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Telecom Act 2023 replaced the outdated Telegraph Laws: India’s Leap into Next-Gen Communication Regulation

12 min read

By Tanishka Tiwari

Published on: February 12, 2024 at 17:07 IST

On December 24, 2023, the Telecommunications Act of 2023 (Telecom Act), passed by Parliament, got Presidential assent. The Telecom Act, once enacted, replace India’s out-of-date telegraph-centric telecommunications regulations, the Indian Telegraph Act of 1885 and the Wireless Telegraphy Act of 1933.

Throughout these years, as technology advanced, service providers arrived and exited. Communications shifted from voice to data, and the Telegraph Act stayed firm, albeit with a series of changes and occasional policy reforms. This new Act’s lifespan may be shorter. Still, it will need to see the next few generations of communications technology, including a slew of innovations spanning human-human (voice calls, messaging, video calls), human-machine (wearables), and machine-machine (Industry 4.0) communications. Computing and other technologies like artificial intelligence, the Internet of Things, and quantum computing will become inextricably linked to communications technology.

While maintaining the core provisions of telecommunications law, the Act incorporates certain practices, such as allocating spectrum bands for specific purposes and establishing mechanisms for resolving disputes between licensed service providers and the government. Additionally, the legislation introduces new avenues for telecommunications operators to obtain authorizations for installing their equipment in different regions.

One aspect of the Bill that has raised concerns among advocates for digital rights is the potentially broad interpretation of the term ‘telecommunications,’ which does not explicitly exclude online services such as email and messaging applications. This ambiguity could enable the government to implement more stringent controls on messaging apps in the future, as activists have cautioned. However, Union Minister for Electronics and Information Technology Ashwini Vaishnaw has clarified that the government does not intend to regulate online applications through this Act.

The Act authorises and assigns spectrum through auctions, except for particular instances stated in the Act’s first schedule. Notably, the Act gives the central government the authority to allocate, for example, satellite broadband spectrum rather than auction it.

The Act defines 19 instances in which spectrum will be assigned through an administrative process rather than an auction. These cases cover a wide range of services and purposes, including global mobile personal communication via satellites, national and international long-distance services, direct-to-home services, and telecom services provided by state-run entities such as Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL).

In this context, it is essential to note that the Supreme Court in Centre for Public Interest Litigation v. Union of India1 emphasised more involvement in natural resource allocation, stating, “While transferring or alienating natural resources, the State is duty-bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process.”

In Natural Resources Allocation, In re, Special Reference No. 1 of 2012,2 the Supreme Court stated that, while the auction is not a constitutional imperative, it can be used in specific cases to optimise income returns and meet legal and constitutional criteria.

Retaining the auction procedure for allocating various telecommunications services demonstrates a proactive stance under judicial recommendations, promoting transparency and justice in allocation. However, eliminating the auction procedure for many services presents significant concerns.

Telecommunication is broadly defined to encompass messages that have been rearranged, calculated, or exposed to other operations during transmission, emission, or receipt. The Act expressly excludes broadcasting services from the scope of telecommunications services. Interestingly, the definition of telecommunication excludes Over-The-Top (OTT) media providers.

The Act requires central government approval for anybody wishing to provide telecommunication services, construct or extend a telecommunication network, or possess radio equipment.

Section 20 of the Act, for example, states that the central and state governments may intercept a message or a class of messages exchanged between two or more people in an intelligible format, monitor them, and prevent them from being transmitted in the interest of public emergency and public safety. The provision is drafted in broad language and allows the government broad authority to intercept and monitor any message or class of messages to or from any individual.

Furthermore, the potential consequence of allowing the identification of the initial source of information on its platform could harm end-to-end encryption, which is a crucial feature that ensures utmost privacy on widely used messaging platforms. This may jeopardise the benefits of such platforms and potentially violate individuals’ fundamental privacy rights. This assertion is supported by multiple provisions outlined in the Act.

The first provision that may give rise to the concern above pertains to the definition of telecommunication, which encompasses the transmission, emission, or reception of any form of communication through wire, radio, optical, or other electromagnetic systems. Messaging platforms would fall within the ambit of this Bill.

The second provision, Section 19 of the Act, grants the central government the authority to establish standards and conformity assessment measures about encryption and data processing in telecommunication. It is crucial to thoroughly evaluate these standards and measures that the government will implement to assess the extent of traceability and interception of data. Importantly, it should be noted that the Intermediary Guidelines of 2021 under the Information Technology Act of 2000 already address identifying the initial source of information on a computer source.

In K.S. Puttaswamy v. Union of India,3 the Supreme Court declared that the right to privacy is an inherent aspect of the right to life and personal liberty guaranteed by Article 21 of the Indian Constitution.4 The Supreme Court emphasized the principle of proportionality and legitimacy when determining whether the State can violate the right to privacy. The following criteria must be met: the action must be legal, necessary in a democratic society, proportionate to the need, and procedural safeguards against abuse. Given the previous, if Section 20 of the Act is not implemented proportionately, it will infringe on individuals’ ‘right to privacy’ as provided by the Indian Constitution.

In People’s Union for Civil Liberties (PUCL) v. Union of India,5 the Supreme Court emphasised that in the absence of a just and fair procedure for regulating the exercise of power under an Act, it is impossible to protect citizens’ rights guaranteed by Articles 19(1)(a)6 and 21 of the Indian Constitution.

As a result, unless and until the legislature establishes comprehensive procedures to regulate/monitor the interception of private information and data transmitted between two or more individuals, the provision is insufficient to protect fundamental rights. In Chief Inspector of Mines v. Lala Karam Chand Thapar,7 the Supreme Court held that a statute is often worse than useless without suitable rules.

Section 6 of the Act authorises the central government to support the flexible, liberalised, and technologically neutral spectrum use. This critical factor promotes a level playing field for various technology solutions by guaranteeing that the government does not impose limitations based on specific technologies.

The Universal Service Obligation Fund, established by the Telegraph Act of 1885, is a pool of cash generated by collecting 5% of the universal service charge imposed on telecom service providers. This Universal Service Obligation Fund has been renamed Digital Bharat Nidhi, a fund that provides telecom services to underserved communities.

In terms of enforcement, the Act includes measures for adjudicating contraventions under it. It has voluntary agreements by facility providers as a means of minimising contraventions. This undertaking exposes the violations and describes the steps taken or to be done to alleviate them. The Act establishes a Designated Appeals Committee and an appeals mechanism for the Telecom Disputes Settlement and Appellate Tribunal. The chapter on offences and penalties under the Act outlines the consequences of violating the Act’s provisions.

The Act addresses the shortcomings of the previous telecom regulatory regime, which needed an efficient dispute resolution process for users and telecom service providers. The Act empowers the central government to establish or authorise ODR methods for resolving disputes between users and authorised telecommunications service providers. Authorised entities must participate in these systems while conforming to the prescribed terms and conditions. Significantly, the Bill does not change users’ rights under the Consumer Protection Act 2019.

The provisions of this Act apply to offences or contraventions committed outside of India if they involve a telecommunication service provided in India or telecommunication equipment or network located in India.

Telecommunication refers to the transmission, emission, or receiving of communications via wire, radio, optical, or other electromagnetic systems. This comprises communications rearranging, calculating, or subjected to other procedures while being sent, emitted, or received.

Individuals who want to provide telecommunications services, build or expand a telecommunications network, or own radio equipment must acquire permission from the central government. Existing licences will remain valid for the time of their grant or five years if no period is indicated. Authorised entities that provide specific telecommunications services, as the central government approves, shall use verifiable biometric-based identification to identify individuals who use the services.

As the spectrum owner, the central government assigns spectrum and may issue a National Frequency Allocation Plan from time to time. Anyone wishing to use spectrum must obtain an assignment from the central government. The central government may set forth applicable terms and conditions for spectrum assignment, including frequency range, pricing methodology, price, fees, charges, payment mode, duration, and procedure. Telecommunications spectrum is assigned through auction, except entries in the first schedule are assigned administratively.

The first schedule covers national security and defence, law enforcement, public broadcasting, disaster management, scientific research, satellite communication, and transportation safety. It covers conservation, meteorology, amateur stations, and international communication. Furthermore, spectrum is allotted for the operation of telecommunications services by governmental bodies, safety support in industries like mining and oil exploration, public services by BSNL and MTNL, and testing for developing technologies via regulatory sandboxes.

Section 4 allows the central government to re-farm or harmonise any assigned frequency band to improve spectrum efficiency. “Harmonisation” refers to reordering a frequency range, but “re-farming” refers to repurposing it for a purpose other than the existing assignee. The central government may allow spectrum use in a flexible, liberalised, and technologically neutral manner, subject to specific terms and restrictions, including charges.

To make the most use of available spectrum, the central government may award a specific portion of the spectrum, previously allotted to a primary assignee, to one or more additional entities. The central government may terminate the assignment or a portion of it if the assigned spectrum is not used for insufficient reasons within the specified time frame. Additional terms and conditions concerning spectrum utilisation may also be imposed.

The central government has the authority to develop a monitoring and enforcement mechanism to ensure compliance with the terms and conditions of spectrum use, allowing for interference-free use of the assigned spectrum. The central government may approve the allotted spectrum’s sharing, trading, leasing, and surrender, subject to specific terms and conditions, including any fees or taxes.

The Telecommunications Act, 2023 in India has generated mixed reactions, with both merits and demerits being highlighted. Here’s a breakdown of some key points:

The Telecommunications Act 2023 is a considerable divergence from earlier Acts, which have been replaced to reflect the changing environment of human-human, human-machine, and machine-machine interactions. Act is ready to manage new generations of communication technologies, such as phone calls, texting, video calls, wearables, and Industry 4.0.

The future of communication is expected to involve the inextricable integration of computers and technologies such as AI, IoT, and quantum computing. Two critical and sometimes ignored goals are highlighted: fostering competitiveness and mobilising money for infrastructure upgrades in a debt-laden business. The Act appropriately calls for technological neutrality in spectrum use, recognising that telecom services are no longer characterised by technology type.

To promote fair competition, new market entrants must be granted non-discriminatory and non-exclusive access to infrastructure on commercial terms. With an integrated perspective, the Act addresses the convergence of telecommunications and the internet, emphasising the significance of regulatory convergence. The difficulty of fragmented governance over convergent services is acknowledged, raising concerns about the efficacy of different licensing and administrative divisions.

The Act fails to address concerns about contentious elements that empower the government amid safety standards and crises, potentially encroaching on citizen privacy while providing limited accountability. Balancing safety and privacy becomes an essential priority for governing officers. India faces obstacles in 5G adoption, such as unappealing use cases, poor monetization, and insufficient infrastructure investment. The pledge of Reliance Jio and Bharti Airtel to significant capex reductions after 2023-24 raises worries. The Act lacks a particular approach for promptly promoting 5G and 6G infrastructures.

The enactment of this Act is timely considering India’s rapid progress in the 5G era and the surge in demand for telecommunications services. There is an urgent requirement for a governance and regulatory framework that aligns with the telecom industry’s needs and supports the advancement of new technologies.

The Act aims to simplify various aspects by incorporating concepts such as voluntary undertaking and digital office drawn from recently enacted legislation like the DPDP Act. However, the Act falls short on certain crucial aspects for facilitating business operations. For example, it lacks provisions for granting exemptions to captive/private use, relaxations for smaller industry players in terms of deferred compliance or financial incentives, provisions on the use and deployment of cloud-based technology, clarity on spectrum holding in the event of insolvency, and a roadmap for other emerging technologies like the internet of things and artificial intelligence. The industry’s reception and implementation of the new framework will determine its effectiveness once the Act is enforced and the rules are communicated.

The Act should incorporate the principle of functional segregation, as observed in international regulations, to tackle market concentration. Instances from Sweden, the UK, Australia, Ireland, and Poland illustrate its implementation, but caution is advisable to avoid disproportionate remedies that could hinder investments and innovation.

As evidenced in Italy, voluntary transitions, incentivized by reduced taxation or fiscal advantages, present a more efficacious approach. Anticipated outcomes encompass a range of industry configurations, ranging from fully integrated telecommunications companies to network aggregators and providers specializing in a single service.

Wireline-based architecture possesses significantly greater capacity to deliver 5g/6g speeds. India must transition from wireless to a wireline-based architecture to support high-quality digital applications. The Act’s emphasis on the Right of Way acknowledges this necessity and calls for establishing a conducive business environment to reduce costs, particularly in the investment in fiber infrastructure for urban and rural areas. Through the USOF, the government should establish explicit targets for developing infrastructure in rural and non-rural regions.

Generating resources and creating a competitive landscape for private sector investments are crucial in fostering a robust fiber infrastructure. The Act concludes by underscoring the importance of a unified vision, highlighting the synergies in licensing, standards, skill development, and governance across various departments. This comprehensive approach is indispensable for India’s digital revolution, positioning the telecommunications industry at the forefront of sustained growth.

Recent developments in India, such as the planned entry of satellite communication services, government concerns about the import and use of unregulated telecommunication equipment within existing networks, inefficient processes surrounding spectrum allocation and subsequent under-utilization, SIM fraud, and rapid advancement of telecommunication technologies, necessitated an overhaul of India’s previous telecommunication regulations. The Telecom Act is part of the Central Government’s broader goal of updating existing laws to reflect the current state of technology, supporting India’s 5G roll-out, ensuring more efficient spectrum utilisation, and bringing emerging issues relating to telecommunication security and diversified telecommunication service structures under regulation and/or oversight. It also plans to make the telecom sector more investor-friendly, with lower penalties and simpler processes.

While OTT players have received some relief from the DoT’s clarifications on the intended scope of the Telecom Act, they can expect content regulation and moderation, as well as intimation requirements, to be implemented under the laws proposed to be made applicable to the broadcasting sector, which is currently undergoing a consultative process through the draft Broadcasting (Services) Regulation Bill, 2023.

The continued expansion of India’s telecom sector is critical to the country’s digital transformation. The Telecommunications Act of 2023 aims to enhance service competition, encourage the transition to fiber-based networks, and promote technical dynamism. These efforts are intended to herald a new age in telecommunications. The focus is on making tangible progress rather than falling short of expectations.

References

Endnotes

1. (2012) 3 SCC 1

2. (2012) 10 SCC 1

3. (2017) 10 SCC 1

4. Constitution of India, 1949, Art.21

5. (1997) 1 SCC 301

6. Constitution of India, 1949, Art.19(1)(a)

7. 1961 SCC OnLine SC 19