Rethinking Telecom Regulation
The DOT is looking to revamp the Indian Telegraph Act to upgrade it to a modern law. If we had a blank slate to reimagine the law what would it look like. I suggest that we do away with the license regime and put all the regulations into the law. This way services providers just sign up a single document signifying that they are bound by the law and the regulations. Then we should simplify the entire system by simply dividing all telecom services into either carriage or access services and prescribing obligations in that manner. Lets make it technology neutral - especially when it comes to distinctions between voice and data.
This article was first published in The Mint. You can read the original at this link.
Telecommunications in India is regulated under the Indian Telegraph Act, 1885, a law that came into force at a time when the internet, voice telephony and many of the services we take for granted today were not even technically possible. Never in their wildest dreams would the British draftsmen of this law have imagined that it would regulate one of the most important sectors of the economy, which today has a bearing on virtually every aspect of modern life.
We often marvel at how British-era laws hold good to this day. But in the telecom context, our reliance on a century-old law has grievously hamstrung the industry.
Stretching the Language
It started with the decision to continue to rely on pre-internet legislation to govern communication technology that had evolved from carrying sounds by wire to transmitting data packets over radio spectrum. As a result, the law had to be interpreted in ways that extended its meaning well beyond what was originally intended—through licenses that became the primary expression of regulatory intent. And once we got accustomed to stretching language to suit our purpose, there was no turning back.
Today, telecom regulation in India is such an ugly, anachronistic mess that most of us in the sector have lost hope that it will ever be unravelled. Which is why the Department of Telecommunications (DoT) consultation on the need for a new legal framework governing telecommunications in India came as such a pleasant surprise.
The paper suggests that the government intends to develop a new future-ready law, consolidating existing regulations while keeping in mind global best practices. It emphasises, on the one hand, simplification and comprehensibility, and, on the other, regulatory certainty to promote investment. For more efficient use of scarce spectrum resources, it seems to recommend re-purposing and re-farming of spectrum bands in line with changing technologies.
In short, the government seems willing to completely re-imagine the way in which the country’s telecom sector is regulated. So now that we have a blank slate, what should the ideal telecom regulation look like?
End the License Raj
In the first place, I would do away with the licences that lie at the heart of our regulatory approach today. Rather than issuing different licences to various participants in the sector, often repeating general conditions with minor variations, we should just encode regulatory obligations into the law. Where specific obligations are required, particularly in relation to different services, they can be set out in purpose-built rules that apply selectively to entities which offer that particular type of telecom facility.
Authorisation to provide a service should be granted through a simple approval letter addressed to the entity permitted to provide that service. This letter can incorporate by reference the provisions of law and specific rules that will apply.
But more importantly, this is an opportunity to re-imagine the fundamental design of our regulatory framework. Today, telecom services are categorised under different licences that cover a range of activities. Many of these licences are redundant, referring to services that are no longer needed or provided more efficiently through software. For instance, the Audiotex licence regulates conference call services. While it might have been necessary when the only way multiple callers could speak to one another was on a conference bridge, today all smartphones have built-in features to call into conference any number of users on the fly. It is pointless to continue with a licence requirement for this. But since it remains in our rule book, service providers feel compelled to obtain it by way of abundant caution. Numerous examples like this abound.
Even the services we actually use are carved up into a convoluted set of categories and sub-categories for reasons lost in the mists of time. We need to radically simplify this Byzantine mess if we are to create a more efficient regulatory regime.
Carriage and Access
My suggestion would be to categorise telecom companies by type, based solely on whether they provide carriage or access services.
Carriage service providers build and maintain the infrastructure of the telecom network that connects operators in different locations and to one another. They should only be authorised to provide services to authorised telecom service providers and not directly to customers. Access providers, on the other hand, should be authorised to deal with customers, both individual and enterprise. They could be further divided by function—those that provide only data services (equivalent to Internet Service Providers under the current regime) and those that provide both voice and data. All the telecom services we consume today will fit neatly into this configuration.
Technology Neutral
There is one additional element to be mindful of—the importance of ensuring that these regulations are technology neutral by design. Defining any part of our regulatory obligations in terms of a specific technology risks having the law rapidly become redundant. To extend this concept further, we should remove all regulatory distinctions between plain voice services and voice over internet protocol services, so that one can be freely converted to the other.
As radical as all this might sound (especially from our current vantage point), many peer countries are already well down this path.
It is not radical liberalisation to catch up with the rest of the world.
