The draft of India’s new telecom law requires a relook

Last week, the Department of Telecommunications (DoT) followed up its recent consultation on a new telecommunications regulatory framework with a draft bill. This bill is intended to replace the Indian Telegraph Act, which has, since 1885, regulated all aspects of telecommunications in the country. I spent the better part of the weekend poring over the draft, and my feelings about it are mixed, at best.

At the outset, it’s clear that the government has tried to re-imagine how the sector will be regulated. Section 3 affirms the government’s exclusive privilege to provide telecommunication services, establish telecom networks and allocate spectrum—thereby giving it the authority to permit private sector participation through licences, registrations and authorizations. This is similar to Section 4 of the Telegraph Act on which all of telecom regulation in India is currently based.

Other than this, much of the rest of the law is new, moving obligations that are today set out in licence agreements into the main body of the statute. This includes rules about telecom spectrum—how it is assigned, shared and transferred, regulations about how violations will be addressed and how disputes will be resolved. It also includes regulations around how rights of way can be exercised—over public and private property alike, the insolvency of licensees and various user protection measures.

Bringing these provisions into the statute not only improves regulatory efficiency, it offers a legislative legitimacy absent in today’s licences. No longer will the government be able to amend terms with a stroke of the executive pen—it will need Parliamentary approval.

All of this suggests that the draft bill is just one part of a much larger reform. With so many provisions being brought into the statute, the licences from which they were taken will have to be overhauled. This is where things could get interesting. The logical next step for the government would be to move licence obligations into purpose-specific regulations. Taken to its logical conclusion, this could mean that telecom companies will only have to sign a simple document recording the type of services they can provide and the regulations they must adhere to.

What’s more, now that the government has shown that it is not afraid to take an axe to the way things have been done so far, I see no reason why it should not go further and do away with redundant licences altogether. Better still, it could collapse the entire licensing regime, as I have suggested before, into two broad categories of service—carriage and access.

Much of the criticism in the media has been levelled at the breadth of the law. In particular, the inclusion of over-the-top (OTT) services within the definition of “telecommunication services” is being seen as a step too far—requiring firms to obtain licences even if they are just providing services on top of telecom services.

If this is in fact what the government intends, it is unfortunate. 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.

But simply because a category of service falls within the exclusive privilege of the state to perform does not mean that companies under all circumstances will have to obtain a licence to provide it. Section 3(3) allows the government, in public interest, to exempt the requirement for licences wherever it deems fit. As a result, even though OTT services fall within its authority to regulate, the government could choose to exercise its powers under Section 3(3) and exempt OTT players from the requirement to obtain licences.

Dare we hope that it will?

For me, the real problem with the draft is in the definitions. Loosely defined terms can transform otherwise sound legislation into a law riddled with loopholes. To my mind, this is where the draft falls drastically short of its promise. Some terms have been defined circularly—referring back to themselves in paradox loops that are next to impossible to unravel. “Telecommunication services” has been defined to mean services made available to users by telecommunication, which is not particularly helpful—even when read along with the list of illustrative examples.

Other terms have been defined so expansively that the synonyms strung together result in absurd outcomes in some of the contexts in which these defined terms are used. The term “messages” has been defined to not only mean signs and signals, but also “data streams, intelligence and information”, which in various contexts in which the term ‘messages’ has been used has strange implications.

I draw comfort from the fact that this is a draft for consultation, that it will likely be amended before it is placed in Parliament. Hopefully, these concerns will be addressed based on feedback received.

Finally, if this draft is in fact part of a larger game plan for how the sector will be regulated, it would help to have all the other elements (regulations and revised licences) in front of us before we comment. How else will we be certain that the comments we make today will not affect some other part of the proposed framework?

Rahul Matthan is a partner at Trilegal and also has a podcast by the name Ex Machina. His Twitter handle is @matthan