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Judicial interventions: Sri Lanka experience

This presentation discusses the experiences of Sri Lanka in managing regulatory and legal processes in the telecom sector, focusing on the interconnection issue during the 1998-1999 period. The complexities arising from ambiguous exclusivity, interconnection disputes, and judicial interventions are explored, showcasing the challenges faced and lessons learned by regulators and operators. The detrimental effects on the sector, the regulatory agency's reputation, and the diversion of resources to legal battles are highlighted, emphasizing the importance of alternative dispute resolution and strategic handling of legal proceedings. Recommendations for regulators include avoiding unnecessary litigation, investing in good legal counsel, and efficiently constructing and managing legal records for potential court cases.

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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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