`Telecom is the most scam-ridden sector'

R.V. MOORTHY

Interview with Nilotpal Basu.

Nilotpal Basu, CPI(M) member of Parliament, was first elected to the Rajya Sabha in April 1994. He has been on a number of committees, including the Consultative Committee for the Ministry of Communications in January 2000. He was re-elected to the Rajya Sabha in April 2000 and was soon nominated to the panel of Vice-Chairmen of the Rajya Sabha. From August 2003, he has been Chairman of the Committee on Transport, Tourism and Culture. One of the areas he has taken a keen interest in is the telecom sector. Excerpts from an interview he gave Siddharth Narrain:

What is the extent of the loss suffered by BSNL and MTNL and how have you arrived at this figure?

It is very difficult to calculate the exact quantum of loss to BSNL and MTNL because the extent of loss has not been investigated by the empowered body. The Telecom Regulatory Authority of India Act specifically assigns to the regulatory body (TRAI) the right to investigate these issues. It is very clear that in a criminal dereliction of duty TRAI has not exercised the powers and the rights with which it is empowered by Parliament. Therefore the exact quantum will be difficult to find. But generally private companies say that the grey market in the ADC [Access Deficit Charge] regime could be anywhere upwards of Rs.2000 crores. Unless a proper authorised investigation takes place, the exact quantum of loss cannot be ascertained. In a reply to a couple of Lok Sabha questions on December 1, 2004, the government says it is only around Rs.350 crores over a period of five years, which is a gross underestimate.

Has the DoT done the right thing in this matter? Is Rs.150 crores a fair penalty?

Unfortunately, the DoT has messed it up. The DoT has served a showcause notice to a private company quoting violations of the licence agreement. The exact provisions of the licence agreement that the DoT has quoted in its notice are in fact non-existent provisions. They have even failed to provide in the showcause the exact provisions of the licence agreement.

Secondly, the DoT has completely failed in its responsibility to prevent underpayment or underinvoicing of the differential between International Long Distance and National Long Distance (NLD). The idea of the Access Deficit Charge is that those who do not have access will be provided access through this money. Avoiding this charge takes away money meant to go to companies that provide this service and to that extent also adversely affects the financial bottom lines of those companies. Perhaps most importantly, as a result of tampering with the switches when the calls come from international gateways to the national network, on the handset of the subscribers either local numbers appear or no number appears, which leads to a security issue also.

Within the TRAI Act there are provisions which say that when public interest and national security are threatened the DoT can direct TRAI to conduct investigations which could have brought out the magnitude of the scam. This is not just a grey market operation. This is a wilful manipulation of the system to underpay and at the same time undercut its competitors by subsidising its own tariff rates. Investigation under the appropriate provisions of the statute has become absolutely imperative to establish the involvement of all concerned - in private companies and the government.

Why has the TRAI not acted and what should be done now that it has not acted?

It was the TRAI chairman's contention when they passed the order on October 29, 2003, that the new ADC regime they are bringing in would reduce the grey market. The ADC for one minute of an international call was brought down from Rs.5 to Rs.4.25 and the NLD rate was brought down from Rs.4 to 80 paise, completely trying to fool the whole country.

While the ADC charge was brought down, the actual ADC differential went up. Whereas it was only Re.1 earlier, it went up to Rs.3.50, which is almost a 350 per cent increase. So, with that kind of a regime, to assume it will bring down the grey market cannot be accidental. Therefore we have asked for the sacking of the TRAI chairman for wilfully trying to mislead the people.

Do you think the Minister of Communications and Information Technology, Dayanidhi Maran, has done enough?

Clearly, he has not done enough because he has given a reply to Parliament that over five to six years the leakage is to the tune of Rs.350 crores, whereas two companies owned by this government have filed claims in court to the tune of Rs.550 crores. So Rs.350 crores is not a figure which he has arrived at on the basis of any investigation that the government has ordered. The scope of the investigations has to be much wider

Do you think the penalty for grey market traffic operators needs to be changed?

That is exactly what has been recommended by the TRAI subcommittee on this issue. The subcommittee says that since the question of caller line identities being removed has very serious security implications, appropriate provisions of the security laws in the country should be applicable in this case as well. This is what I pointed out in the House to the honourable Finance Minister as well, who was arguing with the Left, in a different context, that there were no security implications in FDI [Foreign Direct Investment] in telecom.

What about other private players like Bharti, which reportedly have done the same thing?

I have gone on record on the floor of the House that I have no case against any particular private corporate because I do not know. Only a comprehensive investigation can bring out the facts. It is true that Bharti has been referred to in the complaint filed by the telecom regulator in Nepal.

How did you develop such a keen interest in the telecom sector?

The extra interest I have taken in the sector is because it is the most scam-ridden sector in the country.