FOMO and the Law

Lawmaking, fraught with the challenge of foreseeing unintended consequences, often leads to statutes filled with broad, catch-all provisions. These residuary clauses, while providing regulatory flexibility, create uncertainty and potential for overreach. The Other Service Providers (OSPs) regulations in telecom exemplify this, with vague definitions extending regulatory reach to unintended sectors. Precise, purpose-built legislation is advocated over open-ended definitions to avoid such regulatory ambiguities.

This article was first published in The Mint. You can read the original at this link.

Lawmaking is an unenviable job. It requires clarity of vision and outcome and the instinct to be able to identify and pre-empt unintended consequences of unfortunately phrased provisions. And, since it is practically impossible to foresee the many ways in which the laws we draft will be put to the test, it is, for the most part, a thankless enterprise.

I believe that it is this anxiety around unintended consequences of their drafting that drives lawmakers to stuff their statutes with residuary clauses—ostensibly innocuous catch-all provisions designed to cover subject matter that might have been inadvertently omitted during the drafting process.

Regulators love these clauses because they allow them to cast their net wide and cover things not specifically stipulated but from the point of view of the regulated, these clauses are a constant source of uncertainty and the ultimate excuse for regulatory over-reach.

The Other Service Providers (OSPs) regulations were originally introduced to ensure that unlicensed entities do not use the telecom resources provided to them in ways that enter into the domain of the licensed access providers. They were specifically designed to limit businesses that use high-speed data connections from redeploying that bandwidth to make and receive international voice calls over the data network. International voice telephony was the domain of licensed long-distance telecom operators and if these businesses indiscriminately used their data connections to make calls these operators—and by extension, the government—would have been deprived of revenue.

For this purpose, registered OSPs were subject to three main restrictions—a prohibition against the use of switched telephony services, a restriction on encroaching upon the jurisdiction of other telecom service providers and an obligation to ensure logical separation between voice and data networks. They were also obliged to comply with reporting requirements and subject themselves to inspection by regulatory authorities.

The OSP Regulations apply to firms that use telecom resources to provide “application services", a term which has been defined in the OSP Regulations to include tele-banking, tele-medicine, tele-education, tele-trading, e-commerce, call centre and network operation centre services—all of which refer to clearly identifiable businesses that should be included within the ambit of the regulation.

If the definition stopped there we would have had no cause for confusion. Unfortunately, it does not. The definition goes on to include any other information technology (IT) enabled services, a broad formulation that ensures that any service that has been enabled by IT could be held to fall within the definition of application services and subject to regulation.

There is IT in everything we do today. Pretty much every modern services business is enabled by IT and could, consequently, be argued to qualify as an application service. Software development centres would have to obtain OSP registration even though their use of telecom resources does not in any manner encroach upon the jurisdiction of licensed telecom operators. Data centres that do little more than offer cloud storage facilities will likely be deemed to be an application service.

Why, even modern lawyers’ offices with their dependence on email and the internet for the delivery of service to their clients could, arguably, fall within this definition. Surely it was not the intention of the telecom regulator to bring all these businesses within the ambit of OSP registration.

But that is the text of the regulation and officers of the department of telecommunications have been known to apply a wide interpretation of the term whenever it suits their purpose. I know many businesses that would not have qualified as OSP businesses but for the residuary provision at the end that have applied for OSP registration by way of abundant caution—to pre-empt harassment down the line.

As it happens, we can, in this case, use principles of interpretation of statues to our advantage. The doctrine of ejusdem generis, states that when a general statement follows a list of specific items, the general statement must be qualified by the specific. In the context of OSP regulation, we could use this principle to argue that the term “any other IT enabled services" must be interpreted to mean services along the lines of the specific services that preceded it, preventing the regulations from being broadly applied to anything that is enabled by technology.

We are not always going to be able to find a principle of interpretation that comes to our aid. We should not have to. Open-ended definitions give regulator unnecessarily wide discretion to dynamically determining how regulations should apply to a given operation and results in regulatory uncertainty.

Instead, Indian lawmakers would do well to get over their Fear of Missing Out and draft precise, built to purpose legislation to meet specific regulatory objectives.