Key policy interventions and technological advancements have made India the second-largest telecom market in the world. The sector is one of the highest contributors to India’s GDP. In the last few years, the government has allowed 100% FDI in the sector, largely deregulated BPOs and call centres, enabled in-flight Wi-Fi, and allowed deferred payments from telecom operators due to their strained financial conditions. Now, the Department of Telecom has released the draft Indian Telecommunication Bill, 2022 — aimed at reforming existing telecom laws and regulations, and making them “future ready” — for public comment.
Since the 19th century, the central construct of these laws has been two-fold: first, delivery of telecom service (a dynamic concept in itself) is the sovereign’s “exclusive privilege”; and second, this sovereign privilege can be delegated to private companies. The government delegates this privilege to private companies by granting them telecom licenses and imposing terms and conditions on them. At present, these terms and conditions range from entity and data localisation, revenue sharing in the form of license fees, security vetting of foreign executives, to restrictions on deployment of technologies and equipment. This makes telecom one of the most regulated sectors in India.
The government has indicated that reforms in those license conditions are separately being worked upon. The new Bill lays down a broad framework addressing some issues on principle, leaving other substantive aspects to be formulated by the government once the principal framework is in place. From a legal perspective, the government can achieve more under a Bill than under rules or license conditions, as restrictions on privacy rights, or delving into principles laid down by the Supreme Court are more suited in a principal legislation.
Clarity on Spectrum Assignment: The Bill reaffirms the government’s authority to assign spectrum, with or without auction, and declares common good and access to telecom services as the objective for spectrum assignment. This may put to rest the old debate on whether spectrum assignment should maximise government’s revenue or enhance access to telecom services, and enable smoother and optimum assignment of spectrum (e.g., administrative assignment of backhaul spectrum).
Easing criminal penalties: The Bill removes several redundant penalties (e.g., trespass in telegraph office); imposes a quantum of penalties based on severity; and introduces settlement of offences by payment of fines, and voluntary undertaking. This would augment ease of doing business and considerably reduce the threat of criminal prosecution for operational issues faced by telecom operators. Provisions on notification (not approval) for M&A deals, and having statutory basis and guidelines for Right of Way while laying down infrastructure would further enable ease of doing business in the sector.
Licensing Internet-based apps: However, the Bill requires OTT communication services – which are essentially Internet-based apps/ software – to obtain telecom licenses and thereby bring them under the telecom framework. Given the dynamic and multifaceted nature of Internet-based services, subjecting them to a telecom licensing regime with criminal penalties could stifle innovation or even isolate the Indian market (for e.g., an interactive gaming service may choose to stop offering the interactive feature, or the game itself in India due to threat of criminal penalties for not having a license).
Wide expanse of shutdown and surveillance powers: The Bill allows the government to direct suspension of transmission of messages or provision of telecom networks or services. These powers are much wider than the currently existing framework on internet shutdowns and interception, and include directions for interception and disclosure of data, and suspension/ surveillance of messages “relating to any particular subject”. The latter is an onerous obligation on telecom operators, and risks mass surveillance of the people.
Coordination with other agencies: The Bill dilutes TRAI’s powers, granting the government the power to deal with unwanted ads and promotional messages. It also requires broadcasting licenses to be granted under the same telecom framework, thus far handled by MIB. TRAI also gets the power to decide on predatory pricing, thus far with CCI, whereas several provisions overlap with MeitY’s powers under the Information Technology Act. While streamlining of multiple provisions proves helpful for the industry, relevant inter-departmental consultations should be concluded so as to remove overlap in laws, and achieve the Government’s objectives without internal constraints. This is particularly important as telecom operators are also subject to other frameworks in the pipeline by other agencies, such as the Digital India and Data Protection Bills.
This article was originally published in The Indian Express on 15 October 2022 Co-written by: Shahana Chatterji, Partner; Shashank Mishra, Principal Associate. Click here for original article
Contributed by: Shahana Chatterji, Partner; Shashank Mishra, Principal Associate
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