With the Supreme Court barring private companies from seeking Aadhaar data, telecom firms relying on Aadhaar-based authentication to verify customers are in a fix. Mint analyses how the judgement will affect telecom companies and their subscribers.
1. How will telecom firms be affected?
Private companies including telecom service operators, which had built their e-KYC (electronic-know your customer) authentication system only around the biometric database will have to find other ways to verify their customers. Setting up the new infrastructure will lead to additional costs. According to an industry expert, the cost of authentication is expected to go up from ₹ 15 per person—the current cost of e-KYC verification—to ₹ 100 per person for a physical KYC. Shifting from an online authentication model to an offline one would be both expensive and time consuming.
2. How will this affect customers?
Earlier, customers could visit the nearest store, provide their 12-digit Aadhaar number, get their biometrics verified with the UIDAI database to get a SIM. However, now they will have to fill in physical forms and provide photographs and can get a SIM only after the operator completes the verification process. The offline process will take 24-36 hours. Some experts say the top court judgement requires the use of Aadhaar to be purpose-limited, legally-backed and privacy-protected. They say there may not be a problem if a person voluntarily gives his or her Aadhaar card as proof of identity.
3. What has UIDAI said?
UIDAI has issued a circular asking telcos Bharti Airtel, Reliance Jio and Vodafone-Idea to submit a plan for discontinuing Aadhaar-based authentication services by 15 October.
4. Is it back to an offline verification model?
Industry experts say Aadhaar-based authentication is the most convenient, cost-effective and quickest model of verification. For telcos, verifying customers online without accessing the Aadhaar database would mean returning to the offline model, where once the physical documents are submitted by a customer, the firm ships it to the verification centre and calls up the customer to cross-verify submitted details. Only if one telco can rely on KYC done by another could the online model be operational, said an expert.
5. What is the apex court judgement?
On 26 September, a five-member constitution bench headed by former chief justice Dipak Misra read down section 57 of the Aadhaar Act, 2016. The bench said it was “unconstitutional" for private firms to seek Aadhaar-based authentication. Section 57 of the Aadhaar Act allowed the state, companies or a person to use the unique ID to establish the identity of an individual for any purpose. Post the Supreme Court verdict, only the government can use Aadhaar for social welfare schemes.