Legal implications of the Draft Telecommunication Bill 2022

In News

• Recently, the Department of Telecom has released the draft Indian Telecommunication Bill, 2022 for public comment. 

About

• Aim of the Bill:
  • Reforming existing telecom laws and regulations, and making them future ready.
• Background: 
  • Since the 19th century, the central construct of these laws has been two-fold: 
  • Delivery of telecom service (a dynamic concept in itself) is the sovereign’s “exclusive privilege”; 
  • This sovereign privilege can be delegated to private companies. 
• Sovereign Privilege:
  • The government delegates this privilege to private companies by granting them telecom licenses and imposing terms and conditions on them. 
• Most regulated sector: 
  • At present, these terms and conditions range from entity and data localisation, revenue sharing in the form of license fees, security vetting of foreign executives, to restrictions on deployment of technologies and equipment. 
  • This makes telecom one of the most regulated sectors in India.

Key Provision of Bill

• License for OTTs: 
  • Bringing OTTs under the ambit of telecom services means that OTT and internet-based communications would require a license to offer services.
  • OTT Platforms have to obtain a license from the government just like other telecom operators.
• Dilution of TRAI’s Powers: 
  • Diluted some crucial powers and responsibilities of the Telecom Regulatory Authority of India (TRAI) on issuing new licenses to service providers.
• Interception of Information:
  • Information transmitted and received over telecommunication services could be intercepted by an authorised official of the government in the interest of the:
    • Sovereignty, 
    • Integrity or security of India, 
    • Friendly relations with foreign states, 
    • Public order, or preventing incitement to an offence. 
• Clarity on Spectrum Assignment: 
  • The 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. 
• Easing criminal penalties: 
  • The Bill removes several redundant penalties:
    • Imposes a quantum of penalties based on severity; and 
    • Introduces settlement of offences by payment of fines, and voluntary undertaking. 
• Licensing Internet-based apps: 
  • The Bill requires OTT communication services – which are essentially Internet-based apps/ software – to obtain telecom licenses and thereby bring them under the telecom framework. 
• Wide expanse of shutdown and surveillance powers: 
  • The Bill allows the government to direct suspension of transmission of messages or provision of telecom networks or services. 
  • These powers are much wider than the currently existing framework on internet shutdowns and interception, and include directions for interception and disclosure of data, and suspension/ surveillance of messages “relating to any particular subject”.
• Changes in TRAI Act:
  • At present, the TRAI Act requires the government to seek the regulator’s recommendations before issuing licences to service providers. 
  • It also allows the TRAI to request the government to furnish information or documents necessary to make recommendations. These powers have been proposed to be removed in the new draft Bill.
  • The TRAI may direct operators “to abstain from predatory pricing” that is harmful to overall health of telecom sector, competition, long term development and fair market mechanism. 
  • A current provision in the TRAI Act which prohibits the appointment of a government official as TRAI’s chairperson who has not served either as Secretary or Additional Secretary has also been proposed to be removed in the new draft Bill.
• Telecommunication Development Fund (TDF):
  • It proposes to replace the Universal Service Obligation Fund (USOF) with the Telecommunication Development Fund (TDF). 
  • USOF is the pool of funds generated through a 5 percent Universal Service Levy on the Adjusted Gross Revenue of telecom companies. 
  • It has been used largely to aid rural connectivity; with the TDF, the objective is also to boost connectivity in underserved urban areas, R&D, skill development, etc.
• Control of Government:
  • In case a telecom entity in possession of spectrum goes through bankruptcy or insolvency, the spectrum assigned to it will revert to the control of the Central government.

Telecommunication Sector in India

• Key policy interventions and technological advancements have made India the second-largest telecom market in the world. 
• The sector is one of the highest contributors to India’s GDP. 
• In the last few years, the government has allowed 100% FDI in the sector, 
• Largely deregulated BPOs and call centres, 
• Enabled in-flight Wi-Fi,
• Allowed deferred payments from telecom operators due to their strained financial conditions. 

Regulation of OTT Platforms in India

• No Law or Rules:
  • In India, there are no laws or rules regulating OTT platforms as it is a relatively new medium of entertainment.
  • Government as the first step towards regulation, amended the “allocation of Business Rules” in November 2022 bringing all online platforms under the mandate of the I&B Ministry and all platforms were told to register with the Ministry. 
• Self-regulatory model:
  • The regulation of such platforms has been widely debated and discussed therefore the Internet and Mobile Association of India (IAMAI), a representative body of the OTT platforms has developed a self-regulatory model.
• Issues:
  • On examination, it was felt that the mechanism proposed by IAMAI did not give adequate cognizance to content prohibited under law and there were issues of conflict of interest, which were communicated to IAMAI in September 2020.
  • The Online Curated Content Providers or OCCPs had also proposed a Digital Curated Content Complaints Council along with the self-regulatory mechanism as a part of its proposed two-tier structure.
  • The proposal, however, was shot down by the Ministry of Information and Broadcasting, which will now oversee these platforms.

Challenges

• End-to-end encrypted: It is unclear how these provisions could potentially impact calls over WhatsApp which are typically end-to-end encrypted; meaning the company itself does not have access to the information being transmitted over such calls.
• Content regulation: There is no law or autonomous body to monitor and manage the digital contents provided on these OTT platforms and it is made available to the public at large without any filter or screening.
• More Power is Needed: The OTT platform handles high-resolution video data. As a result, operating these platforms will require additional power. The rising demand for storage capacity is due to increased electricity, energy, and fiber capacity use.
• Piracy of videos: Since the beginning of regular television, piracy has been a concern. Video piracy affects a business a lot of money, as well as users and reputation. User data and content leaks are both at danger when OTT platforms are hacked. In the United States, about 21% of the population watches pirated television.

Way Ahead

• The Bill would augment ease of doing business and considerably reduce the threat of criminal prosecution for operational issues faced by telecom operators. 
• Given the dynamic and multifaceted nature of Internet-based services, subjecting them to a telecom licensing regime with criminal penalties could stifle innovation or even isolate the Indian market.

Source: IE