A fresh epoch for the communication sector

The Telecom Act 2023 marks a significant stride in India’s telecom sector drawing upon various aspects of similar global regulations

India has achieved a significant milestone with the enactment of the Telecommunications Act of 2023, supplanting the antiquated Indian Telegraph Act of 1885 and archaic regulations. This progressive legislation aims to revolutionise the telecom landscape, attract investments, and pave the way for a dynamic era of digital connectivity. Let us delve into its key features, potential impacts on the industry, areas necessitating clarity, and a comprehensive comparison with analogous regulations in diverse geographies.

Similar to the US and EU, India encourages foreign and domestic investments, balancing competition with consumer protection.

IMPACT ON THE INDUSTRY

The Act’s streamlined regulatory environment and emphasis on digital infrastructure are poised to attract substantial investments, fostering sectoral growth and employment. While the entry of new full-scale telecom operators seems improbable, fresh investments in satellite services and infrastructure are imminent. Additionally, it paves the way for new entrants in niche segments.

The Act’s clarity in various areas, such as spectrum allocation for satellite communication services, is anticipated to expedite decision-making among service providers and ecosystem participants. This could result in accelerated growth within the sector.

Improved connectivity, enhanced service quality, and potentially lower tariffs, particularly in rural areas, are foreseeable outcomes due to streamlined processes and heightened competition. The Digital Bharat Nidhi funds could further innovation and rural coverage.

However, the expanded government powers for surveillance, data access, and biometric verification necessitate robust processes and safeguards to protect individual liberties.

AREAS OF CONCERN

While the Act excludes OTT, concerns persist that its broad definition of telecom services (transmission, emission, or reception of any messages through wire, radio, optical, or other electromagnetic systems) could inadvertently encompass certain communication-focused OTT platforms in specific instances.

Clarity is needed regarding the distinction between the new authorisation framework and the existing licensing system.

The Act is applicable to offences committed outside India if it involves a telecommunication service provided in India or telecommunication equipment or network located in India. There is a need for clarity on how this may be implemented in today’s era of cyber threats.

KYC through verifiable biometric based identification could slow the growth of subscriber onboarding and may lead to cyber security issues relating to storage and usage of subscriber biometric information. Besides, this will be difficult to implement for enterprise customers.

Other concerns about potential regulatory multiplicity/overlaps and overreach, spam control effectiveness, and cybersecurity persist, urging the need for clear guidelines and effective implementation.

INTERNATIONAL COMPARISON

The new Act is contemporary and forward looking. It considers the real issues associated with the rapid growth of the telecom and technology sectors, infrastructural constraints, the converging nature of products and services, and blurring of industry boundaries. The Act draws upon various aspects of similar regulations prevailing globally and incorporates several leading practices.

The Act takes a balanced approach between private sector investments and government control, especially for national security.

Similar to the US and EU, India encourages foreign and domestic investments, balancing competition with consumer protection, while China emphasises stringent state control. In terms of data security and censorship, the EU leads with strong regulations, the USA relies more on industry efforts, China enforces strict control, and India adopts a nuanced approach, reflecting a convergence of diverse global practices.

The Act takes a balanced approach between private sector investments and government control, especially for national security.

A broad comparison of the telecommunications regulations in the US, China, the European Union, and Indian Telecommunications Act is provided here (see table International Perspective)

In summary, the Telecommunications Act 2023 marks a significant stride in modernising India’s telecom sector. The success of the Telecommunications Act 2023 hinges on effective implementation, clear rules and guidelines, and addressing concerns within the prevailing and forthcoming digital regulatory framework.

The fair execution of this Act is pivotal. The evolution of this new framework and its lasting impact on the industry warrant close observation.

By Jaideep Ghosh

The author is a former Partner at KPMG in India.

Views are personal.

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