Draft Telecom Bill likely to cover OTT licensing

Draft telecom bill to cover OTT licensing
Draft telecom bill to cover OTT licensing

Indian Market
by 5paisa Research Team Last Updated: 2022-09-23T21:31:59+05:30

In the last few years, the segments like IT, telecom and entertainment have converged like never before. Many of these hardware and software across these segments is becoming a lot more compatible. Platforms like WhatsApp, Zoom, Netflix and Telegram have change the way we communicate, we exchange message and the way we get entertained. As much as there is need for more regulation for orderly growth, there is also the need for creating and nurturing an ecosystem that nurtures and encourages innovation and freedom.


What the new Draft Telecom Bill entails?


The latest draft of “The Indian Telecommunication Act, 2022”, is an attempt in this direction and presupposes several significant changes to the industry. Here are the highlights. 


    1) Broadly, the draft bill looks to permit waiver of dues and exit for telecom operators. In addition, it also looks at bringing OTT (over the top) platforms like WhatsApp, Zoom, Netflix, Telegram and Amazon Prime under the ambit of telecom services, needing license to operate. This also makes them susceptible to interception and bans.

    2) Structurally, the proposed Draft Telecom Bill would replace the Indian Telegraph Act, 1885, the Wireless Telegraphy Act, 1933 and the Telegraph Wires (Unlawful Possession) Act, 1950. These are the laws that currently govern the telecom sector.

    3) The purpose of the Draft Telecom Bill would be to consolidate all the existing laws governing the telecom sector as well as support services at the back end and the user services at the front end. 

    4) The draft bill will also look to simplify the framework for mergers, demergers and acquisitions, under the Companies Act, 2013. Even licensees under insolvency can continue to operate as long as there is no default. Surrender of telecom license will also result in part refund of fees paid. 

    5) An important aspect is that the definition of “telecommunication services" has been expanded to encompass broadcasting services, e-mail, video, data communication, satellite-based communication, Internet-based communication and over-the-top (OTT) platform services, with each entity needing a license to operate.

    6) An important aspect of the Draft Telecom Bill 2022 is that in case of public emergency and interest of the sovereignty, integrity or security of India; centre and states have the powers to direct to block messages, intercept messages. This is likely to become a slightly controversial provision, since it could encroach on freedom of speech.

    7) The Draft Telecom Bill includes some interesting aspects like establishing identity in case of cyber frauds, giving users protection from calls and unsolicited messages etc. This could reduce the amount of spamming and privacy intrusion that goes on now.

    8) The Draft Telecom Bills contains a provision wherein ownership of spectrum remains with government and the value of spectrum cannot be sold by creditors under the Insolvency and Bankruptcy Code (IBC). Government can take back spectrum if the telecom operator has not paid dues. This could delay telecom dispute resolution.

    9) Regulating OTT is likely to be more controversial. Most of the people prefer keeping OTT services under the purview of IT Act rather than bring it under the Telecom Act, as that would increase compliance burden and costs. Unchecked surveillance could become a controversial issue in the coming years.

    10) Last, but not the least, the Draft Telecom Bill has substantially diluted the powers of the Telecom Regulatory Authority of India (TRAI). Going ahead, the government does not need to be authorized by the TRAI to issue licenses. 


Clearly, the Draft Telecom Bill is essential in that it addresses the changing nature of the internet platform and the thinner dividing lines between IT, telecom and entertainment. Hopefully, the small irritants can be easily ironed out.


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