinet minister rank. I went to his room and said, “Nandan, where do I sit?” He said, “Ram Sewak, pull a chair and sit with me.” I said ministers and secretaries don’t sit in the same room, to which he replied, “No, no, we are a government start-up.” It was a fascinating four years I spent in Aadhaar. Like in TRAI, I learnt the power of consultation, I learnt the power of private and public sectors working together.

I would not call it regret, but when I worked in Bihar and later in Jharkhand, sometimes I realised that if you are being upright and if you apply rules and regulations… you are shunted out. So by the time you learn something, you are moved out. I was transferred nine times in seven years in Jharkhand… It becomes a bit of a disappointment. It also gives you the label of a guy who cannot adjust… That, I think, is a bit of the bad part. But overall, when I look back at these 42 years, I think they have been fantastic.

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