Overbearing regulation has reared its ugly head once again, this time in Singapore. There the regulator (IDA) has fallen back on rules from a past monopolistic era formulated for a PTT that had a sole duty to provide service 99.999 per cent of the time as a matter of national security and to meet obligations to its customers.

Today’s telecoms market in Singapore is truly over-serviced with three mobile networks catering to a population of 5 million people on an island of only 704 sq km (272 sq ml). Last September SingTel Mobile Singapore Pte Ltd (STM) suffered a disruption of its 3G mobile services. As a result, he IDA deemed that STM had not fulfilled its obligation to provide resilient mobile telephone services under IDA’s Service Resiliency Code and slammed it with a S$400K ($313K) fine.

It’s not the penalty itself that is an issue, nor the fine amount, it has more to do with the actual need or value of a system that slaps offenders over the wrist for being ‘naughty’. Surely, in today’s unregulated marketplace, it is the customer that wields the power by churning from an offending network. Add in the cost of lost revenue during the disruption, loss of brand value and face, and you can see that market forced punishment is more than adequate.

When Vodafone Hutchison Australia suffered weeks of service disruption the customer retaliation was swift and effective. Hundreds of thousands fled to competitors and those tied to contracts turned to social networking and the national ombudsman demanding compensation and almost holding the operator to ransom. It is still recovering from the backlash. Surely, this is enough punishment for any business that fails to provide service expected of it? Or is it more a case for regulators to show their value to the community by looking after their best interests? Hardly!

We keep hearing that today’s communications services such as voice, internet access, messaging, et al, have become commodities. Outside of telecoms, fuel is deemed to be a commodity, as is bread, potatoes, clothing, free to air TV, etc. So what happens when the supply of any these becomes disrupted? Does the potato regulator fine potato farmers and supermarkets? Do oil companies get fined for not producing or delivering enough fuel to stations? Are the OPEC countries exposed to diplomatic pressure when they slow down output to force the price up? Nope, nothing of the sort. Customers just go elsewhere, they protest via Twitter and Facebook then spend their money someplace that has what they are after.

Not since the days when Telstra’s erstwhile leader, Sol Trujillo, took on Australia’s regulator has there been a really sustained attack on over-regulation. As in the case of Don Quoxite, Trujillo’s tilting at windmills didn’t achieve much, and he eventually fell off his horse, also. However, the fallout from the ‘Great Indian License Fiasco’ appears to have triggered some players into action. On of the biggest casualties of the debacle, Loop, has commenced arbitration against the telecom ministry, by filing a complaint against the ministry and regulator TRAI with the Telecom Dispute Settlement and Appellate Tribunal (TDSAT), seeking a refund of the fees the company paid for its 2G spectrum licenses due to be revoked next month.

As reported in TelecomAsia, Loop is pursuing a return of the 14.54 billion rupees ($260 million) it paid for 2G spectrum and accompanying licenses in all but one of India’s 22 telecom circles. The company is also seeking 10 billion rupees in damages in compensation for alleged loss of reputation arising from the license cancellation. Finally, the operator is requesting interest payments on the license fees, as well as compensation for expenses incurred in deploying 2G infrastructure. A successful TDSAT appeal by Loop Telecom might leave the department and regulator more vulnerable to arbitration action from some of the other operators facing the imminent loss of their 2G licenses.

The damage to India’s credibility as a safe investment in telecoms has been done and the regulator could, for a change, be on the receiving end of government or court action. It begs the question: who regulates the regulators and are the statutes they enforce keeping up with the speed of change in technology, national and customer expectations. Probably not!

First published at TM Forum as The Insider, 30 May 2012