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Making all stakeholders equally unhappy: Test of good solution for a class of policy problems

In 1998, I was in the middle of an intense interconnection fight. It was worse than zero-sum. The Japanese incumbent telco which had purchased 35% of the shares of the Lankan incumbent telco had created a mindset that was extremely hostile to the competitive fixed telcos the government had licensed a year back. Interconnection disputes, where one party’s gain is seen as the other’s loss, are inherently difficult to resolve using even the best mediation techniques because of this. But in 1998 Sri Lanka, the problem was exacerbated by the desire of the incumbent and its Japanese mamagement to demote the parties requesting interconnection from equals to subordinate agents.

Things got so hot that it had to be addressed in Parliament by the Minister. I had jokingly told him that my position was right because everybody was equally unhappy. This was true, because the challengers had hired some wacko European consultant who had got them to believe that they could actually make serious money from interconnection, not just cover costs. The Commission was not going there.

So I was pleased that the Minister stated in the course of the 1999 Budget Debate (in December 1998), that I must be doing a good job because I had made all the stakeholders equally unhappy. One of the main lines of attack on an independent regulator is the insinuation that he/she is partial to one or another party. This neutralized that attack.

Sunil Abraham, my brother in India, has independently come up with this same argument in relation to the net neutrality firefight in India. My only qualification is that test is correct, but only for a subset of policy problems.

Anyway, read the full argument. It’s a good one. Not only with regard to tests for the efficacy of policy solutions, but also in relation to net neutrality.

You know you have reached a policy solution when all concerned stakeholders are equally unhappy. Unfortunately, the TRAI consultation paper assumes that Internet companies operate in a regulatory vacuum and therefore places much unnecessary focus on the licensing of these companies. This is a disastrous proposal since the Internet today is the result of “permission-less innovation”. The real issue is network neutrality and one hopes that after rigorous debate informed by scientific evidence TRAI finds a way to spread unhappiness around equally.

Full op-ed.

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