The Ministry of Communications (“MoC”) had published the draft Indian Telecommunication Bill, 2022 (“Draft Bill”) on 21st September 2022 along with an explanatory note on the Draft Bill. The Draft Bill seeks to replace the Indian Telegraph Act, 1885, the Wireless Telegraphy Act, 1933 and the Telegraph Wires (Unlawful Possession) Act, 1950 and is open for public comments till 20th of October 2022.
The following Salient Features are proposed in the Draft Bill:
The inclusion of OTT communication services within the scope of the definition of “telecommunication services” in order impose regulations under the telecom licensing regime to such services in our view is not a step in the right direction by the Government of India since it would lead to overregulation and would hinder innovation. The rationale behind the requirement of OTT communication services having to seek a license has apparently been done to ensure a level playing field between OTT communication service providers and Telecom Service Providers (TSPs). The rationale behind such demands by TSPs was “functional substitutability” of OTT communication services such as Voice telephony (VoIP), messages (SMS), Video calls, and Instant messaging service. This inaccurate equivalence between OTT communications services and services provided by TSPs ignores the fact that OTTs and TSPs operate in different layers, and OTTs are not substitutable but dependent on TSPs for network access. Additionally, the requirement of seeking a license and the possibility of a license fees being imposed on OTT communication services would increase compliance costs and hinder the roll out of innovative products. Any imposition of a license fee on OTT communication services would force such service providers to impose a fee upon their customers thereby ultimately harming consumer interests who in any case already pay for internet services.
The broad definition of telecommunication services would also likely bring e-commerce applications within the ambit of the proposed licensing regime as these applications provide messaging services via OTT to their customers for grievance redressal and other services.
The need to regulate the telecom network is based on the need to regulate spectrum which is deemed to be a public good. Furthermore, the TSPs operate the broadband infrastructure through which OTT service providers provide various innovative services to their customers. TSPs recover their costs as customers have to pay for using such bandwidth while availing OTT services.
The wide definition of telecommunication services is also likely to result in a regulatory tussle between the Ministry of Electronic and Information Technology (“MeitY”) and the MoC since they would be seeking to regulate the same set of services. Currently, services like internet communication services and OTT communication services are regulated under the Information Technology Act, 2000 and rules made thereunder. These are currently administered by the MeitY. The inclusion of the OTT communication services within the telecom regulatory regime will only upend the wide range of existing regulations governing the OTT services and lead to a confused regulatory architecture hampering the growth of the OTT sector.
Dilution of the powers of TRAI in recommending the terms and conditions of licence to be issued to a service provider would severely weaken the extant regulatory environment. Experience and learnings of the telecom sector over the past 25 years has successfully demonstrated that a powerful regulator like TRAI has been able to foster rapid growth in the telecom sector in the country. The development in the telecom sector is borne out by the fact that there are approximately 1173.66 million mobile subscribers as on 31st July 2021. A strong regulator is a sine qua non for the development of any sector and any weakening of the regulatory powers of TRAI would lead to decline in investor confidence, policy stability and inhibit the growth of the telecom sector in the long term.
It is worth mentioning that the consultative process employed by the MoC in finalising the draft telecom bill through the publication of the consultation paper, draft bill and the explanatory note accompanying the draft bill is laudatory. However, the inclusion of vague provisions in the draft bill militates against the stated objective of ease of doing business and furthering access to digital resources through Digital India initiative. The market forces should be allowed to prosper in the OTT sector and archaic telecom regulations ought not to be imposed on it.
This article was first published on Saikrishna & Associates