A Word of Advice on OTT and the Draft Telecom Bill

Why in News?

• The article discusses the provisions of the draft Indian Telecommunication Bill, 2022 that was unveiled recently for public comments and the risks over inclusion of Over The Top or OTT (Communication Services) within its ambit.
• The draft bill seeks to replace the existing legal framework governing telecommunication in India, comprising the Indian Telegraph Act, 1885, the Wireless Telegraphy Act, 1933 and the Telegraph Wires (Unlawful Possession) Act, 1950.

 

Need for a new telecommunication law

• Outdated framework: The existing regulatory framework for the telecommunication sector is based on the Indian Telegraph Act, 1885.
  • The nature of telecommunication, its usage and technologies have undergone a massive change since the era of the "telegraph". The world also stopped using "telegraph" in 2013.
• India’s large digital ecosystem needs to be regulated: With 117 crore subscribers, India is the world's second-largest telecommunication ecosystem. The telecommunication sector employs more than 4 million people and contributes about 8% of the country's GDP.
• No consolidated framework: This new bill aims to consolidate and amend the laws governing the provision, development, expansion and operation of telecommunication services, telecommunication networks and telecommunication infrastructure, and spectrum assignment.

 

Salient provisions of the draft Indian Telecommunications bill 2022

• Spectrum allocation: For the first time, the draft has laid down a clear statutory framework and regulations on assigning spectrum and stated that spectrum should primarily be given through auction.
  • To enable efficient use of spectrum, the Centre may also ‘harmonise’ any frequency range assigned by auction or administrative process.
  • The Bill enables sharing, trading, leasing, surrender of spectrum assigned, and a process to return unutilised spectrum.
  • For specific functions related to the government and public interest, like defence, transportation and research, the Bill proposes assignment through the administrative process.
• Spectrum termination: The government as per the bill will also have the power to terminate spectrum allocations partly or in full, if it determines that assigned spectrum has remained unutilised for insufficient reasons over a period of time.
  • Also, the spectrum allocated to telecom companies that are undergoing insolvency and are unable to offer services, pay dues or comply with license conditions, will be taken back by the government.
• Expanding the definition of ‘telecommunication services’: The bill proposes to bring OTT communications services such as WhatsApp, Telegram, Internet-based and satellite-based communication services under the ambit of the Bill.
  • Thus, OTT communication services have to take a license thereafter and be subjected to the same conditions governing telecom players in India, like quality of service and security rules, revenue-sharing with the government, etc.
• Simplified framework for restructuring of companies: The Bill also seeks to streamline the framework for mergers, demergers, acquisitions or other forms of restructuring of telecom companies, by only requiring intimation to the licensing authority.
• Telecommunication Development Fund: The Rs 60,000 crore Universal Service Obligation Fund that has been primarily used to aid rural connectivity will be expanded into the Telecommunication Development Fund (TDF) by adding further objectives of underserved urban areas, R&D, skill development, etc.
• Users’ safety and security: The draft bill aims to enable a legal framework to prevent the harassment of users from unauthenticated sources. It also establishes that the prior consent of the user is necessary before offering any promotional services or advertisement.
• Prevent cyber fraud: The Bill provides that the identity of the person sending a message through telecom services shall be available to a user receiving it in order to prevent cyber fraud.
• Dilutes the role of TRAI: The draft bill excludes the obligation of the government to consult Telecom Regulatory Authority of India (TRAI) on licensing issues. It thus dilutes the watchdog function of TRAI to a recommendatory body.
• Enforcing ‘right of way’ (RoW) at state level: The draft bill proposes RoW enforceable at the state and at the municipal-corporation level to rollout 5G services.
  • The RoW is a critical element in the Telecom space which gives a guideline to Telecom companies to lay up its infrastructure elements like towers, optical fiber cables on a designated route.
  • The public entity that owns the land has to grant ‘right of way’ permission expeditiously, unless it gives a substantive ground for refusal.
• Appelate authority: The bill provides for the right of appeal before the appellate authority. Besides, the central government is also enabled to set up an alternate dispute resolution mechanism which can range from mediation, arbitration, etc.

 

Concerns over draft bill

• Vague licensing requirements: The power to issue license standards can dilute technical protections available to users and may lead to smaller online service providers such as Telegram or Signal not offering services in India.
  • Hence, this will a double blow, both on privacy rights and innovation by technology companies.
• Ignores privacy protection: The bill permits central government to direct any service provider, and even any subscriber, to provide any information, for an “apprehended”, and not just actually existing, civil or criminal proceeding.
  • This ignores the KS Puttaswamy judgment (2017) that required surveillance reform, including disapproval of systems of mass surveillance and the requirement of judicial oversight.
• Maintain colonial spirit: The drafters have replicated from the colonial text almost to the word, while detailing the powers for interception and suspension of services under Clause 24(2).
  • Clause 24(2) of the draft bill has expanded the surveillance powers under the Indian Telegraph Act, 1885 to “telecommunication services or network”, threatening end-to-end encryption, which earlier authorised interception of messages transmitted only through telegraphs.
• Against federal framework: The Centre cannot take coercive action against states or municipal corporations to impose ‘right of way’ rules, as land is a state subject.
• Dilutes TRAI: The Bill may adversely impact the consultative role of TRAI by excluding the obligation of the government to consult TRAI on licensing issues.
• Overlooked net neutrality provisions: Net neutrality, which was one of the few examples of mass, public engagements on telecom policy, fails to find any mention in the draft bill.

 

Arguments for inclusion of OTT (Communication Services) in draft Bill

• Same service, same rules: The main logic behind inclusion of OTT in the draft telecom Bill is the principle of “same service, same rules”, i.e., the communication services, whether provided by telcos or OTTs, should be treated similarly.
• Pressure from telecom companies: The telecom service providers claim that operators had to incur high costs of licences and spectrum, while OTT players rode on their infrastructure to offer free service and do not pay any regulatory levies.
  • Hence to preserve the arbitrage that exists between voice and data tariffs, telcos are seeking a level-playing field with OTT service providers.
• Reduces loss to exchequer: OTT communication service providers enjoy huge direct/indirect benefits and revenues by utilising the TSPs’ networks, are not subjected to such taxes and levies, thus causing loss to the Government exchequer.

 

Arguments against inclusion of OTT (Communication Services) in draft telecom bill

• Pre-existing legislation: The existing IT Act already covers OTT communication services, which can be regulated in terms of encryption, data storage, interception, etc.
• Excessive state control: The proposed Telecom Bill is based on the principle that providing telecom services is solely the responsibility of the government, except where private enterprises are permitted, licensed, or authorised.
  • Similar principle operates in respect of content, which the Information and Broadcasting Ministry, Prasar Bharti and the Censor Board, regulate.
• Impede digital economy: The freedom granted to technology/applications and content enables and encourages creativity, innovation, new products etc.
  • By subjecting them to licensing, it could stifle the entire socio-economic ecosystem, kill innovation and hinder the GDP growth.
• Impact venture capital funding: The inflow of venture capital funding to OTTs would be severely discouraged by inclusion under bill ambit.
• Thin demarcation line: It is hard to distinguish an OTT communication service from any other OTT platform because every OTT platform such as Flipkart, Ola, MakeMyTrip does incorporate an element of messaging.
• Varied domains: Same service means that a user should have autonomy to substitute telecom and OTT service with one another. However, no OTT provider can reach a customer without the intermediation and services of a telecom service provider, but the absence of OTT is no bar for a telcos to provide its services.
  • Thus, OTT communication services fall in the domain of applications such as group and video communication, encryption, etc. and telcos are in the domain of carriage, thus donor fall in “same service” category.
• Will handicap Indian service providers: The Telecom Bill will impact only India-based OTT players as it is confined to domain carriage, i.e., geographical boundaries. But those operating from overseas would not be impacted, thus giving edge to foreign competitors.

 

Way ahead

• No other country has equated OTT communication services with basic telecommunications services.
• Therefore, instead of Including the OTT (Communication Services) in the draft Indian Telecommunication bill 2022, the Government needs to give a thought of including whatever controls are deemed necessary in the soon-to-be unveiled Digital India Act.