India is today taking giant strides towards becoming a digitally empowered society and knowledge-based economy. And the backbone of this digital revolution is the Indian telecommunications sector.
Showing a firm intent to revitalise the sector, the Government, in the last few years, initiated multiple structural and procedural reforms towards encouraging investments, promoting healthy competition and protecting consumer interest.
Continuing the reformist approach, the Government introduced the Draft Indian Telecommunication Bill, 2022, and needs to be lauded for its effort in bringing in a progressive piece of legislation that seeks to promote the growth of the sector and also enhance India’s digital infrastructure.
A Forward-Looking Step
The new legislation is the need of the hour as it seeks to replace the outdated legal framework governing telecommunications in the country, when high-speed advances in internet technology have permeated the sector – to help make rapid strides of progress. Once passed, the draft bill would bring about several changes in the way the sector currently operates, including new regulations and guidelines. The draft Bill, aptly focuses on bringing regulatory certainty, ensuring level playing field and applying the law prospectively.
A leveller for fair competition in the ecosystem The proposal to regulate OTT communication services by bringing them under telecommunication services is a prudent move to ensure fair competition and a level playing field. While the services by TSPs and Communication OTTs are similar and provided over the same application layer, the former bears the additional cost of infrastructure development, spectrum procurement and management, licensing fees, etc., and the latter does not. The long and expensive ordeal of acquiring spectrum and developing and maintaining the network infrastructure involves investing a lot of money, which is undertaken by the TSPs alone, presently.
It is only fair that all digital technology-enabled communication services in this day and age be given a level playing field and be supervised by statutory agencies and governing bodies. This is primarily what the Draft Indian Telecommunication Bill, 2022, seeks to do. It will not only strengthen national security by making the ecosystem more accountable, but also lead to improved telecom infrastructure and the potential to unlock new opportunities.
Maximising Access to Spectrum
Spectrum is the key resource for telecom services, and the draft Telecom Bill emphasises the availability of adequate spectrum at reasonable reserve prices, besides its efficient use and other reforms such as Refarming & Harmonization, Sharing/Trading/Leasing, Technology agnostic use, Returning unused spectrum to Government, Surrender of Spectrum, etc. A long-term perspective w.r.t. spectrum pricing is imperative, and hence, situational criteria based modest reserve prices for future spectrum to be auctioned must be set.
Continued spectrum assignment to the state-owned entities at market-discovered prices would ensure that all players can compete effectively in the market, offering quality telephony services to the citizens.
Further, assignment of spectrum via auction or administrative process, must be done in a fair and transparent manner. Any spectrum identified exclusively for IMT Services should not be assigned for non-IMT services or be delicensed. It is imperative that no spectrum below 2 GHz frequency be delicensed, and any decision on the delicensing of new bands only be made after due demand studies, current usage audit, impact on competition, impact on existing investments, and recommendations from TRAI are conducted and reviewed.
Safeguarding National Security
In line with the best global practices, the Act should provide budgetary support or allocations as necessary to implement national security measures. Since telcos may be required to set up noncommercial infrastructure for this purpose, the Government can consider reimbursing them for any such cost incurred. The revenue losses due to internet shutdowns are also significant for the telcos and may be considered likewise. Standard operating procedures in this regard would help bring in more accountability with authorities who initiate/action such measures.
Regulatory Impact Assessment (RIA):
For a sector as critical as telecom, the law should provide for RIA of all Telecom related rules and regulations. The provision for RIA would be in line with global best practices (e.g. as followed by OFCOM in UK) and help ensure that regulations are as efficient and effective as possible. These may be mandatorily incorporated in the process of rulemaking, regulations, etc. to ensure that the benefits of a decision/rule outweigh the costs imposed on a market participant/sector. The due process and safeguards for this may be laid down in the Bill – to include transparent consultation, impact assessment, reference to TRAI (if applicable), financial implications if any, etc.
Right of Way (RoW) for Telecom Infrastructure
RoW is critical for the telcom infrastructure in the country and has been fittingly underlined in the draft Bill, which provides for a “robust regulatory framework within the federal structure, to obtain RoW in a uniform, non-discriminatory manner, for the establishment of telecommunication infrastructure”. The RoW related rules and guidelines issued by the DoT must be legally binding on State and Local Authorities to help expedite readiness of infrastrcuture to enable faster network deployments and service roll-outs. The Bill must also clearly specify that there should not be any recurring/renewal fees/rentals for RoW, but only a one-time fee that should not be more than the cost of restoration. Neither should there be any compensation/recurring charges levied for deployment of telecom infrastructure on Government Land/Buildings.
Realising the Vision of a Digital India
An important aspect of the Draft Telecommunication Bill is the inclusion of measures to promote the expansion of digital infrastructure in India. With this provision in place, all stakeholders in the sector will be required to participate in developing telecom infrastructure and deploying new technologies and services, such as 5G, AI and IoT.
To expedite India’s ambition to become a global digital powerhouse, contributions to the Telecom Development Fund (TDF) must be met not only from budgetary allocation and amounts collected through spectrum auctions but also, from entities that cause traffic in the network, such as OTT service providers.
The OTTs providing “Telecommunication Services” within the meaning of Telecom Bill (to be later converted into the Act) can alternatively pay the TSPs for use of TSP network for providing their services to their customers in a fair and equitable manner by way of an equivalent of “interconnect charge” (say network access charge) for the actual traffic carried by these OTTs on the TSPs’ networks, which can be easily measured.
The telcos, apart from investing massive amounts in creating the network Infrastructure and incurring huge operational expenses in terms of meeting various Regulatory compliances, also pay exorbitant levies and taxes in terms of License Fee, SUC, GST, etc. amounting to more than 30% of the TSPs’ revenues. Reduction in levies like License Fee, USOF contribution, etc. would leave more funds with them for expansion, increasing liquidity, facilitating investments required to complete the Digital India Vision and 5G roll-outs, and also keeping tariffs at affordable levels.
The recommended measures will not only bridge the extant digital divide by creating more jobs and economic opportunities for citizens in the digital economy but also facilitate the growth of ecommerce, digital payments and fintech, bringing us one step closer to realising the vision of Digital India.