Draft telecom bill proposes waiving off dues, licensing of OTT apps

The government has released the draft of ‘The Indian Telecommunication Act, 2022’ wherein it has proposed several significant changes, including provisions for waiving off dues for financially stressed operators, bringing over-the-top platforms (such as WhatsApp, Zoom, Netflix) within the ambit of telecom services that require a licence to operate and provisions for message interception in case of public emergency.

The draft Bill, which was released late on Wednesday night inviting comments from stakeholders, seeks to replace the existing legal framework comprising the Indian Telegraph Act, 1885, the Wireless Telegraphy Act, 1933 and the Telegraph Wires (Unlawful Possession) Act, 1950, that currently govern the telecom sector.

“It’s not just government as big regulator and industry the regulated, but an interactive system in which industry’s concerns are addressed by the government and the government’s concern are duly taken into consideration by the industry. That is important because we have to look at the protection of users…,” Telecom Minister Ashwini Vaishnaw said on Thursday.

The explanatory note on the draft Bill said it aimed to consolidate and amend existing laws governing provision, development, expansion and operation of telecommunication servicesnetworks and infrastructure, and assignment of spectrum.

“Spectrum is a valuable and inexhaustible natural resource, which has an element of public good. Therefore, it is vital to ensure efficient use and management of spectrum… ,” the Centre said in the note.

The draft Bill proposed a special framework to address defaults in payment by a licencee or a registered entity, wherein under “extraordinary circumstances”, the government may allow for deferment of the payment of such amounts, conversion of a part or all of the amounts into shares in the licencee or even write-off of such amounts.

The draft Bill also simplifies the framework for mergers, demergers and acquisitions, for which the entities will need to comply with the scheme for restructuring as provided under the Companies Act, 2013, and only need to inform the Department of Telecommunications. Further, if the licensee is undergoing insolvency proceedings it can continue to operate if it continues to provide telecom services and does not default on payment of dues. However, if the entity is unable to comply, then the assigned spectrum will revert to the control of the government. It “also seeks to create disincentive for acquiring spectrum at a value lower than auction-determined price.”

The draft Bill has proposed a refund of fees in case a telecom or Internet provider surrenders its licence.

The Bill also expanded the definition of “telecommunication services” to include broadcasting services, e-mail, video and data communication services, satellite-based communication services, Internet-based communication services and over-the-top (OTT) services, among others. While the explanatory note states that for providing telecom services “an entity shall have to obtain a licence”, the draft Bill has a clause that allows exemptions from the requirement of licence and registration in the public interest.

Further, it states that in case of any public emergency and in the interest of the sovereignty, integrity or security of India, the Centre or a State government will have the powers to direct that certain messages “shall not be transmitted, or shall be intercepted or detained or disclosed to the officer mentioned in such order”. However, “Press messages intended to be published in India of correspondents accredited to the Central Government or a State Government shall not be intercepted or detained, unless their transmission has been prohibited.”

Noting that every telecom user wishes to know who is calling, the government said it had included provisions related to identity to help prevent cyber-frauds using telecom services. “Users also need protection from calls that they want to avoid. The Bill enables a legal framework for preventing harassment of users from unsolicited calls and messages,” the government explained in the note. “The identity of a person sending a message using telecommunication services shall be available to the user receiving such message, in such form as may be prescribed,” it has said in the Bill.

Prashant Tarwadi, Director – Corporates, India Ratings and Research, said the draft Bill provided clarity upon two critical aspects — insolvency proceedings for stressed telecom companies and bringing Over-The-Top (OTT) and Internet Service Providers (ISPs) under the umbrella of the Ministry of Telecommunications. “The draft bill stipulates that ownership of spectrum remains with government, and value of spectrum cannot be sold by creditors under the Insolvency and Bankruptcy Code (IBC). Government reserves the right to take back the spectrum if the ailing telecom operator fails to pay government dues.”

However, he added that this could further delay resolutions of large telecom operators given that “there has been substantial delays in payment of government dues by such telcos and significant part of telcos’ debt are towards spectrum dues payable to the government”.

Kazim Rizvi, Founder of Delhi-based think tank The Dialogue pointed out that OTT services are currently regulated under IT Act which is better suited to govern OTT and digital platforms. Bringing them under the telecom services will “have a significant impact on the innovation in this sector because of the licensing requirements, added compliance burden and associated costs”.

“Secondly, the power given to the State and Central government to order interception…would now be applicable to the messaging platforms which provide encrypted services. There is still no clarity as to how this provision will operate on such platforms where they themselves hold no records of the communication. Further, the discretionary powers provided under the draft bill without adhering to the necessity and proportionality mandate as envisaged in Puttaswamy judgement might lead to the cases of unchecked surveillance,” Mr Rizvi added.

The bill has also diluted the powers of the Telecom Regulatory Authority of India and removed the parts wherein the government had to take recommendations from the authority before issuing licenses, along with removing the currently existing prohibition on appointing government officials as chairpersons below the rank of secretary and additional secretary, Mr Rizvi noted. “These changes would impact the autonomy and functioning of the authority,” he added.

(EOM)