Governance

Dubious transfer

Print edition : March 31, 2017

J.S. Deepak (right) with Manoj Sinha, Minister of State (Independent Charge) for Communications, in New Delhi on October 28, 2016. Photo: Kamal Narang

Was J.S. Deepak, Chairman of the Telecom Commission, shunted out to the Commerce Ministry because he had raised several issues relating to Jio?

IN early March, a fresh controversy gripped India’s telecom sector after the Appointments Committee of the Cabinet, chaired by Prime Minister Narendra Modi, in an unexpected move, transferred Telecom Secretary and Chairman of the Telecom Commission (TC), J.S. Deepak, to the Commerce Ministry.

It may seem odd that the transfer of an IAS officer, which is not an unusual occurrence in the government, should have caused ripples in the corridors of power. But many observers wondered about the unstated reasons for the transfer of an officer who had a reputation for being independent, given the timing of the decision and the hasty manner in which it was carried out. Speaking to Frontline, a senior official in the Department of Telecommunications (DOT) recalled the mood in Sanchar Bhawan, where the top DOT mandarins work, on the evening of March 1, when the transfer order arrived. “I was shocked. This was unexpected for many of us. By evening, someone shared the order with me on WhatsApp, but he [Deepak] was away in Barcelona, and we couldn’t understand the reason for it [transfer],” he said.

The 1982 batch IAS officer was attending the Mobile World Congress, the world’s largest exhibition and conference for the mobile industry, which was being held in Barcelona. He was to be there until its concluding day, March 2. However, it appears that he was immediately called back to New Delhi by the Commerce Ministry, which communicated with him on March 1.

The DOT officer quoted earlier called this hastiness “absurd” because no other officer was appointed to replace Deepak and, separately, a special post was created for him by upgrading an existing position in the Commerce Ministry before he could take up the post of Ambassador/Permanent Representative of India to the World Trade Organisation (WTO) in Geneva on June 1.

Another senior DOT official said that though the possibility of Deepak taking up the position was being discussed for a couple of months, the manner in which it was done took everyone by surprise. “A discussion with the top echelons of the Commerce Ministry over his appointment as Ambassador/Permanent Representative to the WTO was going on for at least two and a half months and he was hopeful about getting it since he has experience in trade negotiations, and Commerce Minister Nirmala Sitharaman likes him. However, the sudden announcement must have surprised him too, since there are still three months to go before the existing Ambassador finishes her term, so this abrupt transfer seemed unnecessary,” he said.

Indeed, even prominent figures in the telecom industry expressed surprise and dejection at Deepak’s departure. “We are surprised and disappointed. He was very even-handed in dealing with issues,” said Rajan Mathew, director general, Cellular Operators Association of India.



A question of timing

If the manner in which Deepak’s transfer was done seemed unusual and hasty, the timing was suspect too. For, barely a week before the order, on February 23, he had written a strongly worded letter to the Telecom Regulatory Authority of India (TRAI), the sector’s tariff regulator, raising concerns about the adverse impact of the promotional tariff offered by telcos on government revenues and the industry’s finances. Though he did not mention any telco by name, it was obvious that Deepak was alluding to the free data and voice schemes launched by Reliance Jio, which, he argued, could not be permitted beyond 90 days as per TRAI’s own tariff orders in the past. About Rs.800 crore in government revenues were hit, his letter to TRAI said.

It also highlighted the worsening financial situation of other private telcos, whose profits had taken a substantial hit because of Jio’s free services. This could have a cascading effect on the country’s banking system, which has extended credit to the telecom companies for buying spectrum, and depleting finances were not good for the sector, he had argued in the letter.

As per law, the TC and TRAI have precise mandates for the governance of the telecom sector. While the TC is the topmost policymaking and implementing body, TRAI is the regulator, looking at tariffs, interconnection among cellular services and quality of service.

Thus, Deepak flagged the issue of tariffs to the TRAI, mentioning two specific orders in the past through which the period of promotional tariffs was capped at 90 days. However, Deepak’s transfer order came even before the letter, which was leaked to sections of the media before it reached the regulator, was taken up by TRAI’s experts and its board for consideration.

“The letter has been sent to experts for comments and it will then perhaps be taken up by the TRAI board for consideration sometime after Holi,” a TRAI official told Frontline in the first week of March. He saw no virtue in the arguments made by Deepak concerning tariffs and, hinting at the stand the regulator may take regarding the issues flagged in the letter, said it was not obligatory on TRAI to follow up on the TC’s observations.



Worsening Friction

The official’s stand was a reflection of the prevailing friction between TRAI and the TC, which appears to have worsened in recent months, particularly in matters concerning Jio. For, TRAI has, in many important cases, including allegations of predatory pricing by other cellular operators against Jio, ruled in Jio’s favour while the TC has continued to raise concerns about several issues concerning the company.

There are at least two other instances involving Jio in which Deepak took a position which was not aligned with the interests of the company. One concerns the uniform spectrum charge issue in which the TC sought to ensure that all telecom operators paid the same spectrum user charge; the other concerns the controversy surrounding “Points of Interconnection” (POI) in which TRAI had imposed heavy penalties on telcos which initially refused to grant the POIs, which facilitate voice calls between different networks. The TC questioned TRAI over this and, clearly, the two were not on the same page.



Caught in the crossfire?

It is this history of raising several issues concerning Jio that prompted many to wonder if Deepak’s hasty transfer was an unfortunate consequence of an ongoing corporate war between Reliance Jio and other telecom operators, which first became public with the formal launch of Jio in September 2016 and has only intensified since then. The DOT official quoted earlier was not forthcoming on this point but reflected the uncertainty prevailing among government officials about the message to officials in the manner in which the transfer was done. “There are so many versions [of the reasons for the transfer] doing the rounds that it is hard to tell what is true and what is not,” he said.

For a sector that has been known to be vulnerable to crony capitalism, even the suspicion of undue influence by corporates with vested interests is bad news. And if that suspicion enables perceptions to gain ground about the vulnerability of the Chairman of the country’s top telecom policy body, it bodes ill for the future of transparency in the governance of the telecom sector.

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