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The Editorial Column is authored by Vanshika Samir and Dhiren Gupta, Associate Editor and Assistant Editor respectively, at the RGNUL Financial and Mercantile Law Review.
1. INTRODUCTION
With an estimated 1.17 billion subscribers and some key policy interventions that were made recently, India has become the second-largest telecom market in the world. This sector is one of the largest contributors to the Indian GDP and in the past few years, 100% Foreign direct investment (“FDI”) was approved for it. The government even allowed deferred payments from telecom companies due to their strained financial conditions. In the midst of the slew of developments in the sector, the Government has released the Draft Indian Telecommunication Bill, 2022 now to reform the existing telecom laws and regulations.
The areas in which the bill aims to bring changes are spectrum assignment, licensing internet-based apps (primarily Over-the-Top platforms (“OTTs”) and Games), dilution of the Telecom Regulatory Authority of India’s (“TRAI”) role and coordination with other agencies, easing criminal penalties, and giving the government a wide expanse of shutdown and surveillance powers. The Indian Telegraph Act, 1885 serves as the foundation for the current regulatory structure for the telecommunications industry. Since the “telegraph” era, telecommunication’s nature, methods of use, and technologies have all drastically changed. The government has also launched several schemes over the last eight years to help the telecommunications industry expand. These steps include expediting the Standing Advisory Committee on Radio Frequency Allocation (“SACFA”) clearance process for mobile towers, rationalizing the definition of Adjusted Gross Revenue (“AGR”), rationalizing bank guarantees and interest rates through the automated route, delicensing of frequency bands, etc. The Bill will replace the existing legal framework governing telecommunication in India, comprising of the Indian Telegraph Act, 1885, the Wireless Telegraphy Act, 1933, and the Telegraph Wires (Unlawful Possession) Act, 1950.
The article shall discuss how spectrum management and licensing internet-based apps (Primarily OTTs) operated in India and what were the issues faced by them, along with the reforms that can be brought by this Bill.
2. SPECTRUM MANAGEMENT
Spectrum (also sometimes referred to as airwaves or frequencies) is a scarce natural resource. Earlier, it was thought that spectrum was the property of the government, but in 1995, the Supreme Court held that these airwaves or frequencies are public property and should be used by a public authority in the interest of the people and to prevent the invasion of their rights. As a result, just like other scarce public resources, its distribution must be effective to safeguard the public’s interests by eliminating waste and boosting public utility. Given this context, it would appear useful to have a general understanding of the problems associated with the distribution of telecom spectrum in India as well as the regulatory implications of such distributions.
The Department of Telecommunications (“DoT”) of the Government of India has the duty to assign spectrum and see for the best interest of the people and ensure better access to telecommunication services. There may be a possibility for the notification of the National Frequency Allocation Plan (“NFAP”) for the usage and allocation of spectrum. The primary mode through which the government assigns spectrum is the auction, though an exception can be provided if there is an administrative process for governmental functions or in the interest of the public. For cellular services, DoT opted to have two suppliers per area, and for normal services, one other operator per area in addition to DoT.
Spectrum management issues arise in developing nations like India due to:
a) a lack of alternative wired access network infrastructure for broadband access;
b) a relatively high mobile phone penetration rate and the resulting demand for wireless broadband; and
c) an insufficient spectrum allocation for mobile services.
The complexity of spectrum management makes it incumbent to deploy frameworks of analysis that go beyond simplistic considerations of economic efficiency, However, this Bill is a positive step towards the promotion of optimal use of the available spectrum. It aims to establish a monitoring and enforcement mechanism to ensure adherence to terms and conditions of spectrum usage and enable interference-free use of the assigned spectrum. The Bill provides a supportive framework for the Optimal utilization of the spectrum. These include the subsequent clauses:
a) Technology agnostic use: A spectrum assignee may introduce new technologies inside its spectrum in order to facilitate the use of the spectrum in a liberalized and technologically neutral way.
b) Re-farming and re-purposing: Rearranging the frequency range is frequently necessary to enable the repurposing of any frequency band for new usage. As a result, the Bill calls for re-farming and frequency range harmonization.
c) Sharing, trading, leasing, and surrender: The bill permits sharing, trading, leasing, and surrender of allotted spectrum under specified terms and conditions in order to facilitate effective spectrum usage.
d) Returning unused spectrum: The Bill provides a method for returning unused spectrum to ensure effective usage of spectrum.
3. OTT PLATFORMS AND THEIR REGULATION
One of the key features of the Bill is that it proposes to regulate OTT platforms and bring them under the ambit of telecom services. The key rationale behind such a change was to ensure that voice, video, and other data-related services provided by OTT platforms like WhatsApp, Google Meet, etc. were regulated on an equal footing like that of other telecom services.
The tech community opposes the bill. Their contention is based on the ground that such rules may lead to regulations that in the long run may act as a hurdle and stifle innovation and possible advancements in technology. This is so because these platforms are already regulated by provisions under various laws. The telcos on the other hand support such amendments as they would ensure that the OTT platforms which provide video, audio related services are brought under the same licensing and regulatory regime as applicable in the telecom industry. In its proposal, the government stated that if it is in the “public interest,” it may exempt entities from the obligation of acquiring a license, registration, and authorization. As per section 24 of the Bill, the central and state governments, as well as authorized officials, may intercept information sent or received over telecommunication services in the interest of the sovereignty, integrity, or security of India, friendly relations with foreign states, public order, or preventing incitement to an offense. Additionally, the draft Bill gives the Union government the authority to grant relief to any licensee in the event of extraordinary circumstances, such as “financial stress, consumer interest, maintaining competition in the sector, or reliability and continued supply of telecommunication services,” by deferring, converting into equity, waiving off, or doing so.
While some form of regulation for OTT services, such as requiring non-discrimination, privacy standards, or regulation to protect revenues, or offer emergency services, is not unusual, licensing for software is essentially unheard of, and the proposal has already encountered a great deal of opposition. Such regulation may pose a grave challenge to innovation introduced by these platforms. Additionally, the digital economy as well as user privacy may also be challenged due to the proposed regulations. The key thing to keep in mind is that there has been a long history of disagreements in India around revenue-sharing commitments, audit standards, and allowed activities.
4. CONCLUSION
Recently, the government has legalized in-flight Wi-Fi, enabled 100% FDI in the sector, and deregulated BPOs and call centers to a considerable extent. The proposed Telecommunication Bill, 2022 aims to modernize the sector, and consequential amendments have been introduced to the current telecom rules and regulations. Several changes have been introduced. The aforementioned article discussed two of the major changes introduced- provisions related to spectrum and OTT platforms. The bill called for public comments on the draft. Several technological changes and innovations continue to happen in the telecom sector. What has to be seen now is to what extent and in what direction the draft bill with these relevant changes affects the dynamic sector as it continues to develop over time.
When putting forth the Draft Bill, the DoT took into account laws from countries with relatively uniform telecom regulations, such as the UK (and the EU), Australia, and Singapore, as well as laws from countries with more dispersed telecom regulations, such as Japan and the US. The essential choice to be made was whether to establish a broad power to license and regulate diverse telecommunications services, as is the case in Singapore, or to naturally identify that certain sorts of activity would simply not be controlled. By reserving some sort of an exclusive privilege to offer telecommunications services, set up and run telecommunications networks and infrastructure, and use and assign spectrum, the DoT has categorically chosen the former and built on the strategy under the Telegraph Laws.
The Indian Telecommunications Bill, 2022 is a brave and encouraging move towards A self-reliant India in the telecom industry, even though there are some inherent ambiguities in the licensing system and most of the operational parts of the law would be under the rules to be established So, to secure the desired outcome, however, some changes may be incorporated in the Draft Bill. For example, there is a need for a data protection clause in the Bill as the same in the current form can prove to be a challenge for the user privacy associated with the OTT platforms. The users may be exposed to some vulnerabilities in their privacy if such issues are not addressed properly. There is also a need to trace the first originator of messages and decryption under the recently notified Intermediary Guidelines and the obligations. The same needs to be addressed in the draft bill.