Striking a balance or walking a tightrope?

India’s recently passed Telecom Bill has been appreciated for its futuristic approach. However, it still leaves some issues open

On Christmas Eve, the Telecom Bill 2023 received the assent of President Droupadi Murmu, thereby making it into law. Now an Act impending its ongoing rule-making process, the new law for the mammoth telecommunications sector has been hailed in specific areas for fruitfully modernising various aspects of the industry. This, many have argued, has been achieved through easing access to spectrum in some cases, not regulating online data-based services in others, and upholding the ease of doing business in the sector.

However, legitimate concerns have been raised by others in terms of how much the Act has achieved—in terms of modernisation of licensing, censorship, interference in online services, and handling of personal user data. These concerns are driven by how clauses have been formulated in the Act, showcasing ambiguity in many cases and leaving considerable room open for interpretations and further clarity.

As the rule-making process for the new telecom law ensues, here is a look at four appreciations of the Act and four criticisms of it, too.

“The new Telecom Bill replaces ‘licence’ with ‘authorisation’ specifying that authorisation would be required to provide telecommunication services.”- Lt Gen (retd) Dr SP Kochhar, Director General, Cellular Operators Association of India

THE PROS

#1

Constitutionalising allocation of spectrum

One of the biggest factors that drew ubiquitous appreciation in the Telecom Act, 2023 is in constitutionalising the procedure for administrative allocation of spectrum for various broadcasting and communications services. The Act brings relief to the nascent satellite communications (satcom) sector by including it under the services for which spectrum allocation can be conducted.

An allocation process is beneficial in many ways since it enables the government to offer companies a spectrum-sharing approach to offer services related to broadcasting and communications. So far, the commonly used process for auctioning spectrum has seen private entities acquire exclusive usage of spectrum. This process, typically, leads to large entities with deep pockets acquiring spectrum—thereby getting the power to privately control services as well as the pricing involved in any entity being able to access spectrum. In ways, auctioning can leave out new entrants in the telecom industry, by actively discouraging them due to very high capex requirements.

Administrative allocation, particularly for satcom services, will be beneficial as it can bring forth a more open and competitive market. By enacting this into law, the Telecom Act, 2023 can potentially open the doors for a more competitive overall broadcasting and communications market—with more choices for consumers to follow.

#2

Leaving OTTs out of traditional telecom ambit, for now

One of the key debates leading up to the tabling of the Telecom Bill, 2023 was around whether internet-based, online and data-driven services, such as Meta’s WhatsApp, Netflix, Google’s YouTube and so on, would come under the ambit of the same set of regulations that govern traditional broadcasting and telecommunications services.

This concern has been somewhat alleviated as the Act foregoes explicit inclusion of Internet-based services, classified typically as over-the-top (OTT) services, from the legislation. Backing this up further while speaking with media, Union Telecommunications Minister Ashwini Vaishnaw indicated that OTTs will indeed not be regulated under the Telecom Act, and will be regulated by the Ministry of Electronics and Information Technology (MeitY) and legislations of the Information Technology Act.

The move is a welcome one for most online service providers since it helps them avoid similar restrictions, regulations for providing services, and prosecutions that are faced by traditional telecom operators. This is a crucial piece of legislative difference, particularly because OTTs are inherently and structurally different from any traditional telecom service—and industry advocates have long argued that they cannot be regulated in the same vein as traditional services.

#3

Regulatory stability for licensing, penalties and ease of business

The Telecom Act has replaced the much-criticised licensing procedures with a digitised authorisation process instead, for service providers looking to gain clearance for offering services. Penalties levied for breach of law have received a spate of clarifications, which too have been appreciated by many stakeholders of the industry. All of this, industry stakeholders have said, will benefit the sector.

“The Bill brings in the proportionality and nexus with the nature of the offence and will lead to a considered and rational approach to penalties. It is a progressive step designed to increase industry confidence and increase ease of doing business. It replaces ‘licence’ with ‘authorisation’ specifying that authorisation would be required to provide telecommunication services. This would simplify the overall regulatory landscape for telecom services,” said Lt Gen (retd) Dr SP Kochhar, Director General of the telecom industry body, Cellular Operators Association of India (COAI).

The Act also did not fiddle with any postulates of foreign direct investment (FDI) in the telecom sector—right now, 100% FDI is permitted in telecom, with 49% not requiring any government approval.

“Given that the Bill aims to protect consumers, it is important that the sensitive personal information of users is not misused in the data processing lifecycle.”- Shreya Suri, Partner, Induslaw

#4

Attempt at reducing telecom frauds

Finally, many stakeholders have stated that the Telecom Act’s move to cut down on telecom fraud is a largely positive one. This has been done by imposing a three-year imprisonment term and penalties of Rs 50 lakh for SIM card fraud. Any new user onboarding will further require biometric authentication of a user, which in turn could add significant accountability to the entire procedure of users gaining access to telecom services. Cloning of SIM cards, too, is now a civil, financial and criminal offence.

This will be crucial, as a multitude of online crimes and frauds have proliferated in the industry due to widespread access to connectivity. Regulating access by linking users to connections used by them could also boost traceability and tracking down of individuals in case of cyber complaints being filed against them.

THE CONS

#1

Uncertainty around the definition of OTT

While Vaishnaw has offered verbal clarification on OTTs not being included for regulation in the Telecom Act, the lack of concrete codification of this under the law has left wide room for ambiguity—and the potential for future modification in its overall interpretation. Such ambiguity in interpretation could mean that hypothetically, unless OTTs are codified firmly under law, they may at some point be regulated within the same ambit as traditional telecom services.

Industry stakeholders have expressed similar concerns emphasising the ambiguity surrounding the exclusion of OTT services from the legislation. Experts point out that the definition of ‘telecommunication service’ in the current version is broad enough to potentially include OTT services, raising the possibility of state and, particularly, DoT intervention in the domain of internet services, such as WhatsApp, Signal, and others.

#2

Government control and censorship

One of the biggest concerns about the Act is around government control and censorship of the freedom of speech and communications—without leaving any room for checks and balances. These are included in clauses 19(f) and 20(2) of the Telecom Act, 2023. These give the government control over “any message or class of messages, to or from any person or class of persons, to or from any telecommunication equipment or class of telecommunication equipment, or relating to a particular subject brought for transmission by, or transmitted or received by any telecommunication service or telecommunication network.”

Control over such a sweeping definition of communications services has been afforded to the Centre, which can now cite national security interests to crack down on any service. Industry experts have argued that this has been done without keeping in place any accountability for the government to take over services.

The Telecom Act, 2023 can potentially open the doors for a more competitive broadcasting and communications market—with more choices for consumers.

Clause 3(7) of the Act is the one that deals with this and leaves open a wide band of situations which the government may be able to use for its benefit—without users or companies having any apparent recourse against it.

#3

Questions around licensing and authorisation

While experts have argued that shifting from ‘licensing’ to ‘authorisation’ in the Telecom Act represents a significant change, closer examination suggests that the main difference lies in the digitisation of procedures.

Additionally, state bodies now have specific authorisation powers for telecom infrastructure deployment. However, aside from these aspects, the authorisation process closely resembles the previous licensing framework, raising questions about the actual regulatory differences on the ground.

#4

Concerns around personal privacy of users

The Act raises significant concerns regarding the use of user biometrics for safety measures, creating uncertainties about potential misuse, targeting, censorship, and overall data handling.

According to Shreya Suri, Partner at Induslaw, the involvement of multiple intermediaries in collecting and processing sensitive information poses challenges. “Whether they will have appropriate technical and organisational measures in place to ensure the security of the personal data being collected as well as meeting other compliance obligations under the Digital Personal Data Protection Act, 2023 is a question which needs to be evaluated before implementing this process,” she said.

Suri further emphasised the need to prevent the misuse of users’ sensitive personal information, aligning with the bill’s goal of consumer protection. “Given that one of the aims of this Bill is to protect consumers, it is important that such sensitive personal information of users is not misused by any entity in the data processing lifecycle.”

Regarding telecommunication identifiers, expected to identify users linked to biometric information in the verification process, Suri highlights uncertainty. It remains unclear if the central government’s allocation of these identifiers grants access to underlying information. Suri urges that any access should adhere strictly to circumstances and situations permitted under the DPDP Act.

By Vernika Awal