Efficacy of Regulatory adjudication

Presentation by Madhav Joshi

Tata Teleservices Limited

The present-day global telecom sector is characterized by:

   simultaneous existence of state and private owned multiple operators

    fast changing technologies, convergence of ideas, services and markets

    liberalized and customer oriented regulatory regimes.

subscribers wanting Value Added Services using IP, wireless and broadband technologies rather than Plain Old Telephony Service(POTS)

countries wanting to attract private investment by providing favourable investment climate.

Telecom sector - present scenario

Dispute Resolution –why so important ?

InvestorsTelecom sector needs huge capital investments. Investors need assurance about quick, fair and effective

disputes resolution mechanism.

Subscribersneed new services at lower tariffs delays in dispute resolution would deny them this benefit.

EconomySlower growth of telecom sector would retard general economic

and technical development of the country. In order to avoid disruptions and delays in the development of telecom markets, disputes need to be resolved expeditiously.

Successful dispute resolution:

facilitates investment climate, stimulates growth and is of prime importance to developing countries targeting higher teledensities and even spread of telecom across all the regions.

is increasingly important for introducing competition.

should be as speedy as the networks and technologies they serve. Official dispute resolution mechanisms are important as a basic guarantee that sector policy will be implemented.

Dispute Resolution -importance

Disputes Resolution Techniques

Regulatory Handled by Regulators appointed under statute,review within the regulatory organization followed by appeals to hierarchy of Courts.

Non-Regulatory i.e.Alternative Disputes Resolution (ADR)

Less official means of dispute resolution I.e.negotiation, mediation and arbitration.

Awards are subject to limited review by Courts on procedural grounds like scope.

Countries vary in their stage of market development, regulatory approaches, dispute resolution and general business cultures, and in the types of disputes that commonly arise. These factors will result in different experiences with regulatory adjudication, arbitration,mediation, negotiation, ombudsmen schemes and other approaches

Has the advantage of finality and official enforcement mechanisms. Formal Structure is defined. decision-makers have to follow set procedures and precedents .They are accountable to state or parliament.

Decisions and establishment commands respect, reflects authenticity . Unless “arbitrary and capricious” the courts respect regulatory tribunal decisions.

Regulatory adjudication- advantages

Time consumingInappropriate if the disputes revolves around some sensitive information .It may not remain confidential.Regulator may be exposed to competitive or political pressures, Public opinions.Regulator may lack necessary economic, legal and financial expertise to resolve disputes efficiently and with adequate finality.high costs and delays in some jurisdictions and a perceived lack of telecom-specific expertise to deal with many complex industry disputes.If the review is by political minister, and the government also holds an ownership stake in one of the parties to a dispute –then bias can creep in.

Disadvantages of Regulatory adjudication

ART -independent administrative authority performs regulatory,consultative and dispute settlement and conciliatory functions.It can rule on disputes between operators,impose sanctions for non-compliance of legislations and regulations. It may suspend/withdraw licenses,impose penalty up to 5% of turnover.EU directive to settle cases in 4-6 months. Appeal to ordinary courts (contractual matters) or Administrative Courts which deal with sanctioning powers granted to ART. Court decisions can be appealed against by parties to dispute.ART can’t appeal but is heard.Minister of industry also shares some powers with ART i.e. to issue licences.

DR in some countries - France

DR in some countries - GermanyReg TP is responsible for licensing,USO,frequency allocation, tariffs regulation,checking anti-competitive behaviour of dominant operators, interconnection disputes and consumer protection matters.It can initiate proceedings of its own on USO, tariffs, anti-competitive behaviour. on a motion in matters like granting of licences, interconnection, assignment of numbers and frequencies.Decision can be appealed in administrative court which has expertise.The regulatory decisions are slow.In proposed amendment to Telecommunication Act,appeal on Admin. Court decision would lie to Federal Admin court -only on law point.

DR in some countries- USA

FCC is the regulator.It interprets,co-ordinates and adjudicates on policy issues and disputes arising from them.FCC provides parties with a choice of ADR procedures as mandated under the Telecommunications Act of 1996. No separate appellate mechanism for telecom.FCC generally takes pro-consumer,anti-monopolistic stance in regulatory and dispute resolution functions.There is a provision of final decision to be given by a commissioner or panel of commissioners.It also admits review petitions.The decisions can be appealed in US Court of Appeal.Many of FCC orders are subject to review in Federal Courts.Unless “arbitrary and capricious” the courts generally don’t interfere in regulatory decisions.

India has perhaps a unique model since year 2000 regulatory functions are vested with the telecom regulator Telecom Regulatory Authority of India(TRAI),policy and licensing functions are retained by the union Government’s wing Department of Telecommunications (DoT) andthe adjudication function has been vested with a specialized high powered tribunal Telecom Disputes Settlement & Appellate Tribunal (TDSAT).

Innovative Indian Structure

Jurisdiction of civil courts has been ousted and for all telecom related disputes the jurisdiction has been vested only with

TDSAT TDSAT has the following powers i.e. to (a) adjudicate any dispute – (i) between a licensor and a licensee; (ii) between two or more service providers; (iii) between a service provider and a group of consumers (b) hear and dispose of appeal against any direction, decision or order of the Telecom Regulatory Authority of India. Does not hear restrictive and monopolistic practices issues and individual consumer complaints. 

TDSAT-a one stop solution !

It has wide original and appellate jurisdiction. As the only telecom adjudicator,it hears questions of facts and law.It blends law,commerce and technology.Chairperson - serving or retired judge of Supreme Court or Chief justice of a High Court.Two members - well versed with technology, telecommunication, industry, commerce or administration or Secretary to Union of India for 2 years minimum.It can regulate its own procedures.Appeal lies only to the highest court I.e.Supreme Court of India.

TDSAT – it is different !

TDSAT –overcomes disadvantages of Regulatory adjudication.

It has gathered required expertise.Very few matters are pending.It passed orders on interconnection issues,license agreement interpretation,pricing,jurisdictional issues,policy interpretation, level playing field.Very few decisions were appealed to Supreme Court.No reversal.One case was remanded for review.Even complex matters like challenge to limited mobility service reached finality in less than 3 years, despite appeal to Supreme court.

In many countries office of Ombudsman has been established as a forum for resolution of disputes under a statute. Australia TIO appointed in ’93, independent of industry, Consumer Organizations & Govt.Fee charged per complaint.It acts as incentive to operators Operator gets reasonable time before TIO admits complaint.Power to make decisions up to $ 10,000.Prerequisites:Complaint within 12 months,no pending legal proceedings,complaint is within TIO jurisdiction.Covers all telephone, internet access services,pay-phones, delays in connections,fault repairs,privacy,breach of Customer Service guarantee and industry codes.No jurisdiction - competition issues, tariff setting, internet content.

Ombudsman

In evaluating the success of dispute resolution processes, it is important to consider economic costs to the sector as a whole. Costs may result from delays and lack of transparency and predictability. emergence of a ‘market’ for dispute resolution techniques and professionals is likely to improve them.Some regulators are providing parties with a choice of ADR procedures. See -United States, the Telecommunications Act of 1996.It is important to design economic incentives for the parties to disputes. The allocation of responsibility for the costs of disputes can affect the manner in which parties behave.

Economics of dispute resolution

Comparative levels of parties’ market power may decide type of dispute resolution.ADR techniques may help where disputing parties have similar levels of market power, where parties are more likely to negotiate solutions that meet their mutual on-going commercial interests. Regulatory intervention is considered necessary where one party effectively requires the protection from abuse by the other.

Market power asymmetries decide choice of DR method

Publish adjudicator decisions and facilitate access to them through the Internet. Adopt international best practices in resolving disputes.Publish and organize precedents of innovative dispute resolution procedures, in order to promote their adoption.Strengthen non-official ADR approaches by endorsing their usage and supporting them with official enforcement of their results.Tap into the human resources available to dispute resolution by establishing panels of arbitrators and mediators and collaborating with existing arbitration and mediation institutions. Increase cross-pollination of ideas and collegial sharing of experiences between the telecom sector and the dispute resolution communities.

Improving telecom dispute resolution-ITU suggestions.

Improving telecom dispute resolution-contd.

Harness new on-line resources and services to help policy makers and regulators to improve dispute resolution techniques. (ITU’s on- line Global Regulators Exchange and live virtual conferencing facilities).

Recognize that dispute prevention is as important as dispute resolution.

Use of consensus building measures by policy makers and regulators can engage sectoral parties and identify converging interests and mutual commercial opportunities.

References:ITU paper of December, 2003Papers by Mr. R.U. S.Prasad, former Member,TDSAT

ACKNOWLEDGEMENTS