M.S. VERMA AGE 64 Verma is a post-graduate in philosophy from Patna University. An SBI-lifer, he retired from the bank as its Chairman. He was appointed Chairman of TRAI in March 2000, after the previous regulator-Justice S.S. Sodhi-and his team were sacked. He has taken his time to settle in, but industry says he now appears to understand the business of telecommunications. BRICKBATS FOR TRAI » The interconnect and Consumer Access Code regimes are still not in place. BSNL and MTNL's 35.4 million subscribers can't access long distance services on offer from private players » BSNL continues to operate without a licence » TRAI has dragged its feet on tariff-rebalancing, preferring to allow market forces to set the terms » Many private telecom companies claim TRAI is inaccessible.

N. RANGACHARY AGE: 64 Rangachary holds a diploma in commerce. He's a fellow member of the institutes of Chartered Accountants, Costs and Works Accounts and Company Secretaries. Selected to Indian Revenue Service in 1960, he retired as the Chairman of the Central Board of Direct Taxes in 1996 and has been Chairman of IRDA since. Industry appreciates his transparent style. BOUQUETS FOR IRDA » IRDA has ensured that despite the monolithic presence of the state-owned insurance companies, the field has remained more or less level for all companies » Rangachary, personally, is considered a transparent and accessible regulator by industry » IRDA involves all concerned parties in key decisions » IRDA studied insurance regulations in six countries before evolving ones for the Indian market

Regulators are a liberalising economy's superheroes. They bust monopolies, police regulations, and ensure that the interests of wobbly-legged new entrants aren't threatened-through foul means-by erstwhile monoliths. Telecom Regulatory Authority of India (TRAI) Chairman Maya Shanker Verma and Insurance Regulatory Development Authority Chairman Nambi Rangachary make for unlikely superheroes. One, they're both 64. Two, neither looks a superhero. Still, the government's mandate to both is to be just that. Taking comments from their respective industries at face value N. 'the riot' Rangachary seems to have had no problem doing so. M.S. 'mum's the word' Verma, not so. Sampling: ''IRDA has been very forward-looking and pragmatic in opening up the insurance sector,'' says Shikha Sharma, the Managing Director of ICICI Prudential Life Company ''There is a perception of inconsistency in the decisions of the telecom regulator,'' says Rajeev Chandrasekhar, the CEO of BPL Innovision.

Insurance is insurance, and telecom, well, telecom. As Chandrasekhar adds, ''The insurance sector is always going to be less controversial because there is almost a free licensing regime there.'' Still, there are enough similarities to warrant a comparison-of the industries, and of the men.

Neither telecom nor insurance has even scratched the surface of the great Indian marketplace: the proportion of total insurance premium to GDP in India is a mere 1.9 per cent; it is 3.88 per cent in Malaysia and 16.54 per cent in South Africa. India's teledensity (number of phones per 100 people) is 4 per cent. The global average is 32 (India figures 151 among 196 countries, according to a International Telecommunication Union study on teledensity).

Rangachary and Verma are 64, their terms come to an end in 2003, and both retired from important posts before becoming regulators. Yet, the insurance industry has only praise for the taxman-turned-regulator and the telecom industry (or most part of it) has no kind words for the banker-turned-regulator.

Whiter Than White

These days, IRDA's office at the towering glass-and-chrome Jeevan Bharti building in New Delhi's Connaught Place district bears a deserted look. Rangachary is one of the few people left here; the rest have moved to Hyderabad where IRDA will soon be based. The regulator's piety-his day begins at half past three, and he spends four hours, between five and nine, in his prayer room-can't be lost on visitors: little statuettes-Ganesha, the elephant god is a favourite-adorn his room. ''I am just doing my job,'' stresses Rangachary, dressed, as he usually is, in spotless white. ''I've tried to do the maximum I could for the sector.''

"There is a general perception of inconsistency in the decisions of the telecom regulator" R. Chandrasekhar, CEO, BPL Innovision

"The umbilical cord between DoT and BSNL doesn't seem to have been broken" T.V. Ramachandran, Director-General, COAI

"IRDA has been very forward-looking and pragmatic in opening up the insurance sector" Shikha Sharma, MD, ICICI Prudential

"Rangachary is an open, self-confident person who doesn't come with any past baggage" Deepak Satwalekar, CEO, HDFC Standard Life

Industry appreciates that. ''Rangachary is an open, self-confident person who doesn't come with any baggage,'' points out Deepak Satwalekar, the CEO of HDFC Standard Life Insurance. ''That's helped the sector.'' Adds Dalip Verma, the Managing Director of Tata aig General Insurance, ''I've worked with regulators in the UK and Australia; my experiences there weren't as pleasant as they have been here.'' In Australia, Verma once had to wait three months for an appointment with the regulator. In India, IRDA's executive council comprises three in-house members and seven from the industry, and meets every month.

The man he is helps; enough has been written about Rangachary's habit of eating only home-cooked food, and his habit of travelling by train when not on work. ''The regulator is very transparent,'' says Anuroop 'Tony' Singh, the Chief Executive of Max New York Life, referring to the transparent manner in which IRDA issued licences.

Rangachary has become the recipient of such praise by simply doing things by the book, a desirable trait in the Indian Revenue Service, which he joined in 1960. That obsession with rectitude translates into a clear definition of IRDA's agenda. Lobbying for an increase in the stake foreign insurance companies can have in their Indian ventures from 26 per cent to 49 per cent, for instance, is not on it.

There's still work to be one-issues related to superannuation schemes and income tax rebates, notably-but most insurance pros are worried about life after Rangachary. ''There is some concern over what could happen after his term,'' admits Satwalekar. Still, the man has made his successor's job that much easier.

In The Eye Of The Storm

Ask any of the telcos about Verma and the most charitable comment you'd probably hear is ''he's more conversant with telecom now''.

Some executives point to his background-Verma worked at State Bank of India for 40 years and retired as its Chairman. ''He comes from a monopoly; it's no surprise that his policies suit the (erstwhile) monopoly (in telecom),'' says one. TRAI's legacy apart, if Verma can be faulted for something, though, it has been his approach to the entire issue of wireless-in-local-loop, which allows basic telephony companies to offer cellular services.

Then, there's the issue of BSNL and MTNL dragging feet over a Consumer Access Code for long-distance telephony companies. Thus, six months after launch, IndiaOne's domestic long-distance service can't be accessed by BSNL and MTNL subscribers.

The ability of one carrier to connect to another, interconnect, is another issue. ''A cost-based non-discriminatory interconnect regime is the basis of robust competition in telecom,'' explains Virat Bhatia, the Country Manager and Managing Director of AT&T's Indian operations. ''This remains an elusive target as far as India is concerned.''

Verma isn't to blame; he is up against a government that seems keen to keep its multiple roles intact in the telecommunications sector. Execs move freely across the Department of Telecommunications (DOT), TRAI, and bsnl. Narendra Sharma was first with DOT, moved to TRAI, and then to MTNL-from licensor to regulator to operator. And ''the umbilical cord between DOT and BSNL hasn't been broken,'' rues T.V. Ramachandran of the Cellular Operators Association of India. But don't apportion all the blame to Verma. ''The government's multiple roles makes regulation in telecom more contentious,'' admits Bhatia of AT&T.

Verma, however, has to admit that TRAI under him has not followed up on the previous regulator's efforts to rebalance tariffs, an effort aimed at ensuring that operators used the economic-cost-plus model while arriving at rates. Nor has he continued the practice of preparing consultation papers or that of receiving and circulating comments. ''We were the first organisation in India to bring transparency to the regulatory process,'' says former TRAI Chairman S.S. Sodhi.

Still, Satwalekar of HDFC Standard Life believes the telecom regulator has had to cope with a shifting framework, something IRDA hasn't had to do. ''If that happened in our industry, it would have been (equally) difficult.'' Maybe, the telecom industry should wait for Verma to keep his promises about interconnectivity before passing its judgment.

"CONTROLLING INCUMBENTS IS THE KEY"

We're doing our job, the much-maligned TRAI's Chairman M.S. Verma tells Business Today. The ability of one telecom network to transfer calls to another, interconnection, is still a problem in India. We don't even have a policy on this. Why? The biggest role in interconnection is that of the incumbent. The incumbent, the world over, does not want to facilitate interconnection. Since it can't say no, it creates hurdles. So controlling an incumbent is the biggest problem facing the regulator. We are going to ask not just the incumbent, but any operator with a marketshare higher than 30 per cent to publish the terms and conditions of interconnect. This is the reference interconnect offer (RIO), a sort of menu card. Once an RIO is prepared, it will have to be approved by TRAI. After that, it will be made public. Besides, TRAI will bring out a detailed framework on interconnection. This will be done in the next 2-3 months time and will be the final word on interconnect. Is the Indian telecom market a level playing field? The existing agreements don't ensure a level playing field. For instance, each of the operators has got a licence. But BSNL hasn't. We have told BSNL that it will need a licence-geographically, and for each service. When we look at costs, there is a possibility that an operator may subsidise one area with (revenues from) a profit-making area. If that's so, then this facility should be available to all operators. Hopefully, BSNL will start maintaining accounts for each geography and each service. I don't know when this will happen, but hopefully it will. Cellular operators feel you were biased against them in the limited-mobility issue... Our recommendation was that the advantages of technology should not be denied to the public. But we also said that will (wireless in local loop) should not pose an undue threat to cellular companies. We wanted to give the fixed-line user the advantage of mobility. However, this mobility has to be limited within a short-distance calling area. Since we thought that it might impact the cellular operators we suggested that their revenue sharing-which was at that time 17 per cent -be brought down to 12 per cent. Why does the Department of Telecom reject your recommendations so often? The TRAI Act says that the government will seek our recommendations. And they may refer them back to us for review once. In the last one year, the government has accepted 100 per cent of what we have said.

"I HAVE JUST BEEN DOING MY JOB"

Industry's singing his praises but IRDA Chairman N. Rangachary strikes a self-effacing note in his meeting with Business Today. What has been your biggest achievement as the Chairman of the IRDA? I have no achievements. I have just been doing my job. Do you think the IRDA is constrained in any way by the Insurance Act? It lacks no power. At best, I can say that as per the Insurance Act of 1938, when it comes to disciplining the industry, the quantum of penalty levied is very low. A maximum penalty of Rs 500 per day may be too little. We have asked the Law Commission to revise the Act. Do you think there is level-playing field in the insurance sector? Some players say that there are still a few things in LIC's advantage. Consumers, for instance, can avail Income Tax exemptions only on housing loans taken from LIC. We have already taken up this matter with the Central Board of Direct Taxes (CBDT). They have accepted our view and we are expecting an amendment shortly. But these are minor glitches. Overall, the playing field is quite level. Insurance companies are of the view that the stake of the foreign investors should be revised upwards because some Indian partners don't have the financial muscle to pump in more money into the business... If Indian companies don't have the financial muscle, they should never have got into the business. We had clearly asked them to give us their business plan for the next five years. Besides, it's the government's prerogrative to raise the limit for foreign investment, not mine. What's prohibiting the growth of health insurance in India? The lack of proper healthcare infrastructure makes it very difficult for a purely 100 per cent health insurance company to be able to tap the Indian market. Besides, health insurers have come under pressure the world over. Therefore, we have encouraged life insurance companies to sell products with riders on health, such as a critical illness cover. Are insurance companies meeting their rural obligations? Everyone has met their obligations. Some life insurance companies have asked us to redefine the rural sector. Our definition says that a rural area is one where 75 per cent of the male population is engaged in agriculture. Companies say it is very difficult to find such locations. We have asked IIM-Bangalore to undertake a study and come out with a report on this. However, during the last financial year, every company met its rural obligations.