On 24th December 2023, the Telecommunications Bill, 2023 received the President of India’s assent after passage in both houses of the parliament and became a law i.e., The Telecommunications Act, 2023 (“Telecom Act”). The Telecom Act has now become the prevailing law for the development, expansion, and operation of telecommunication services and telecommunication networks, assignment of spectrum, and related matters. The Telecom Act will replace the existing legal framework governing the telecommunication sector comprising the Telegraph Act, 1885 and the Wireless Telegraphy Act, 1933, once the Central Government notifies the date on which the relevant provisions will come into force.
By way of brief background, the Department of Telecommunications (“DoT“) had earlier introduced a draft of the Indian Telecommunication Bill 2022 (“Telecom Bill”) for public consultation on 21st September 2022. The Telecom Bill received push-back for the legal and regulatory confusion that will be caused by the clubbing of Over-the-Top (“OTT”) communication services, internet-based communication services with the telecommunication services, introducing licensing requirements for providing, inter alia, OTT communication services and also encroaching upon the authority of the Telecom Regulatory Authority of India (“TRAI”). While some of these concerns seem to have been addressed, a closer examination of the Telecom Act shows that the definitions of key terms such as telecommunication, telecommunication services, and messages within the Telecom Act are wide and may potentially include regulation of OTT communication services. However, Shri Ashwini Vaishnaw, the Minister for Railways, Communications, Electronics & Information Technology, has reportedly clarified to various news outlets that OTT players or applications will not fall under the scope of the Telecom Act and will continue to be regulated by the Information Technology Act, 2000 (“IT Act“).
Brief Overview of the Telecom Act
- The Telecom Act will be notified in a phased manner as the Act allows for different notification dates for different provisions of the Act for a phased implementation.
- Key Definitions:
- Message: Any sign, signal, writing, text, image, sound, video, data stream, intelligence or information sent through telecommunication;
- Telecommunication: Transmission, emission or reception of any messages, by wire, radio, optical or other electro-magnetic systems, whether or not such messages have been subjected to rearrangement, computation or other processes by any means in the course of their transmission, emission or reception;
- Telecommunication equipment: Any equipment, appliance, radio equipment, etc. or user equipment, that may be or is being used for telecommunication, including software and intelligence integral to such telecommunication equipment; and excludes such equipment as may be notified by the Central Government;
- Telecommunication identifier: It is a series of digits, characters, and symbols, or a combination, used to identify uniquely a user, a telecommunication service, a telecommunication network, elements of a telecommunication network, telecommunication equipment, or an authorised entity;
- Telecommunication network: A system or series of systems of telecommunication equipment or infrastructure, including terrestrial or satellite networks or submarine networks, or a combination of such networks, used for providing telecommunication services, but excludes such telecommunication equipment as notified by the Central Government;
- Telecommunication service: Any service for telecommunication;
- User: A natural or legal person, using or requesting a telecommunication service but does not include person providing such telecommunication service or telecommunication network.
- Authorisation: The Telecom Act requires persons to obtain authorisation/permissions to:
- provide telecommunication services,
- establish, operate, maintain or expand telecommunication network, or
- possess radio equipment.
Further, authorised entities offering certain ‘notified’ telecommunication services will be required to identify persons who are availing telecommunication services using prescribed verifiable biometric-based identification.
- Differential regulatory treatment and exemptions: The Central Government can prescribe different terms and conditions of authorisation for different types of telecommunication services, telecommunication networks, or radio equipment, or grant an exemption from authorisation altogether if such an exemption is necessary in ‘public interest’.
- Spectrum assignment: The Telecom Act allows the Central Government to assign spectrum via auction except for certain purposes, listed in the First Schedule, such as national security, mobile satellite service, etc. for which it may adopt an administrative process for such assignment. Significantly, the Central Government has the authority, under the Telecom Act, to modify the First Schedule through notification if the administrative assignment of spectrum aligns with public interest, facilitates government functions, or is deemed more suitable than auctioning due to technical or economic considerations.
- Flexible use of Spectrum: The Telecom Act allows the Central Government to regulate the use of spectrum in the following manner:
- Harmonise (i.e., rearranging a frequency range) or re-farm (i.e., repurpose frequency for a different use than that for which it is used by an existing assignee) any assigned frequency range to enable more efficient use of spectrum.
- Allow the utilisation of spectrum in a flexible, liberalised, and technologically neutral manner, subject to certain terms and conditions.
- Promote optimal use of available spectrum by assigning a specific part of the spectrum, assigned to a primary assignee, to one or more additional entities (i.e. secondary assignees).
- Terminate the assignment or a part thereof if the assigned spectrum remains unutilised for insufficient reasons for a period as may be prescribed.
- Establish a monitoring and enforcement mechanism to ensure compliance with the terms and conditions of spectrum utilisation, facilitating interference-free use of the assigned spectrum.
- Authorise the leasing, sharing, trading, and surrender of assigned spectrum, subject to terms and conditions.
- Standards and conformity assessment measures: Under the Telecom Act, the Central Government has been empowered to prescribe standards and conformity assessments for telecommunication equipment, cybersecurity for telecommunication services and networks, encryption and data processing in telecommunication, etc.
- Provisions pertaining to public safety and public emergency: On grounds of ‘public emergency’ or ‘public interest’, the central government/ state government can, inter alia:
- take temporary possession of any telecommunication service and network.
- intercept, detain or require disclosure of any messages from any person or any telecommunication equipment in an intelligible format.
- Measures for national security, etc.: The Central Government can, in the interest of national security, friendly relations with foreign states, or in the event of war, issue directions for, inter alia, taking over the control and management of or suspending the operation of any telecommunication service/network.
- Digital Bharat Nidhi: The erstwhile Universal Service Obligation Fund, which was earlier formed under the Indian Telegraph Act, 1885 has been replaced by the Digital Bharat Nidhi to, inter alia, provide telecom services in underserved areas, for research and development of telecommunication services, technologies, and products.
- Regulatory Sandbox: The Telecom Act provides for the creation of regulatory sandboxes to encourage innovation and technological development. This would allow live testing environment where new products, services, processes, and business models may be deployed, on a limited set of users, for a specified period of time, with certain relaxations from the provisions of the Telecom Act.
- Protection of users: The central government can promulgate rules, in consonance with regulations notified by the TRAI, for protecting users, including measures such as obtaining consent for specified messages, maintaining a “Do Not Disturb” register, etc. The term “specified message” is defined under the Telecom Act as any message that offers, advertises, or promotes goods, services, interest in property, business opportunities, employment opportunities, or investment opportunities.
- Duties of users: The Telecom Act also imposes certain duties on users, such as the duty to not furnish false particulars, suppress material information, or impersonate another person, and to share information required under the Telecom Act.
- Grievance Redressal: The Central Government may establish/approve one or more online dispute resolution mechanisms for resolving disputes between users and authorised entities providing telecommunication services. However, the dispute resolution mechanism under the Telecom Act would not affect the rights of the users under the Consumer Protection Act, 2019.
- Appointment of adjudicating officers: The Telecom Act provides for the appointment of adjudicating officers by the central government who can pass directions to the authorised entity, in case of breach of terms and conditions of the authorisation/assignment granted under the Telecom Act. These directions, inter alia, pertain to preventing breach or for ensuring compliance with the Telecom Act, imposing civil penalties, or on violation of specified provisions provided in the Telecom Act, on the receipt of a complaint or suo moto. The adjudicating officers shall have the power of a civil court and any orders passed by them shall be executable in the same manner as if it were a decree of a civil court. Additionally, the adjudicating officers are empowered to make recommendations to the Central Government regarding suspension, revocation or curtailment of the authorisation/assignment.
- Establishment of a Designated Appeals Committee: A person aggrieved by an order passed by the adjudicating officer can prefer an appeal before the designated appeals committee comprising of members who shall be officers of the Central Government not below the rank of Additional Secretary. Any order issued by the designated appeals committee has the enforceability equivalent to that of a civil court decree. Further, an appeal from the designated appeals committee’s decision will lie before:
- Telecom Disputes Settlement and Appellate Tribunal (“TDSAT”): For matters regarding breach of terms or suspension/revocation of an authorisation/assignment; or
- Civil courts: In case of orders regarding contraventions of certain provisions which are outlined in the Third Schedule of the Telecom Act such as possessing radio equipment without authorisation, contravention of provisions pertaining to measures for protection of users, etc.
- Voluntary undertaking for contraventions: The Telecom Act provides for voluntary undertaking for contraventions by the authorised entity or assignee. Any authorised entity or assignee who, inter alia, is in breach of the terms and conditions of authorisation/assignment may, before any notice or initiation of the determination process, submit a voluntary undertaking to the adjudicating officer. This undertaking discloses the contraventions and outlines measures taken or to be taken to mitigate them. The acceptance of the undertaking shall lead to a bar on the proceedings under the Telecom Act.
- Offences: The Telecom Act outlines several criminal offences such as offering telecommunication services without authorization or unauthorised access to a telecom network is subject to imprisonment for up to three years or a fine of up to INR two crore or both. Similarly, possession of unauthorised radio equipment or tampering with telecommunication identifiers is punishable with imprisonment for a term which may extend to three years, or with fine which may extend up to fifty lakh rupees, or both.
- Power to seek information, document or record: Any officer authorised by the Central Government can direct any authorised entity/assignee to furnish to such officer any information, document or record in its possession that relates to any telecommunication service, telecommunication network or use of spectrum. This power can only be exercised where the officer authorised by the Central Government is satisfied that the necessary information, document or record is necessary to be furnished in relation to any pending or apprehended civil of criminal proceedings.
- Extra-territorial application: The Telecom Act will apply to any offence/contravention committed outside India if the offence/contravention involves a telecommunication service provided in India or telecommunication equipment/network located in India.
India’s rapid economic growth creates fertile ground for telecom-powered innovation and progress. The widespread adoption of 5G networks and related technologies positions India to tap into fresh possibilities within the telecom and digital realms. The Telecom Act fuels this transformation by unleashing the full power of India’s telecom networks. The Telecom Act aligns with the government’s broader reforms like the Digital Personal Data Protection Act, the Digital India initiative, and the upcoming Digital India Bill, driving India’s ambitious march towards a digitally empowered future.
To this effect, the Telecom Act attempts to regulate activities related to telecommunications by introducing several changes to existing regulatory mechanisms governing the sector. The Telecom Act replaces the licensing regime for the establishment, maintenance, or operation of telegraphs with the introduction of an authorisation model for the provision of telecommunication services and for operating telecommunication equipment and networks. The Telecom Act has established a legal foundation for authorized entities to implement cybersecurity measures, aimed at safeguarding and ensuring the cybersecurity of both telecommunication networks and telecommunication equipment. Further, the Telecom Act amends the TRAI Act to allow for the appointment of members and the chairman from the private sector as well. This opens up the opportunity for cross-pollination of best practices as till date only individuals who have served in the State/Central Government were eligible for appointment as member or chairman in TRAI.
However, the Telecom Act does have some areas of concern. Given the broad definition of the term “telecommunication”, “telecommunication services”, and the inclusion of “data stream” within the term “messages”, the Telecom Act can potentially include OTT communication services as well. This would subject OTT communication service providers, who may also qualify as intermediaries, to dual regulation under the Telecom Act and the IT Act. This is because the IT Act already governs and provides a due diligence framework for intermediaries under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021. By subjecting OTT communication services to the same regulatory treatment as the telecommunication services provided by authorised entities in the network layer, the Telecom Act clearly overlaps with the provisions of the IT Act. In light of this, the DoT should limit the definition of “message” under the Telecom Act to specifically exclude “data stream” from the ambit of “message” in order to exclude OTT communication services and thereby separate the treatment of services in the network layer and the application layer. While the minister of communications and electronics & information technology, Shri Ashwini Vaishnaw, has reportedly clarified to various news outlets that OTT communication services remain regulated by the IT Act and are not covered in the Telecom Act, there has been no formal clarification that has been issued by the Ministry to this effect. Accordingly, whether OTT communication services will be completely excluded or not from the purview of the Telecom Act will be realised in the fullness of time. The major challenge that OTT communication platforms will face if they get covered within the purview of the Telecom Act is the implementation of the provisions pertaining to interception, as the same will affect the end-to-end encryption of OTT communication platforms, requiring them to completely reconfigure their operational architecture. This process would be extremely cost intensive and would impede the introduction of novel and innovative products and features by OTT communication service providers.
In conclusion, while the Telecom Act sets the stage for India’s digital transformation and telecom evolution, it is imperative that the government navigates its powers judiciously, addressing privacy and regulatory concerns and establishing clear safeguards for a resilient telecommunications landscape.