While I do believe that (a) the Director of Information is on the face unqualified to serve as DGT, and that (b) the Department of Information has no role to play in a modern democratic society, I do not think that any of these feared things will happen.

Whatever the DGT does, he has to do under the Law, the Sri Lanka Telecom Act, 25 of 1991, as amended. According to the Act, the DGT does not have legal authority; all authority lies with the Commission, a five-person body chaired by the Secretary of the relevant Ministry, at the present time Mr Lalith Weeratunge, Secretary to the President. The DGT is a member ex officio and until now, the only full-time member. The other members are part-time, one qualified in law, another in finance and so on. The DGT is the CEO of the Regulatory Commission and must act under the direction of the five-member commission.

The Commission has to act as specified in the Act and other relevant legislation (and of course the Constitution). If it acts outside these powers or if it exercises these powers without adhering to natural justice, it can be checked under the writ jurisdiction of the Court of Appeals, as set out in Article 140 of the Constitution. Fundamental rights cases may also be brought against it before the Supreme Court.

Let us take the case of licensing news websites. Can the TRC do this?

The Act specifies several kinds of licenses and a permit. It is an offence to do the acts covered by these licenses and permit, without being issued these licenses and permits. Action may be taken when the terms and conditions of the said licenses and permits are violated.

The first question then is whether the operation of news websites requires a license under Act 25 of 1991, as amended. We can without much difficulty exclude the licenses for cabling, frequencies and frequency emitting apparatus etc. The core issue is whether a news website requires a license under s. 17.

Section 17 states that:
“(1) Subject to the provision of section 20, no person shall operate a telecommunication system in Sri Lanka except under the authority of a licence granted by the Minister in accordance with subsection (2).
(2) The Minister may grant the licence referred to in subsection (1) on the recommendation of the Authority, provided he shall have the power to reject such recommendations for reasons assigned and grant a licence in his own discretion.”

Section 20 is about certain kinds of activities in contiguous spaces and/or within organizations and is not of relevance to the present discussion. The key phrase is “telecommunication system in Sri Lanka.” Anything that falls within the definition of a “telecommunication system in Sri Lanka,” and does not fall within the exclusion specified in s. 20, requires a license.

A “telecommunication system” is defined in Section 73 as “a system for the conveyance by the agency of electric, magnetic, electro-magnetic, optic, electro-chemical or electromechanical energy, of
(a) speech, music and other sounds ;
(b) visual Images;
(c) information for human comprehension that is intended for presentation in a two dimensional form, consisting of symbols, phrases or sentences in natural or artificial languages, pictures, diagrams and tables ; or
(d) signals serving for the actuation or control of machinery or apparatus.”

One may access a website using a telecommunication system licensed under the Sri Lanka Telecom Act, but that does not mean that the website is a telecommunication system that requires a license. In short, the TRC does have the authority to license Internet Service Providers, through whose facilities we gain access to websites; but it does not have authority over the websites. It is possible for the TRC to include specific license conditions in the license issued to ISPs that may include restrictions about filtering and such, but as far as I know such conditions were not included in the ISP licenses that were issued since the 1990s and even if the TRC tries to include them it may find itself violating the Constitution.

Living in war conditions caused the citizens of this country to yield fundamental rights in the name of assisting the fight against terrorism. We must get back to asking “under what authority?” whenever someone in government seeks to prohibit something or get us to do something. There does not seem to be any legal authority for the TRC to do any of the actions they are allegedly planning to take.

Quo warranto, TRC?

Supreme Court today (Nov 01, 2008) ordered the suspension of three environmental levies imposed recently, reported Lanka Dissent.

Accordingly, the levies imposed on telecommunication towers, CFC bulbs of more than 40 Watts as well as the levy imposed on vehicles in the Western Province were directed to be suspended.

Should we open a bottle of Champaign? May be not. It was not LIRNEasia that took Environment Ministry to courts. Still we take pride in fighting against these irrational environmental levies which would have served nobody.

Some of our earlier blog posts:

Small Victory for LIRNEasia: Sri Lanka’s Supreme Court issues Interim Order against Tax on Mobile Phones and Telecom Towers (Sept 23, 2008)

Digital cigarettes (Sept 21, 2008)

Sri Lanka: Udaya Gammanpila says Environmental Levy does not burden public (Aug 19, 2008)

Sri Lanka: Road to ‘Dharma Rajya’ does not look ‘toll-free’ (Aug 14, 2008)

Sri Lanka: Taxing poor to clear the e-waste of rich (Aug 03, 2008)

Is mobile phone a polluter? (April 10, 2008)

“Green” tax to be imposed on mobiles? (Oct 30, 2007)

By the way, please note the 2% envy tax on mobile usage is still not off. So the battle is only half won.

If any reader wishes to offer their deepest condolences to Udaya Gammanpila, Chairman, Central Environmental Authority and Champika Ranawaka, Minister of Environment, about their failed attempts to irrationally burden a selected group of consumers to cover the recurring costs of Ministry of Environment, please feel free to use space below for the same. Guaranteed reading by both gentlemen. After all, LIRNEasia still comes within first ten Google hits for their names.

In Sri Lanka we now make policy in the Supreme Court. This is not optimal, but it’s the way it is. Therefore, I was pleased to see that Justice Tilakawardene had used one of the analogies I had pushed hard in relation to the recent punitive measures taken against mobile phones. Today’s Lankadeepa, reporting a decision on the Defense Ministry’s effort to cancel the mobile phone service (SIMs and value) dealership of an associate of a politician who crossed over from the government, quotes the Justice as saying that just because a crime is committed using a Honda motor cycle, we do not take action against the company selling Honda motor cycles and that in the same way, we should not be punishing phone companies and their dealers just because a SIM is used illegally. She had also mentioned the problem of unregistered SIMs and said that the solution was making sure all SIMs were registered, not other sweeping punitive measures.

The new TV regulatory regime introduced surreptitiously as regulations under an archaic 1982 Act will to put a stop to many of these plans, if the government manages to defend it from its many opponents and the difficult-to-predict Supreme Court. Dialog for example may have to exit the satellite and terrestrial TV businesses altogether, because only public companies with majority Sri Lankan ownership can even apply for these licenses.

Even if one can apply, the issuance of the license is at the discretion of the Minister. He may also exercise broad discretionary powers to suspend, cancel, or renew/not renew licenses once granted. And unprecedentedly, the duration of the license is one year. So those who get these pieces of paper will have to be very confident about their friendship with the Minister or the President before they make significant investments.

Five of the major telecom operators are majority foreign owned, so it appears that their only option will be to allow majority Sri Lankan owned license holders to provide services over their networks. In the case of Dialog, they have to apply for a new license by November 10th, 2008, which does not even leave them time to restructure the TV business units. This may mean an enforced firesale, which sends a terrible signal in terms of foreign investment.

Of course, there is the alternative of ignoring the whole thing. There is no mention in the regulations or in the parent act about the offense of engaging in TV broadcasting without a license. And absent a definition of broadcasting, it may be possible to argue that the cable headend or the satellite uplink is not a TV broadcasting station, which is the anchor for all the definitions.

The presentation examined the broadening of consumer rights in the Sri Lanka industry as a result of the increased economic freedom in the telecom industry enabled by the multi-faceted liberalization undertaken by multiple governments since the 1990s. It then went on to draw lessons for other infrastructure industries and countries. The principle of “competition wherever possible; regulation where necessary” was the anchor of this part of the presentation. It was emphasized that the possible and necessary varied depending on country and time and that there were no one-size-fits-all solutions.

The presentation slides are here.

The recent effort to bring the wisdom of the Supreme Court of Sri Lanka to bear on the prices of fixed telephony services are of interest in this regard. Around ten million Sri Lankans are served by mobile telephony, while only less than three million are served by fixed telephone operators. Prices keep coming down in mobile services, to the extent that some are beginning to fear the companies will cease to make money.

Is it not more logical to ask why there is no need for regulation or for the resetting of the x in the RPI-x price formula in mobile telephony services than to overload the Supreme Court’s already full docket? Is it not more logical to allow the mobiles to enter the fixed space and vice versa, by unifying the licenses, removing obsolete prohibitions on who can and cannot draw wireguides to homes and offices, ensuring that mobile operators are paid for the calls terminated on their networks the same as the fixed operators, and so on?

The logical thing to do is to extend the solution that is working for close to 10 million consumers to the three million in a market still dominated by SLT; not seek to get an overworked court with general competence to order an incompetent regulatory agency to calculate costs of capital and reset the x in RPI-x, which would, by the way, require a modification of the relevant licenses.

Lower prices and higher quality (consumer rights) are assured by policy and regulatory actions that increase economic freedom, using the principle of competition wherever possible; regulation where necessary.

In a letter dated October 10, 2008 to TRC Director General Priyantha Kariyapperuma – copied to The Sunday Times – Mr. Nanayakkara states that ‘OPA’s experts in their presentation to the TRC, around March 2008, explained and established that the TRC’s tariff proposal recommended to the SC is flawed mathematically and technically and that it is in violation of the provisions in the Sri Lanka.

In particular, Mr. Nanayakkara writes that the TRC did not put up to the SC that the per-line operating costs of the SLT since its privatization in 1998 has been declining at around 15% per annum. The TRC also provided disinformation to the SC, to conceal the urgent need arising from above, to update the outdated X factor of price cap CPI – X. The X factor is not a one-time set value. Its regular revision is an essential requirement that underpins its core aim which is to sustain market competitiveness in the fact of advancing technology and declining costs, the letter said.

Further, Mr. Nanayakkara said the TRC also did not inform the SC of the abrupt suspension of this license condition in 1997, on the unjust insistence of Nippon Telephone and Telegraph (NTT), at the time it entered into a joint agreement with SLT, which stalled reduction of tariffs. The TRC also did inform the SC that it failed to revise X in 2002 when the suspension was terminated in 2002 and the Government took measures to revamp the market competitiveness.

Read the full report in ‘Sunday Times’ here.

Considering five fundamental rights applications yesterday (Sept 22), the Supreme Court issued an interim order against the implementation of the Environment Tax, reported Lanka Dissent. The petitioners were Ven. Maduluwawe Sobhitha Thera, Ven. Kiniyawala Palitha Thera, Telshan Network and Swarnavahini.

The SC ordered the immediate suspension of the gazette notification announcing the new tax, and fixed December 01st as the next day of hearing.

A party that opposed not the idea of Environment tax, but the manner it was irrationally applied on mobile usage (not ownership) LIRNEasia takes pride in presenting some of its previous blog posts on the subject below.

Oct 30, 2007: “Green” tax to be imposed on mobiles?

April 10, 2008: Is mobile phone a polluter?

Aug 03, 2008: Taxing poor to clear the e-waste of rich

Aug 14, 2008: Road to ‘Dharma Rajya’ does not look ‘toll-free’

Aug 19, 2008: Udaya Gammanpila says Environmental Levy does not burden public

Sept 21, 2008: Digital cigarettes

The salient features of the Concept Paper were presented to the Commission, in addition several other research findings relevant to the Commission. The importance of an all-hazards approach was stressed and governance model options were discussed. Recommendations on actions that are needed by government were made and intended actions by the Vanguard Foundation were presented.

Commission members, retired Supreme Court Judge H.S. Yapa (chairman) and retired Court of Appeal Judge P.H.K. Kulatilaka took great interest in the presentation made by authors, Rohan Samarajiva and Malathy Knight John and Vanguard Services Managing Director, Lakshaman Bandaranayake.

Copies of the final Concept Paper were provided to the Commission, and supplementary material and contacts were also provided.

Presentation slides: NEWS:SL Presentation to the Presidential Commission of Inquiry