What the draft telecom policy intends to regulate

What is the new Telecom Bill all about?

The Centre’s new Telecom Bill will replace replace the Indian Telegraph Act which has been regulating the telecommunications space since 1885. The Bill is part of four laws that the government wants to pass in Parliament to regulate the dynamic digital tech space. So in many ways, this Bill is an addition to past laws and lends clarity on regulations in the telecom space. The Bill, which is in its draft stage and will likely change during the consultation process, is quite ambitious in its scope.

How different is this Bill in comparison to the previous laws?

There are many proposed changes from the Telegraph Act, which could have implications for the industry. For instance, the Bill has explicitly introduced the word “telecommunication services” in its draft, to refer to telecom networks in the current Act. By providing a definition of telecommunications services, the Bill has also clarified what type of services and technologies will fall under its regulatory ambit. While the Telegraph Act defines any message flowing on its telecom network as falling under its purview, the new Bill specifies the kind of services and technologies which will be considered. This includes broadcasting, voice, and data, as well as internet communication services such as WhatsApp and Zoom, electronic mail. 

What else is new in the proposed Bill?

The Bill also puts into law how the government will deal with stressed telecom assets, and has said the government will remain the custodian of spectrum assets owned by a company if it falls into bankruptcy. Currently, insolvency cases under IBC have not had much success because there was no clarity on whether the spectrum owned by the defaulting operator belongs to the Centre or whether banks can take control of it. This clarity will avoid litigation that the Centre encountered in insolvency cases such as R-Com. The Bill also formally introduces a clause that will allow the government to provide waivers to operators who are unable to pay their dues to the government. 

Does the Bill provide clarity on spectrum issues?

At present the government provides spectrum to telecom service providers on an ad hoc basis, which has led the courts to intervene (such as the 2G case) -- the Centre clearly wants to take back the power in spectrum management and the Bill has chalked out rules on how spectrum will be managed.

The draft rules allow for spectrum to be assigned administratively,. Here the government seems to looking to maximise utilisation of spectrum instead of revenue.

How is the industry responding to the law?

The Bill is quite expansive in nature and the industry is still deliberating upon its implications. However, there has been criticism on some parts of the Bill. The Bill also proposes to dilute the powers of the regulator the Telecom Regulatory Authority of India (TRAI).

BIF, an industry body, has said that the whittling down of TRAI’s powers could push the industry back into the pre-1997 era (before the creation of TRAI). Civil liberty organisations and certain tech companies have also expressed concerns about the inclusion of OTT services into the regulatory ambit for telecommunications. The government still needs to clarify on which part of the internet communication space falls within the DoT’s purview. More clarity will emerge during the public consultation process. 

What is the OTT controversy?

As mentioned before, the Centre has clarified that communication services such as electronic mail or over-the-top internet communication services will be regulated under the new telecom Bill. This can have major implications, from being subjected to licensing just like a typical operator, to the dissolution of user anonymity and user privacy while utilising these services.

Clauses such as messages being potentially intercepted at the behest of the state could also have implications on privacy and threaten the end-to-end encryption on many of these platforms such as WhatsApp which does not even allow the company to read user messages. 

The Centre will have to appraise the extent to which they can regulate internet communication services, as many experts believe licensing or even disclosure of user identity will be challenging for tech companies.

For instance, in order to impose a license fee, the government will have to determine the exact revenue accrued from communication services which for apps such as WhatsApp is essentially free, since it earns revenue from its partnerships with businesses. 

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