ABSTRACT
This chapter discusses the context for the present book, beginning with the worldwide deregulation of the telecom sector and covering developments in the Indian policy landscape, the new institutional economics framework that informs the study, and rudiments of relevant regulatory theory, finally arriving at a working definition of regulation that frames the issue areas elaborated in the subsequent parts. It contextualizes telecom sector regulation by explicating deregulation based on consensus at the World Trade Organization and rapid technological changes. The unique attributes of the telecom sector are touched upon, including its evolution from a natural monopoly to a realization of its potential as a powerful tool of economic and social development. Developments in the Indian telecom sector policy regime over the two decades since deregulation are then traced out in brief, emphasizing the key role played by the judiciary in the institutionalization of regulatory space. The chapter sets out the framework for this book; with a new institutional economics (NIE) orientation, it seeks to account for the evolution of regulatory governance in the Indian telecom services sector along three dimensions: the macro-institutional level, the institutional environment, and the micro-institutional level. It outlines important theoretical aspects of regulation in order to arrive at a working definition to be used for further analysis of the Indian case. It sketches salient aspects of regulatory theory such as market failure, administered contracts, long-term incomplete contracting, economic rent, externalities, information asymmetry, and public goods. After arriving at a working definition of regulation, it surveys the underpinnings of public interest and private interest theories of regulation before moving on to briefly describe institutionalist theories of responsive regulation and regulatory space. The concluding portion deals with various regulatory techniques ranging from command and control to consensus and the many shades in between. It sets out the aims and objectives of the three different issue areas presented in the following parts of the book. Part II of the book examines how the Indian telecom regulatory space became a site where judicialization of the political process intersected with non-judicial legality in creating expertise-based new institutions. Part III of the book deals with how TRAI (Telecom Regulatory Authority of India) has fared in meeting the NIE regulatory objectives of crafting order, mitigating conflict, and realizing mutual gain in its non-adjudicatory role. This part also examines the nature of judicial intervention in spectrum allocation and interrogates the decision to lock in spectrum allocation to a private-property-rights regime. The final part, Part IV, studies the impact of formal and informal rules at the organizational level of the central regulator, TRAI.
