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Judicial interventions: Sri Lanka experience

Judicial interventions: Sri Lanka experience. Rohan Samarajiva, LIRNE.NET & Delft University of Technology SAFIR Workshop on Legal Aspects of Regulation in South Asia, Dhaka, August 3-4, 2002. Purpose of presentation.

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Judicial interventions: Sri Lanka experience

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  1. Judicial interventions: Sri Lanka experience Rohan Samarajiva, LIRNE.NET & Delft University of Technology SAFIR Workshop on Legal Aspects of Regulation in South Asia, Dhaka, August 3-4, 2002

  2. Purpose of presentation • Draw out lessons from Sri Lanka’s experiences with the interplay of regulatory and legal processes • Focus on telecom in 1998-1999 period

  3. The underlying problem • Interconnection • There is no “win” from the incumbent’s view • Assume incumbent has 1000 customers; new entrant has 10 • Calling opportunities in former = 999; calling opportunities in latter = 9 • If interconnected, calling opportunities are equalized at 1009 • Major “win” for new entrant; perceived loss for incumbent

  4. The underlying problem • Exacerbated by ambiguous exclusivity in Sri Lanka • Incumbent partially privatized in August 1997, with commitment that “no other licenses shall be issued for international telephone service” • Believed it had an international monopoly • Three prior licenses included language that were allowed (and were later interpreted by the courts as allowing) international telephone services • Over 60% of incumbent’s revenues came from international in 1997, mostly from termination

  5. Context • 4 national mobile operators licensed at various times since 1989 • Interconnection, but unfair commercial terms • 2 national fixed-access operators (wireless) licensed in 1996 • Interconnection disputes from start • Sender-keeps-all interim solution 1996-1998 • Very high levels of animosity by 1998

  6. Interconnection proceeding • June 1998: Regulatory Commission (TRC) retains consultants; initiates mediation proceeding with procedures agreed upon for formal determination if mediation fails • September: Mediation fails; mediators’ report to TRC • November: Following formal procedures TRC issues determination

  7. The legal phase . . . • December 1998: Incumbent obtains ex parte injunction against Enhanced Voice Operator, TRC not a party • Dec ‘98-Jan ’99: Incumbent corresponds with TRC re determination; asks for reconsideration; gets response; engineers’ union threatens technical responses” • January 1999: Ex parte injunction lifted; headline: “Bell tolls for SLT monopoly”

  8. The legal phase . . . • February 1999: Evidence presented that incumbent is not implementing determination; TRC builds up the record leading to license-condition violation proceeding • March: Incumbent seeks judicial review • May: TRC files response, including 50+ page affidavit by DGT and two volumes of supporting documentation; incumbent asks for a long date/no request for stay order

  9. The legal phase . . . • May: At end of TRC’s license condition violation procedure, incumbent files an appeal (1st under the Act); TRC send up the record • June: Court of Appeals orders consolidation • 1999-2001: Repeated postponements; as a result of an MOU among the fixed operators all cases, including the above, are withdrawn by parties

  10. The end result • Increase in regulatory risk in the telecom sector • Image of regulatory agency tarnished • Operators’ energies misdirected to legal infighting as against service provision in a country that still has 270,000 waiters

  11. The end result • Incumbent paid upward of SLR 17.50 per minute to fixed-access competitors in 2001, after fighting a determination that gave them only SLR 9.50 per minute • Lots of lawyers learned about telecom and regulation (and made money) • The difficulties of regulating telecom through the courts demonstrated (again)

  12. Lessons for regulators • Try to avoid going to court • Value of alternative procedures and alternative dispute resolution • Interconnection in Sri Lanka: 1998 versus 2002 • Conduct your proceedings and build and manage the record, assuming you will end up in court • Use good legal counsel

  13. Lessons for regulators • Put in the effort to argue the case, wherever/whenever possible • In appeals, send up the record • In judicial review, can explain • In case of appeals, where argument is not allowed • Make the record as self-explanatory as possible • How much to include in decision? • Value of draft decisions • Reconsideration

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