Why the new draft telecom bill has set alarm bells ringing

telecom

Indian Market
by 5paisa Research Team Last Updated: 2022-11-02T11:04:55+05:30

Even as telecom companies in India begin rolling out 5G services across the country, the government is preparing for the next set of policy changes for the industry.

In October, the telecom ministry released the draft Indian Telecommunication Bill, 2022 — to reform the existing telecom laws and regulations, and make them 'future ready' — for public comment.

This bill, the government says, is aimed at transforming the second-largest telecom market in the world. The Indian telecom sector may have grown exponentially over the past couple of decades, but it remains one of the most regulated sectors in the economy.

The new bill will impact all the major private-sector telecom companies—Bharti Airtel, Reliance Jio and Vodafone Idea—and all the prominent internet service providers in the country. 

With 117 crore subscribers, India is the world’s second-largest telecommunication ecosystem. The sector employs more than 4 million people and contributes about 8% of the country’s GDP.

The reasons for this stringent regulation of the telecom and communication sector are historical. You see, ever since the British introduced communication services in what was then British India, the way the laws were constructed had been two-fold: first, delivery of telecom service was to be the exclusive privilege of the government; and second, this privilege could be delegated to private companies, willing to adhere to all the rules and regulation imposed on them.

The government ensures this by granting private telecom companies and internet service providers telecom licenses and imposing terms and conditions which presently relate to issues like entity and data localisation, revenue sharing in the form of license fees, security vetting of foreign executives, and restrictions on deployment of technologies and equipment.

While a legislation reforming these license conditions is reportedly being worked upon separately, the new bill basically seeks to put in place a broad framework addressing some issues on principle, even as it leaves other substantive issues to be formulated by the government once the principal framework is in place.

The new telecom bill comes even as the government, in September, unveiled several sectoral reforms that allowed deferred payment of statutory dues and redefined adjusted gross revenue among other major measures

Some of the satcom-related reforms include mounting of VSAT on any mobile vehicle, self-certification of antennas, and simplified NOCC process with a single-step procedure. The department also delicensed the 865-868 MHz spectrum band for Internet of Things and machine-to-machine, 433 - 434.7MHz and 9-30MHz for wireless charging. Delicensed spectrum does not need to be auctioned, and can be allocated administratively, for a fee.

The draft bill is currently with a parliamentary committee before it is tabled in the coming winter session of parliament. Here are the key issues the new telecom bill seeks to address:

Assignment of spectrum

As The Indian Express newspaper notes, the new 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 effectively means that going forward there will be no doubt on who owns the spectrum and who should profit from it. In other words, revenue and profit maximisation will be the norm in all future spectrum auctions, if the government chooses to go in for one. This was the crux of the issue that led up to the controversy around the so-called 2G scam.

Shutdown and surveillance powers

The new telecom bill provides expansive powers to the central government to shut down or inrercept internet and telecom services, much more than they already have. This has already become a bone of contention as it may eventually lead to mass surveillance and could also put onerous responsibilities on telecom companies. The government can, as per the new bill, direct interception and disclosure of data, and suspension/ surveillance of messages “relating to any particular subject”.

Licensing OTT services

The new bill requires OTT services like Netflix, Amazon Prime, Disney Hotstar, Sony LIV and Zee 5, just to name a handful, to obtain telecom licenses and thereby bring them under the telecom framework.

This stipulation in the bill has already generated much debate as it would effectively mean that the government will effectively be in a position to regulate content on these OTT services, which have mostly been outside the purview of the state. Experts say that if these OTT services or even online gaming apps are subjected to criminal penalties, they may not be able to offer avant garde content and take creative liberties that may be deemed offensive.

Licensing telecom networks

As news website The Print notes, the bill provides that a license will be required for establishing telecommunication network, and registration will be required for providing telecommunication infrastructure. However, as per the definition, a telecommunication network could comprise solely of telecommunication infrastructure.

Penalties

Having said that, the bill does seek to ease and rationalise criminal penalties and aims to remove redundancies. If done well, this will significantly make it easier for telecom companies to do business as they may now be allowed to voluntarily pay fines. Moreover, the new rules are also likely to help ease mergers and acquisitions, experts say.

Dilution of TRAI’s powers

Another facet of the new bill that is causing much consternation is the fact that it has sought to dilute the powers of the Telecom Regulatory Authority of India (TRAI), as it seeks to give the government the power to deal with unwanted advertisements and promotional messages. The telecom regulator will however get to adjudicate on the issue of predatory pricing, which has henceforth been the domain of the Competition Commission of India (CCI).

“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 Bill,” Shahana Chatterji, partner and Shashank Mishra, principal at Shardul Amarchand Mangaldas & Co. note in their piece in The Indian Express.  

Opposition’s concerns

Predictably, the opposition is up in arms about the dilution of the TRAI’s power when it comes to licensing. Telecom minister Ashwini Vaishnaw has, however, said his ministry has addressed TRAI’s fears over the dilution of its powers in the telecom bill.

"The issues with the Telecom Regulatory Authority of India (Trai) have now been resolved...In the draft (telecom Bill), we have focused on user protection, which is central to our policy making," Vaishnaw said, adding that the department is actively consulting stakeholders.

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