The Aakhya Weekly #77 | The Telecom Saga
The Aakhya Weekly #77 | The Telecom Saga
In Focus: Telecommunication Bill, 2023: Progress or Regress?
By Anoushka and Aradhana Gupta
India's digital transformation is undeniable, fueled by a staggering one billion mobile users, a robust internet community of half a billion, and the world's highest mobile data consumption. As of January 2023, India's telecommunications sector ranks second globally, with 1.17 billion subscribers. The sector, integral to public infrastructure, emphasizes the need for cost-effective, reliable, and universally accessible telecommunication services. However, the existing laws governing telecommunications have a history of both appropriate use and misuse, including issues like surveillance and internet suspensions.
The Telecom Bill aimed to regulate online communication services like Zoom and Gmail. However, the bill's unclear definition of telecommunication has sparked concerns regarding its relevance to internet services. Telecommunication, broadly defined as the electronic transmission of information, involves specific methods of exchanging information through technologies like phones, the internet, and broadcasting.
Regardless of the specifics, the bill is poised to impact our fundamental right to privacy and constitutional freedoms, including freedom of expression and the right to receive information. This uncertainty underscores the imperative for thoughtful consideration and precision in regulating telecommunications, especially given the dynamic nature of the digital landscape.
The Pre-Reform Phase
On December 18th, 2023, the Lok Sabha introduced the Telecommunication Bill 2023, aiming to simplify the intricate regulations and licensing that pose challenges for both companies and users. This legislation pledges to streamline the process for those looking to provide telecom services, paving the way for quicker approvals and smoother infrastructure development.
Before this initiative, the Ministry of Communication engaged the public in shaping a forward-looking framework for telecommunications. In July 2022, a consultation paper titled "The Need for a New Legal Framework Governing Telecommunication in India" was released, gathering insights from a diverse array of stakeholders and industry associations. The feedback received during this process played a crucial role in shaping the Indian Telecommunication Bill 2022.
The consultation paper delved into the existing legal framework and associated challenges, drawing inspiration from telecom laws in leading global jurisdictions such as Australia, the EU, the UK, Singapore, Japan, and the US. Despite multiple rounds of consultations and deliberations preceding the bill's introduction, it has faced significant opposition.
Various stakeholders have voiced concerns, emphasizing potential implications for mass surveillance and threats to online privacy in the proposed legislation. This underscores that the journey toward reform is characterized by both progress and contention.
A Watershed moment for the Telecom Industry: Why now?
The history of India's telecom industry traces a transformative journey, evolving from a state-monopoly era to a dynamic and competitive landscape. It all began in 1851 with the establishment of the first telegraph line. Post-independence, the Department of Telecommunications (DoT) was formed in 1985, marking an era of state monopoly.
In the late 20th century, the winds of change swept in with economic liberalization. The National Telecom Policy in 1994 signaled a significant shift, opening doors for private participation and breaking the state monopoly. To regulate this evolving sector, the Telecom Regulatory Authority of India (TRAI) was established in 1999.
Fast forward to the recent winter session of Parliament, where the government embarked on an ambitious agenda to overhaul the telecommunications sector. The mission was to replace age-old legislation dating back 138 years, including the Indian Telegraph Act of 1885, the Indian Wireless Telegraphy Act of 1933, and the Telegraph Wires (Unlawful Possession Act) of 1950. And thus, the Telecom Bill of 2023 was introduced, aiming to amend the Telecom Regulatory Authority of India (TRAI) Act of 1997.
Presenting this groundbreaking bill to Parliament, Ashwini Vaishnav, the Minister of Electronics and Information Technology, outlined key provisions, shaping the future trajectory of India's telecom industry.
Shift in Power Dynamics: TRAI to Central Government
The proposed telecom bill brings substantial changes in the regulatory framework by diminishing the authority of the Telecom Regulatory Authority of India (TRAI) and redistributing powers to the Central government. Section 3 of the bill grants exclusive licensing privileges to the government, bypassing the need for TRAI recommendations and altering the previous consultative process. TRAI loses the power to compel the government to disclose crucial documents when evaluating recommendations. Furthermore, Section 46(d) removes a provision that previously restricted the appointment of certain government officials as TRAI chairpersons. These alterations signify a noteworthy shift in power dynamics, indicating a move towards a more centralized governance structure in the telecom sector. Despite these changes, the objective is asserted to be serving the interests of consumers, promoting market competition, ensuring telecom network availability, and safeguarding national security.
Spectrum Management: The Public Resource
Recognizing the significance of spectrum as a valuable public asset, there is an imperative to ensure its judicious and effective utilization. The current legislative proposal introduces a nuanced approach to spectrum management. As per the bill, spectrum allocation will undergo a transformational shift, employing a dual mechanism of auction and administrative allocation. This marks a departure from conventional practices and aims to optimize the distribution of this vital resource, aligning with the broader interests of the public and the nation.
The "Right of Way (RoW)" for Telecom Infrastructure
The "Right of Way (RoW)" is essential for a telecom company to lay fiber-optic cables in a city, involving obtaining permission to use public spaces like streets and sidewalks. This access enables the establishment of high-speed internet infrastructure, crucial for network expansion. The provision emphasizes that the right of way must be provided on a non-discriminatory and non-exclusive basis, ensuring fair and open access for all qualified facility providers. This ensures equal opportunities for different telecom companies to expand their networks and offer services in the same area.
User Privacy: Safe or Not?
In today's digital era, where telecom services serve as the gateway to online experiences, the government is prioritizing user protection. Measures such as the right to consent before receiving specific messages and the creation of "Do Not Disturb" lists aim to ensure a positive and safe online experience. However, a concern arises from a provision in the Telecom Bill that seeks users' biometric information for telecom services, previously declared unconstitutional. Critics express worries and raise questions about the potential impact on privacy.
Way Ahead: Positive Step or Not?
Looking ahead, the current parliamentary scenario, marked by chaos, protests, and the absence of over 140 opposition Members of Parliament, suggests a need to reconsider the passage of the Telecom Bill 2023. The Internet Freedom Foundation recommends appointing a Law Commission or an unbiased expert body to assess necessary reforms for the telecommunications sector. Additionally, explicit clarification within the bill, excluding online communication services from its scope, is emphasized. On the other hand, the Internet and Mobile Association of India (IAMAI), representing around 600 internet firms and startups, supports the bill, anticipating enhancements in licensing and spectrum allocation procedures. However, concerns arise due to the exclusion of certain domains, viewed by some stakeholders as limiting comprehensive regulation in the evolving telecom and digital sector. The contrasting views highlight the complexity of balancing progress with concerns about exclusions in the telecom sector.
And So……
The Telecom Bill 2023 has sparked intense debate about its potential impact on the Indian telecom landscape. While it aims to modernize the regulatory framework and streamline infrastructure rollout, concerns regarding its provisions on surveillance and internet governance remain unaddressed. Only time will tell whether the bill ultimately fosters a robust and user-centric telecom ecosystem or stifles innovation and user rights.
The Telecom Bill 2023 marks a significant step in reforming India's telecom sector. Its success will depend on its ability to strike a balance between promoting healthy competition, safeguarding user interests, and addressing national security concerns. Continued public discourse and legislative scrutiny are crucial in ensuring the bill delivers on its promises.
Top Stories of the Week
Parliament passes Post Office Bill 2023
Both houses of the parliament have passed the Post Office Bill 2023, repealing the antiquated Indian Post Office Act of 1898 which regulated post offices in the country. The Union government emphasized that the new legislation is designed to facilitate the transition of post offices from conventional mail delivery services to a vehicle for the delivery of citizen-centric services and to further expand its role to include banking services.
Key changes prescribed by the bill include, (i) granting the post office exclusive privilege for issuing postage stamps, (ii) allowing the central government to authorize officials to intercept mail for reasons including state security, foreign relations, emergencies, or law violations, and (iii) exempting the post office from liability unless officers are involved in fraudulent or willful actions causing service loss, delay, or mis-delivery.
Many parliamentarians have expressed apprehensions about the provision for intercepting mails, emphasizing that it might compromise the privacy of citizens utilizing Indian Post services and promote state surveillance. The bill's ambiguity is underscored by the absence of clear interception criteria, notably the undefined concept of 'emergency,' providing a broad and potentially extensive basis for the interception of mails. Critics have criticize this lack of precision, seeing it as an avenue for the state to exercise unrestrained powers in the guise of national security. Furthermore, the bill fails to establish a well-defined procedure for interception, accentuating the arbitrary nature of the process. The absence of transparency in intercepting raises concerns about the potential misuse and abuse of power by authorities.
RBI's Advisory on Mitigating Evergreening Risks
The Reserve Bank of India has issued an advisory restricting its regulated entities from investing in Alternative Investment Funds (AIFs) linked to their debtors. These include banks, NBFCs, and other financial institutions.
AIFs are investment vehicles regulated by the Securities and Exchange Board of India (SEBI), designed for sophisticated investors who pay a minimum of Rs. 1 crore each to the fund that invests per a defined investment policy. Recently, SEBI noted that many regulated entities were investing in AIFs that had downstream investments in their debtor companies. When a company would be on the verge of defaulting on its loans, it could receive funds from AIF, and use these to repay the lender. This perpetuated a practice known as “evergreening”.
Banks indulge in ‘evergreening’ to prevent loans from defaulting and appearing as non-performing assets in their books. By concealing the actual status of these loans through new or additional ones, banks can create an illusion of profitability and asset quality.
RBI’s recent advisory could be viewed as a response to SEBI’s estimation of circumvention in these cases amounting to tens of thousands of crores. The directive instructs that a regulated entity must exit AIFs lending to its debtors. Failure to comply with the directive within 30 days will require these entities to make a 100% provision on such investments.
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