New controls, new powers, some ambiguity: All you need to know about the proposed Telecom Bill

What if WhatsApp, Telegram, Signal, Zoom and their ilk had to get a licence from the telecommunications department to operate in India? If the new Telecommunication Bill, put out for consultation by the department yesterday, is passed in its current form, they might just have to.

The new bill seeks to replace three existing acts: the Indian Telegraph Act (1885), Wireless Telegraphy Act (1933), and Telegraph Wires (Unlawful Possession) Act (1950). The reasoning is quite simple – since the oldest of these acts were passed, technology and communication services have evolved much beyond telegraphs.

The new act – along with the Digital India Act, which is under progress and will replace the IT Act – is also expected to be India’s answer to technology governance issues that have cropped up in the last two decades.

The bill will allow existing telecommunication network providers to continue operations for the duration of their existing licences and give them time to migrate to a new set of terms and conditions. Existing telecommunication infrastructure providers will be allowed to operate for five years from the day the act goes into effect, or allowed to migrate to a new set of terms and conditions.

Major sections of the bill are completely reliant on delegated legislation – rules and regulations that would need to be formulated and notified later by the central government. This includes the administration of the Telecommunication Development Fund (currently called Universal Obligation Fund) and creation of a regulatory sandbox, amongst others.

While the bill aims to preserve existing rules and regulations under the Telegraph Act, at least until they are replaced, this might not be easy.

“Existing delegated legislation depends largely on the concepts and definitions under the parent law that has been rewritten entirely,” said Arun S Prabhu, partner (technology, media and telecommunications) at law firm Cyril Amarchand Mangaldas. “There may be inherent inconsistencies and conflicts. A different approach may have to be proposed during consultation.”

The proposed penalties for breach of terms and conditions range from written warnings to fines of Rs 5 crore, depending on the severity of the breach. In some cases, the proposed penalty is even imprisonment.

What’s included in the bill?

Among the new terms introduced is “telecommunications services”, which covers services of any description made available to users by telecommunication. This includes broadcasting services, email, voicemail, voice, video and data communication services, fixed and mobile services, internet and broadband services, internet based communication services, machine to machine communication services, OTT communication services.

But some definitions are ambiguous. For instance, it’s not clear at this stage what’s included in over-the-top, or OTT, services. Will it include messaging apps, or only apps with voice-over-IP and video-calling functions? If it includes messaging apps, will it include email apps too? What if you access these services through a browser instead of the app?

These questions will have to be resolved through consultation, as OTT services have not been defined under Indian law. But it’s clear this provision is intended to target messaging and calling services such as WhatsApp, Signal and FaceTime because the telcos have been lobbying to level the playing field for a long time.

The bill also defines “telecommunication equipment” to include “software integral to such telecommunication equipment”. It’s not clear if this would include a mobile’s operating system.

Controlling OTT services: Possible or not?

According to the bill, a central or state government or specially authorised officer can order the proscription, interception, detainment or disclosure of any message for purposes of public safety and public emergency; in the interest of India’s sovereignty, integrity or security; public order; friendly relations with foreign states; or preventing incitement to an offence.

But are interception and decryption possible when it comes to end-to-end encryption and traceability? This was argued in the Madras High Court in 2019 and in the Supreme Court in 2020. Under the IT Rules 2009, “decryption assistance” is any assistance to “(i) allow access, to the extent possible, to encrypted information; or (ii) facilitate conversion of encrypted information into an intelligible form”. WhatsApp had argued that “to the extent possible” does not mean breaking encryption and since end-to-end encryption renders decryption impossible, there was not much it could do. The government of India, on the other hand, had argued that this means breaking end-to-end encryption.

The matter remained unresolved and in 2021, the government notified the IT Rules 2021 under which significant social media intermediaries are required to trace the “first originator” or a message. WhatsApp and Facebook sued the government over it, arguing that it would mean breaking end-to-end encryption and undermining the right to privacy for all their users. This matter, too, remains sub-judice.

In addition, the bill says a specially authorised officer can direct the service provider to furnish any information, document or record – which may or may not be related to a subscriber – that is necessary for any civil or criminal proceedings. What would this mean for a service such as Signal, which maintains no records of its users and has no metadata for them? Would it cease to operate in India?

“The prospect of licensing for OTT is similarly concerning,” said lawyer Prabhu. “If licences for these types of services (which are usually regulated lightly, if at all) create onerous obligations which do not exist anywhere else, providers may be forced to deviate from global practices to continue to operate in India.”

Under such circumstances, all telecommunication services, including the internet, can also be suspended by the government. Interception and suspension of services are meant to be temporary measures that can only be maintained for as long as the public emergency exists. Similarly, the government or its authorised officer can take temporary possession of any telecommunication services, telecommunication network, or telecommunication infrastructure from a service provider.

Possession and use of any jamming devices that block telecommunications is prohibited without authorisation by the central government for specific purposes.

Licensing and spectrum allocation

The central government is the most powerful authority in this bill. It has the power to grant licences, authorise the possession of wireless equipment, and assign the spectrum. It also has the power to grant exemptions from such requirements in public interest.

Rights to spectrum can be assigned by the central government either through an auction or through an administrative process (that is, no auction) for governmental functions or public interest purposes on the basis of necessity. Existing spectrum allocations will remain valid for five years from the date specified by the government or date of expiry of the existing contract, whichever is earlier.

Certain kinds of uses within specified frequencies may not require auction or allocation through administrative process if the central government deems it so in public interest. Such existing exemptions will continue unless otherwise notified by the central government.

To enable more efficient use of the spectrum, the government may refarm (repurpose a frequency range for a different use than the one for which it’s used by the existing assignee) or harmonise (rearrange frequency range) any frequency range. This will be subject to terms and conditions, including payment of fees and charges.

Changing names

The Universal Service Obligation Fund, or USOF, was created in 2022 and given statutory status in 2003. The fund exists to pay for telecommunication infrastructure in rural and backward areas, and is raised through a universal access levy – a percentage of operators’ revenue under different licences.

The bill proposes changing the name of USOF to Telecommunication Development Fund. All licence, registration and assignment fees shall be made payable towards this fund.

Right of way

In telecom, right of way is a concept by which a service provider can lay down infrastructure in an already owned property (government or private) through a predetermined process.

If the property is owned, controlled or managed by a public entity, the bill says the service provider can submit an application for right of way for telecommunication infrastructure. Permission will be granted by the public entity, which is also entitled to be paid a fee. Substantive grounds are required for rejecting such an application.

If the property is private, the service provider can submit an application to the person who owns, controls or manages it. The central government will prescribe the procedure for the service provider to carry out any approved survey, operations, etc in such a place. In case the owner does not agree to provide right of way but the central government deems it necessary to do so in public interest, the government can still proceed to acquire the right of way for enabling the service provider to provide the infrastructure.

The bill spells out that right of way must be granted to all applicant providers on the same terms, in a non-discriminatory manner and, as far as possible, on a non-exclusive basis.

Right of way does not mean a service provider has any rights over the property, nor is the infrastructure considered part of the property. Certain infrastructure projects – such as establishment of common ducts, conduits or cable corridors for installation of telecommunication infrastructure – can be made available on an open-access basis to service providers by the central government.

Dispute resolutions over right or way will be prescribed through delegate legislation.

What happens if the service provider becomes insolvent?

In case of insolvency proceedings, the government can allow the entity to operate for national security, consumer interest, or the security, reliability and continued supply of telecommunication services.

If certain payment-related conditions are not met, the spectrum allotted to the entity will revert to the central government. The entity can be allowed to continue operations but its revenues will be placed in a separate designated account wherein the licence fee and charges applicable will be paid first.

In case the entity is unable to comply or has to wholly or in part shut down, a resolution professional, appointed under the Insolvency and Bankruptcy Code of 2016, must give 30-day notice to the central government.

In case an entity defaults on payments, the government can also choose to defer the payments, convert part or all of the amount payable into shares in the entity, write off such amounts or part thereof, or give relief from payment of such amounts or parts thereof. Through a notification, it can also choose to waive in part or full any fee or grant exceptions from the provisions of this act to an entity.

Regulatory sandbox

To encourage innovation, the central government may create a regulatory sandbox under which a registered entity can test its products and services in a live but controlled environment under government supervision. To do so, the entity would have to adhere to special terms and conditions of a licence, registration, authorisation or assignment.

In 2019, the Reserve Bank of India introduced a regulatory sandbox, while the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority of India introduced theirs in 2020. The now withdrawn Personal Data Protection Bill had also proposed the creation of an innovation sandbox.

No more spam?

The bill proposes certain steps to protect users from any communication that advertises goods or services (called “specified message”), irrespective of whether such goods or services are real or fictitious, legal or illegal. These steps may include taking user consent for receiving certain messages, preparation and maintenance of at least one Do Not Disturb register, and a mechanism to allow users to report specified messages that send messages without the users’ prior consent.

The Telecommunication Regulatory Authority of India had already notified the Telecommunication Commercial Communications Customer Preference Regulations, 2010 to curtail unsolicited commercial communication. It had also set up a Do Not Disturb registry according to these regulations and released a list of registered SMS headers for registered telemarketers in 2020. TRAI has a reporting mechanism to complain against unregistered telemarketers that would at first level be resolved by the telecom service provider and, in case of dissatisfaction, be escalated to the appellate level at the provider.

It is not clear whether the proposed changes will replace or supplement the existing mechanism.

Users must provide true information and must not impersonate another person while availing telecommunication services. Given that these services now include OTT services, it raises significant questions about what happens to online anonymity.

Diluting TRAI but acting against predatory pricing

The bill also proposes diluting the powers of TRAI. For instance, it has proposed removing the requirement for the central government to seek TRAI recommendations on the need to issue a licence to a new service provider and the terms and conditions of the licence that need to be offered. It has also proposed scrapping TRAI’s power to request necessary documents from the central government to make aforementioned recommendations.

The bill has also proposed that while notifying the rates at which telecommunication services are offered within and outside India, TRAI can direct telecom service providers from engaging in “predatory pricing that is harmful to the overall health of the telecommunication sector, competition, long term development and fair market mechanism”.