The Big Telecom Reform

The Telecommunications Bill 2023 offers a radical new approach to telecom regulation. It replaces the license-based regime with a more legislative approach that can only be good for the sector. There is much that remains to be done to get this right but the law is a step in the right direction.

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

Earlier this week, the government introduced the Telecommunications Bill, 2023, in Parliament. It is intended to replace a law that was enacted over 100 years ago to govern telegraph communications, but one that has since been applied in India to every evolution of communication technology to date. If enacted into law, this will reset the way telecom is regulated in India.

Exclusive Privilege

Last year, a draft of this law was released for public consultation. As glad as I was that the Telegraph Act was being replaced, my enthusiasm was tempered by our path dependence that was coming in the way of more meaningful reform. While it had put in place a new regulatory framework, the state was going to retain unto itself the exclusive privilege of providing telecom services in the country. As a result, private sector participation in the sector was going to continue to be permitted under licences—granted at the discretion of the Executive.

The 2023 bill does away with all references to exclusive privilege. While it has substituted licences with authorizations and allows the state to prosecute any provision of telecom services without authorization, the decision to refrain from regulating telecom from a place of exclusive privilege is a welcome signal of a new regulatory mindset.

Regulating OTT

Similarly, conspicuous by its absence is a reference to over-the-top (OTT) services. In my analysis of the 2022 draft, I had argued that the law ought not to regulate anything beyond the hard infrastructure that facilitates communications. In particular, I had said that it needed to stop short of extending to telecom-adjacent services delivered using software built atop the core infrastructure layer:

The telecommunications law should only regulate the hard infrastructure that facilitates communications and stop short of regulating what happens in the software layers above that. Diluting this principle—by including even a small subset of those software layers in the definition of telecom infrastructure—would, to my mind, risk the future of data innovation.

I am glad that the government has seen merit in these arguments.

Naysayers point out that it is still possible—from a combined reading of the terms “messages," “telecommunication" and “telecommunication services"—for the proposed law to be extended to cover OTT and other digital businesses.

While it will always be possible to wrest additional meaning out of broadly stated definitions, it seems unlikely that the government would go to the extent of removing the reference to OTT services if it was always its intention to regulate these businesses under this law.

Executive Discretion

I was similarly heartened to note that an effort was being made to minimize executive discretion. The 2022 draft for consultation stated that spectrum could be assigned through auction, administrative processes and “any other manner as may be prescribed." In the 2023 bill, this has been limited to just auction or administrative processes.

The 2022 draft had a residual entry in the First Schedule under which the government was allowed, in addition to a long list of purposes for which spectrum could be used, to also administratively assign spectrum for “any other function or purpose determined by the Central Government." The 2023 bill has no such residual provision.

Given how legislators suffer from a peculiar brand of ‘FOMO’ (fear of missing out), they tend to stay constantly anxious about all aspects of regulation that their drafting might have overlooked. Not even in my wildest dreams did I think I would live to see the day when Indian legislators willingly surrender the belts and braces of residual language that otherwise serves as safeguards against unknown unknowns in the future.

New Concepts

There are a number of other concepts that have been newly introduced into the 2023 bill. For instance, the territorial applicability of the 2023 bill now extends to offences committed outside India if the offence in question involves a telecom service provided in India, or if the telecom equipment or network involved is located in India. Given how most telecom services are centrally managed from a given country but provisioned everywhere else in the world, this sort of extra-territorial applicability is perhaps to be expected.

It is also gratifying to see a reference to technology solutions for governance—something I have been advocating for a while—from the use of regulatory sandboxes, which can be used to empirically assess the efficacy of relaxing certain provisions of law in respect of certain new products and business models. Also welcome is a reference to online dispute resolution for grievance redressal and the bill’s emphasis on ensuring that adjudication is digital by design. These were ideas first experimented with in the Digital Personal Data Protection Act, 2023, and I am glad to see the government double down on this approach.

Much Needs to be Done

To be clear, there is much that remains to be done. Even though the 2023 bill hints at a new approach to telecom regulation, we will only know what that will look like once the rules are drafted. By moving some of the obligations listed in licence deals into the statute, we have taken an important first step towards improving regulatory efficiency and have at the same time provided the sort of legislative legitimacy that no licence regime could. The logical next step is for the remaining licence obligations to be moved into purpose-specific regulations—at which point of time, all a telecom company would need to do is sign a document that records the type of service it is authorized to provide.

There are probably other nuances that on further study will reveal themselves to be a problem. In some instances, they will give rise to unintended consequences and need amendment. On balance, however, this is a brave attempt to chart a modern future for telecom in the country.

I look forward to watching it unfold.