A Review of Draft Indian Telecommunication Bill, 2022

By Praveen Sharma

BACKGROUND:

Bringing in a new law while repealing law (Indian Telegraph Act 1885) which is more than 137 years old requires some courage particularly on the subject as complicated as telecom licensing and couple it with need to repeal other law (Indian Wireless Telegraphy Act 1933) which is about 90 years old requires lot of commitment, daring and handwork. Daring, because this was earlier also attempted with draft Communication Convergence Bill in the year 2000-02 but without any success. It is for this reason that I want to begin this review with a word of thanks and appreciation for the present leadership at Department of Telecom led by Hon’ble Cabinet Minister Shri Ashwini Vaishnaw.

So there was always a crying need for a new Statute to govern telecom services as earlier Acts namely the Indian Telegraph Act 1885, the Indian Wireless Telegraphy Act 1933 and the Telegraph Wires (Unlawful Possession) Act 1950 have lived their utility and new Act was required to consolidate the provisions of aforementioned three Acts with the advancement of technology and to address new evolving business models. The new Law to govern provision, development, expansion and operation of telecommunication services, networks and infrastructure, spectrum assignment and matter related to all of aforesaid.

I know for sure that lot of thought, hard work and mid night oil has gone in the drafting of this draft Indian Telecommunication Bill 2022 and a critique / review of the draft is no way to berate the hard work but to give constructive suggestions on what further can be done with the draft Bill.

Chapter 2   Definitions

2 (5) “customer equipment” means equipment deployed on the premises of a person, other than the equipment of the licensee or registered entity, to originate, route or terminate telecommunication, or equipment used by such person for accessing telecommunication services;”

Comment: The Definition of “customer equipment” is very vague.  Does it debar licensee from deploying customer equipment at customer premises? What is the difference between the terms” to originate, route or terminate telecommunication” and “for accessing telecommunication services;” in the definition above? There is a need to provide clearer definition in the Bill.

One may argue that the reason to define ‘customer equipment’ in the manner it has been defined is to restrict entities from using Radio backhaul using the customer equipment as the telecommunication equipment Clause 2(18) as defined includes the customer equipment however a customer equipment cannot be used for backhaul creation. However, when we look at the definition of Telecommunication network clause 2(20), it does not consider customer equipment as part of the telecommunication network. Now, this would create a dichotomy as telecommunication networks are used to provide telecommunication services however the customer equipment are part of the service but not the part of network. This may cause concern towards compliance to various standards regarding those equipment which resides at customer premise (under the ownership of the customer).  However, it is essential to deliver telecommunication services by connecting them to the telecommunication network. It is understood that Customer  will be taking the ownership of such equipment to ensure compliance with the respective standards for the ‘customer equipment’ as the same are not part of telecommunication network.

2(20) Reason for exclusionof customer equipment from the definition of telecommunication network is not very clear.

2(21) Definition of telecommunication services: Definition of the term telegraph in the earlier Indian Telegraph Act 1885 was very vague, dated and all-encompassing and reads as follows:

<(1) "telegraph" means any appliance, instrument, material or apparatus used or capable of use for transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature by wire, visual or other electro-magnetic emissions, Radio waves or Hertzian waves, galvanic, electric or magnetic means.

Explanation. – "Radio waves" or "Hertzian waves" means electro-magnetic waves of frequencies lower than 3,000 giga-cycles per second propagated in space without artificial guide;>

 Under first proviso to the Section 4 of the Indian Telegraph Act 1885 , Government had the power of licensing in following terms “Central Government may grant a license, on such conditions and in consideration of such payments as it thinks fit, to any person to establish, maintain or work a telegraph within any part of ”. All the present licenses of telecom services are issued in pursuance of powers under provision as mentioned aforesaid and it can seen that definition of telegraph is very wide and therefore the Government licensed whatever services it wanted to.

The new Act rightly changes the basis of licensing from telegraph to telecommunication services and there was an opportunity to bring more clarity and regulatory certainty to the statutory provisions of licensing requirements for telecom services. Unfortunately, definition of telecommunication services in the new Bill is also very vague and all encompassing. What is needed is exact clarity in terms of what/which are the services which would require license in terms of existing services and which are new services proposed to be added in the licensing regime on light-touch regulation basis or even otherwise. Use of very generic terms like  Internet-based communication services, video and data communication services, Interpersonal communication services, and over-the-top (OTT) communication services makes the definition and requirement of licensing vague and subject to diverse subjective  interpretation, which any draftsmen of new statute would ideally avoid. There is an element of inherent regulatory uncertainty as the services proposed to be licensed are not listed in the definition.

Any services/ solution which use telecom connectivity services as an input service but provides some other services should not attract license requirement barring those services which are similar in nature and substitutable to the licensed telecom services. Therefore, the definition of telecommunication services should only cover the licensed services, i.e., Wireless Access services, Internet Access services, NLD, ILD, GMPCS and other licensed services only and OTT Communication Services which are similar and substitutable to licensed telecommunication services. It should exclude wireline access services, e-mail, voice mail, audiotex, videotex, and internet-based communication application services.

Further, the definition of terms needed like RoW, OTT Communication services, Internet Communication services need to be provided in the new bill.

Chapter 3: Licensing, Registration, Authorization and Assignment

Section 3 Exclusive Privilege: The exclusive privilege Section 3(1) and licensing power Section 3 (2) is now in respect of telecommunication services and not telegraph which is an improvement over existing Act.

However, the need for having power, in the public interest, to exempt the requirement of license, registration, authorization or assignment under sub-section (2), in the manner as may be prescribed is debatable particularly when public interest conditions are abstract and not defined and is discriminatory towards licensed entities.

Section 4   Licensing, Registration, Authorization and Assignment

4(1) : Since the license agreement is a contract there is no need to mention specific terms and conditions of license in the Act as is being done as it takes away the flexibility of the Government to determine terms and conditions of the license. Supreme Court as per UoI and Anr vs AUSPI and ORs SC judgment in SLP CA 5059 of 2007, has held a license granted under proviso to sub-section (1) of Section 4 of the Telegraph Act is in the nature of a contract between the Central Government and the licensee. Any specific mention of terms of license would take away the flexibility in framing terms and conditions of license. Amended Clause 4(1), it is suggested should read as under:

“4(1) The grant of license, registration, authorization or assignment under sub-section (2) of Section 3, shall be subject to terms and conditions, including payment of  entry fees, license fees, registration fees or any other fees or charges by whatever name called, as may be prescribed.”

4 (2) : Regarding prohibition to amend terms of license retrospectively: Exception provided for in Section 4 (2) should be removed or alternatively conditions, where such modification would be resorted through, should be  provided.

Section 5 : Spectrum Management

Section 5(2)(b): Assignment of Spectrum without auction administratively: There is a provision in the Bill that the Government may assign spectrum through an administrative process for Governmental functions or other purposes or purposes in view of public interest or necessity as provided in Schedule 1. The Government will have the discretion to decide to whom it would allocate spectrum on administrative basis as it has reserved power to amend the list of entities in Schedule 1 as per item no 19 of Schedule 1. Schedule 1 lists PMRTS, radio backhaul for telecommunication services, satellite-based services like teleports, Direct to Home (DTH), DSNG, VSAT, NLD, ILD, Mobile Satellite Service, etc. There is a need to include CNPN services in Schedule 1 as per the latest policy decision of the Government reference DoT letter dated 27^th June 2022 issuing Guidelines for CNPN license. The Government also needs to allocate spectrum administratively to ISPs for broadband services and also replacement spectrum to those ISPs who have vacated spectrum in 3.3 GHz band.  

There are provisions to delicense spectrum in the Bill (Section 5(5) ) which needs to exercised more often by the Government .

Section 6 : Sharing, Trading, Leasing and Surrender of Spectrum

Rules for spectrum sharing and trading should be liberalized further. In a welcome move , Spectrum leasing is also enabled through the new Act reference Section 6 of the new Bill which may create a secondary market for spectrum and proliferate efficient and better usage of a scarce natural resource in case spectrum user club is game for this commercial opportunity.

Section7: Breach of Terms and Conditions

The proposed Bill consolidates, updates and simplifies various provisions on penalties and offences under the existing law. For breach of terms and conditions, the Government, among others, can issue cease and abstain orders, suspend a license, registration, authorization or assignment, curtail the period of such license, registration, authorization or assignment or revoke or vary such license, registration, authorization or assignment. There is significant reduction in the quantum of penalty. Breaches have been categorized as (i) Severe (Penalty up to Rs.5 Crore), (ii) Major (Penalty up to Rs.1 Crore, (iii) Moderate (Penalty up to Rs.10 Lakh), (iv) Minor (Penalty up to Rs.1 Lakh), and (v) Non-severe (Written warning). Defined in Schedule 4 of the proposed Bill. A licensee can give a voluntary undertaking to take specified action to rectify the breach as per Section 8 of the Bill. This is a very big positive for the industry and promotes Ease of Doing Business (EoDB) in a big way.

8. Voluntary Undertaking

The proposed Bill has introduced a new concept of 'voluntary undertakings'. To this end, the licensee or registered entity has an option to voluntarily disclose any breach of the license or registration terms by giving an undertaking that specified action will be taken by such entity. Once the voluntary undertaking is accepted by the DoT, it shall bar any proceedings against such entity. This is also very innovative solution and will result in open and transparent working.

9. No refund of fees

The move to refund amounts in case of voluntary surrender of license by an Entity is a welcome move.

10&11 Appeal & Alternate Dispute Resolution

Appellate Authority needs to be defined.

Introduction of Alternate Dispute Resolution -(ADR) Settlement process in the draft Bill, will dilute the exclusive powers of the sectoral adjudicating expert body namely TDSAT.  which has come into existence because of a special TRAI Act. This is a grave cause of concern as the “suitable mechanism” for ADR has not been mentioned in the proposed draft Bill and can be arbitrarily notified by the Government in its favour later.

Chapter 4: Right of Way for Telecommunication Infrastructure

The proposed Bill seeks to remove current limitations by providing an enforceable and enabling framework that facilitates RoW for laying or building telecommunication infrastructure by any facility provider. The term “facility provider” includes any licensee or registered entity, including any contractor or sub-contractor or agent working for the Central Government or licensee or a registered entity.

Right of Way needs to be defined.

There needs to be a non-obstante clause in the Central Government powers to prescribe charges under this Act which should give over-riding effect to any other Act of Central/State Government and Rules made thereafter or any other Rules made by any of the Public Entity defined under this Act.

Therefore, clause 13(2) needs to be revised as follows:

13(2) The public entity shall grant permission under sub-section (1) in an expeditious manner, and within the timelines, as may be prescribed failing which the permission will be deemed to be granted after prescribed timeline elapses.

The new bill should contain a provision that the local authorities – municipality, gram panchayat, development authority etc. would need to align their building bye laws in line with Central Government rules/ provisions related to telecom services.

Chapter 5: Restructuring, Defaults in Payment and Insolvency                                   

21.Special Framework governing defaults in payment by licensees, registered entities or assignees: A special framework governing payment defaults by licensees has been included in the Act wherein the Government can take measures to defer payments, convert shortfall payments into shares of licensee or write off such outstanding amounts or part thereof and relief from payment of such amounts or part thereof.

There is a need to have a similar framework governing the payment of the dues by the licensees whose assessment of dues is delayed due to various reasons including litigation and the Government should have the power to take such payments in installments when such payments get assessed and determined by the Government.

22. Power to waive fee, interest, additional charges, penalty or grant exceptions

The Government has also reserved the power to waive, in part or full, any fee, interest, additional charges, penalty or grant exception in case of mitigating circumstances, including interests of consumers, ensuring competition, continued supply of services, and any circumstance of public interest or national security. This power should be exercised in cases where dues are claimed in a delayed manner by the Government due to delay in assessment or reasons including litigation. Interest, Penalty and Interest on Penalty should be waived in all such cases and simple interest should be applied for such dues in for the reason of fairness.

Chapter 6: Standards, Public Safety and National Security

23. Power to prescribe standards

23 (c): In respect of 23 (c) regarding issuing standards on reliability of the provision of any telecommunication services to the public, there is an avoidable overlap of powers with TRAI as TRAI has executive powers on QoS issues which includes reliability of services. Section 11(1)(b)v states that TRAI will discharge the function of  “lay-down the standards of quality of service to be provided by the service providers and ensure the quality of service and conduct the periodical survey of such service provided by the service providers so as to protect interest of the consumers of telecommunication service”. There is a clarity needed on which Authority will discharge this function. There is a similar overlap regarding which Authority will ensure compliance to the terms and conditions of license on which also some clarity is needed. While statutorily, TRAI has been entrusted with the function of ensuring compliance to the terms and conditions of the license vide Section 11(1) (b)(i) and there are some field units of TRAI operational, DoT LSA units are performing these functions.

24. Provisions for Public Emergency or Public Safety

For the sake of transparency and clarity there is need to define the terms Public Emergency, Public Safety, Public Order. Suitable illustrations may be given for better clarity.

Chapter 7: Telecommunication Development Fund

USOF has been named as Telecom Development Fund and scope of the Fund has been widened significantly to include R&D and support introduction of new telecom services, technologies, and products. Also added in the scope is the functionality of skill development and training in telecom. Licensees have been paying 5% of their AGR as contribution towards this Fund and TRAI in 2015 had recommended reduction of this levy to 3% of AGR. Further, the levy of 5% for USO was fixed in 2000 when the telecom network coverage was very poor in the country. It would be therefore in the fairness of the things if the individual licensee’s contribution is reduced to 2 % of the AGR for 7 years have already elapsed when TRAI recommended making this levy at 3% of AGR.

Chapter 9: Protection of users

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33(1)&(2) Unsolicited Message Framework: The Bill creates a framework for the government to protect users from 'specified messages'. 'Specified messages' have been defined as messages that offer, advertise, or promote goods, services, solicits interest in property, businesses, employment, or investment. The Bill provides for prior user consent, preparation, and maintenance of Do Not Disturb (DND) registers and the mechanism to enable users to report specified messages received in contravention of this Section. This is in addition to the measures taken by TRAI under its TCCCP Regulation 2018 which have not provided effective remedy against the unsolicited communications to the end Users.

34. Duty of Users: No user shall furnish any false particulars, suppress any material information or impersonate another person while establishing identity for availing telecommunication services and any non-compliance of the same would entail penalty as provided in the Bill.

Tighter KYC norms and traceability of messages: The proposed Bill requires licensed entities to ensure that they identify the persons to whom they provide telecommunication services. The Bill places an obligation on TSPs to do this through a 'verifiable mode', as prescribed by the government. This would also be applicable to users of OTT communication services and its service providers.

Application of provisions of proposed Personal Data protection legislation: In order to protect the customers, the new bill can have a provision that the relevant provisions under the Personal Data Protection applicable law would be applicable to customers availing telecom services.

Spam Control/Fraud Prevention by mandatory user identity and traceability of communication.

Framework for Internet Shutdown: Clause 24(2)(b) provides a clear statutory internet suspension power, which did not exist earlier. There is no provision for judicial oversight over the suspension orders. 

46. Amendment to Act 24 of 1997

Dilution of TRAI Act: The Bill proposes amendments to the Telecom Regulatory Authority of India (TRAI) Act, 1997 which significantly dilutes the recommendatory power of TRAI and gives DoT more than an upper hand in dealing with TRAI recommendations.  For example, the Government can straight away reject the recommendations of TRAI without giving any reasons and without the requirement of sending a reference back, Additionally, there is no obligation cast upon the Government to necessarily seek recommendations of TRAI in respect of terms and conditions of the license.  The proposed changes are against the principles of transparency, accountability and constructive cooperation between the statutory Regulator and the Government. It also dilutes the stature of the statutory Regulator as an expert body. 

Since lot of powers are proposed to be exercised by the Government unilaterally now, it is essential that these powers are exercised in a transparent manner for which a clause similar to Section 11 (4) of the TRAI Act should be there as follows:

“The Central Government shall ensure transparency while exercising its powers and discharging its functions under this Act.”

I applaud the Government efforts in bringing this Draft Bill which is a revolutionary step towards more certainty and ease of doing business for Telecom Sector. However, there is a need to review some of the clauses as highlighted in above review to make this Bill clearer and more transparent for the industry which is vital for attracting more investments in the sector.

Praveen Sharma is a veteran in the Telecom Regulatory space in India. Currently, he is the VP & Head- India Regulatory Affairs at Tata Communications. He is an  Independent Director of Asianet Satellite Communications Ltd.

(The views expressed are my own, and do not reflect views of my employer).