The Making of Regulatory Independence By

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The Making of Regulatory Independence By THE MAKING OF REGULATORY INDEPENDENCE BY SIDDHARTHA SUNDER RAJA DISSERTATION Submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Communication in the Graduate College of the University of Illinois at Urbana-Champaign, 2011 Urbana, Illinois Doctoral Committee: Associate Professor Christian Sandvig, Chair Professor Peggy Miller Professor Dan Schiller Professor Noshir Contractor Abstract This study offers an ethnographic account of life at a regulatory agency to offer a new perspective on an important question: how does a regulatory agency become and remain independent? Relying on an analytical framework based on scholarship in legal anthropology, this study provides elements of an answer based on an insider‘s view of regulation, illuminating the complex, messy, and political nature of what may seem from the outside as calm and neutral application of technical expertise. The formal account suggests that legislative action defines the position and mandate of such an agency making it independent—immune from political influence in its decision-making. However, experience has shown that the making and maintenance of independence is a challenge, especially as these agencies typically enter arenas much after other powerful economic and political interests have established their own positions. The result is that in spite of efforts of international financial institutions, governments, and regulatory staffers worldwide to create independent regulatory agencies, many of these agencies are severely constrained in their ability to function effectively. Using unprecedented access to individuals working at the Telecom Regulatory Authority of India (TRAI), this study will show that regulatory staffers are constantly struggling to make and maintain their position, define their role, and keep their agency going. These individuals engage in strategic choice-making, applying ideas and creating rituals in their various attempts to define a role for the agency. Even if they could call upon a formal mandate as defined in the law, the agency‘s position is largely determined through the actions of the individuals working at the agency and, interestingly, through the actions of other entities in the arena. The role and position of the regulatory agency thus has various sources and is defined through multiple activities, including the act of regulation itself. If regulation is political, this study proposes rethinking regulation in terms of its semi-independence. A regulatory agency‘s procedures and decisions are all part of the attempt of that agency to define a role for itself and are, consequently, political in nature. This political behavior is shaped by the preferences, values, and relative positions of other entities in the arena. By engaging in such political behavior, the agency becomes semi-independent; it might not be an apolitical rule-applier, but it may also be able to define a more meaningful role for itself. Rethinking regulatory independence as an ongoing effort thus situates an agency within political and social contexts, allowing us a new perspective on this widespread activity. ii Acknowledgements This dissertation exists because I had the support of teachers, mentors, family, and friends. Thanks to Christian for being everything an advisor should be and for helping me bring this home. Any good ideas here are due to him. Thank you to Peggy, Dan, and Nosh for supporting me throughout. Thank you for broadening my intellectual horizons, for challenging me and forcing me to think in new and interesting ways. Thanks to Francois Bar and Rafiq Dossani for entertaining the fledging aspirations of an engineer to study public policy. A very big thank you is due to the Department of Communication at Illinois—the erstwhile Speech Comm—for always supporting my work no matter my physical or intellectual location. A fond thank you to Dale Brashers for his support and guidance. He will be missed. Thanks are due to my colleagues at work, who gave me the support, space, and ideas that allowed me to improve and complete this dissertation. Thanks are especially due to my interlocutors at TRAI, for allowing me to spend time with them and for sharing a part of their lives with me. I wish them the best as they work through difficult times. There is too much for which I must thank my family and friends and I can only say thank you for everything; I could not have done this without you. A special thank you is reserved, however, for my Deepti. Without her and her patience, open-mindedness, guidance, grace, and understanding, this author would have been a poorer man. iii Table of Contents Chapter 1. Rethinking Regulatory Independence.............................................................. 1 Chapter 2. An Analytical Framework ............................................................................... 32 Chapter 3. From Small to Worst: A History of Indian Telecommunications .................. 42 Chapter 4. A Note on Methods ......................................................................................... 71 Chapter 5. Regulatory Life at TRAI ................................................................................. 93 Chapter 6. Defining the Regulator‟s Role .......................................................................121 Chapter 7. Choice Making in Dispute Resolution ......................................................... 154 Chapter 8. Expertise and Ideas in Policymaking ........................................................... 193 Chapter 9. The Construction of Regulatory Independence ........................................... 240 Bibliography ....................................................................................................................... 252 iv Chapter 1. Rethinking Regulatory Independence Sitting on the dais, the Chairman of the Telecom Regulatory Authority of India (TRAI) was getting visibly irritated. The telecommunications service providers present at the public meeting he was leading were giving lukewarm, uncommitted responses to his proposals to curb unsolicited telemarketing calls. The regulator would need service providers to implement specific technical and business practices to prevent such calls; without their support for his proposals, it would be unlikely that TRAI would be able to curb telemarketing calls effectively. If he did not get support for its proposals, it would be a blow to the regulatory agency‘s position that it was concerned with consumer protection. In October 2006, the frequency of unsolicited calls had increased to such a level that almost everyone I met who knew that I was working at TRAI asked me the same question: why was TRAI doing nothing to stop annoying telemarketers? The agency had been slow to respond to this issue, and other agencies and individuals had begun to address it first. The Rajya Sabha, India‘s upper house of Parliament, saw the introduction of a legislative bill on this issue. Consumer activists had also filed a series of complaints in the consumer courts on the issue, and lawyers were approaching various courts seeking protection from the invasion of privacy due to unwanted telemarketing calls. However, telecommunications law identified TRAI as the agency that should regulate telecommunications services to protect consumer interests. Because TRAI had not immediately addressed the telemarketing issue, some consumer rights advocates had already accused it of siding with the telecommunications firms against the consumers‘ interests. The Chairman was keen to respond to and disprove these accusations. In November of that year, he put a small group of TRAI staff in charge of seeking public feedback on the matter and identifying a set of potential solutions to the problem. In line with TRAI‘s standard consultation procedure for regulatory issues, this group prepared and published a ‗consultation paper‘ that sought public comments.* The television news channels and newspapers covered the regulator‘s action and release of this consultation paper, noting that the regulator was working to provide a ―welcome reprieve for millions of phone subscribers‖ (―Trai to put,‖ 2006). Given the widespread complaints heard about telemarketers, one might expect that this paper would * Such papers have a standard format: they include an examination of the issue at hand, a discussion of possible regulatory responses, and summarize international experience in dealing with unsolicited telemarketing calls. They close with a series of questions to help the regulator resolve the issue. Consultation papers are public documents and anyone is free to respond. 1 receive many responses from the public and consumer activist groups. TRAI received only 20 responses. Of those, seven were from service providers or their industry associations. Looking at the formal communication, it would seem like the proceeding was a non-starter. Notwithstanding this underwhelming response, TRAI continued to follow its formal procedures and organized an ‗open house discussion‘ on the topic a few days after the deadline for responses to the consultation paper. The open house discussion was organized in a hall at a conference center in New Delhi and had about fifty participants sitting in a U-shaped table with the Chairman and some of the other members of the senior leadership on a dais in the front of the room. As with written responses to the consultation paper, the service providers dominated the forum. The proceedings began with the Chairman explaining
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