Telecom Bill revisits licence raj, impinges on privacy safeguards

The draft Telecommunication Bill, 2022, which was released for public comment last month, was meant to revamp archaic laws, some of them over a century old, and make the telecom sector “future-ready”. Instead, stakeholders — telecom companies (telcos), digital app players, broadcasters, direct-to-home service providers, and over-the-top (OTT) services — fear that the scope of the Bill goes far beyond telecom issues and points to the return of the Licence Raj under the Department of Telecommunications (DoT).
 

Telcos are concerned that apart from weakening the consultative role of the Telecom Regulatory Authority of India (TRAI), the draft vests DoT, which also oversees a state-owned telecom company, with a huge amount of discretionary powers to act in favour or against telcos.
 

Many say the Bill has also indulged in “regulatory overreach” by usurping the powers of the Ministry of Electronics and Information Technology (MeitY) and the Ministry of Information and Broadcasting (I&B ministry). So regulatory overlaps could seriously impact the ease of doing business, which was another stated purpose of the new legislation.
 

Many global agencies have raised concern that the draft Bill will adversely impact privacy by giving DoT almost unlimited powers to access and endlessly demand all manner of private information.
 

All stakeholders have till October 20 to send the government their responses to the draft Bill.
 

Much of the controversy hinges on the broad definition of “telecommunication service”. Under the draft Bill, it will now include, among others, electronic mail (say, your personal Gmail), broadcasting services, video and data communication services, OTT communication services (such as WhatsApp) and interpersonal communication services. That apart, the Bill has a clause that gives the government limitless powers to add or exempt any others in the list. “Message” has been defined very broadly to include “any sign, signal, writing, image, sound, video, data stream or intelligence…”.
 

“Such a broad definition means that apps of e-commerce, banking, gaming and social media apps, and any platform where there is two-way messaging will be brought in the definition and will require a licence. So it’s getting the entire digital app ecosystem under the Licence Raj,” said a senior executive of an OTT communication services company.
 

These objections involve differences between OTT players and telcos, too. The latter argue that OTT communication services are usurping their SMS and voice call businesses and, therefore, should be licensed just as they are. OTT players argue that their services are very different from telcos — they don’t buy spectrum but use telecom networks to offer value added services for which telcos get paid by customers for utilising data. Plus, they are already regulated under the IT Act as intermediaries.
 

DoT officials argue that OTT services were implicitly defined and interpreted as telecom services under the Indian Telegraph Act already and what they have merely done is make it transparent and less confusing. They argue that they will go for “light touch regulation” and there is no reason for concern.
 

Global concerns over the draft Bill are a bit different. The US-based think tank Albright Stonebridge Group’s (ASG) analysis of the draft points out that the Indian government believes that foreign technology companies do not contribute their “fair share” given the huge market they enjoy. So the wider licensing regime proposed by the Bill is one way in which the government hopes to change that by significantly boosting its revenues through licence fees. Left unstated is the fact that licensing is also a way of curbing the growing power of the global tech players.
 

The bigger issue global tech players are worried about is surveillance. The ASG note said, “It’s a serious blow to privacy and end-to-end encryption, the Bill could let the government access virtually endless amounts of private information if the government meets vaguely defined thresholds. For instance, they say the government can intercept any message under the draft if it is in the interest of sovereignty and security of the country.” ASG has also red-signalled powers under the draft Bill for internet shutdowns on the basis of “low, ambiguous thresholds”.
 

For telcos, the big blow is that the Bill eliminates the need for the government to seek Trai’s recommendation before issuing a licence to a service provider. For instance, the regulator had earlier recommended that OTT telecommunication services should not be licensed. Now there will be no need for consultation once the provision is incorporated in the Bill.
 

“An independent regulator is key to a vibrant telecom industry, weakening it is surely not desirable. Also the Bill provides huge discretionary powers that can be used to benefit some telcos against others. It can lead to arbitrary decision-making. This happened earlier; but now it will have legal sanction,” said a worried top executive of a telecom company.
 

For instance, the draft Bill provides powers to DoT to waive the fee or interest payable by a telco even for the entire amount to be paid to the government and also grant exemptions under the Act, all in the name of national security, public interest or to ensure competition. It can also convert its dues to equity or even offer write-offs.
 

The issue has come into the spotlight because of the government’s revival package for Vodafone-Idea Ltd, in which it agreed to convert its dues into equity and become its largest shareholder. At that time, the argument being forwarded was that the government wanted to ensure competition by ensuring a three-player industry. Now the question being asked is whether the government should use taxpayer money to run inefficient telcos, which would be unfair to competitors.
 

DoT officials say that it is only an enabling provision and the detailing of when and in what circumstances such powers would be used will be clearly incorporated in subsequent notifications, so the concern that it will be arbitrary is unfounded. Privately, though, many telcos are too wary to believe it.

Call for concern

• Bill goes far beyond telecom extending its licensing powers to virtually all digital applications
• Many see it as a “regulatory overreach” with DoT usurping powers of other ministries
• Stakeholders complain that they will now be controlled by multiple ministries, which is contrary to government’s public stance of ensuring “ease of doing business”
• Telcos complain that it gives huge discretionary powers to DoT, which could be used to favour or disfavour some telcos
• Global think-tanks see it as a serious blow to privacy
• They say it is directed towards global tech companies, which the government believes have not contributed a “fair share” despite getting entry into a huge market. They will now have to contribute through licence fees