Quality improvement: a regulatory challenge?

Until recently, monopolistic provision of infrastructure services by public agencies and lack of their effective regulation invariably led, among other things, to lack of concern for quality of services. The relevant legislations did not cast any obligation on the service providers to ensure quality. Despite growing possibilities of competition for improving delivery of infrastructure services, the market continues, and would continue, to remain monopolistic in nature. This has made it necessary to protect consumer interests, mitigate transaction costs, and more importantly, to ensure that services provided were of acceptable quality. Accordingly, autonomous regulators came into existence in the infrastructure sector in India. And, for the first time, consumer interests were brought to the centre stage, with regulatory legislations enjoining upon the regulators to ensure quality. For instance, the TRAI Act 1997 as well as Orissa Electricity Reform Act 1995 enjoined upon the respective regulators to regulate the quality of infrastructure services. These are in line with the international practices. In the UK, for instance, the electricity regulator protects consumer interests on prices, security of supply, and quality of service. However, we have not gone to the same extent in protecting consumer interests and ensuring quality as in the UK. There every utility is required to declare, in consultation with the regulator, the quality of services to be guaranteed to the consumer and automatically pay compensation when the quality of service is below the guaranteed level. In Orissa, the electricity regulator has set the service standards required to be provided to a consumer by a distribution utility. There are provisions for imposition of penalties by the regulator if the conditions of supply relating to quality are violated, and the penalty prescribed is very high. A time limit for remedial action has also been set for such individual service, and a procedure for grievance redressal within a utility as well as outside has been prescribed. While these initiatives in Orissa are in line with similar practices in the UK, a close examination would show that there are areas where further refinement is required. First, an aggrieved consumer in Orissa has to approach various levels within a utility for redressal and this need to be streamlined. Otherwise, the process of grievance redressal would be long, expensive, and cumbersome. And, we need to watch to what extent the time limits are adhered to. Second, a consumer cannot get automatic compensation from a distribution licensee for failure to adhere to the standards of service set except in the case of billing errors by way of waiver of interest charges. Unfortunately, in the telecom sector, there has not been much progress in this direction except the fact that the regulator had prepared a quality consultation paper (1998), which had proposed certain benchmarks on technical parameters, consumer facility, quality of connection, and grades of services. However, the proposal has certain deficiencies: the benchmarks? parameters are too many to be monitored for various services, fines for non-performance are relatively small, there is no criteria for measuring standards, and information requirements for assessment of standards are not addressed. What is worse is that TRAI has proceeded with tariff rebalancing resulting in tariff increase without laying down quality standards. It is thus important for TRAI to introduce quality of services without further delay, perhaps with a few performance parameters, provide sufficient deterrence for continued defaults, if proved, address viability issues, and provide a quick dispute resolution mechanisms. What the regulator in India should explore is whether in terms of the given mandate, they could guarantee the levels of services backed up by automatic penalties on the lines being provided in UK.