The draft Bill could also trigger turf wars between the DoT and MeitY and the DoT and TRAI as the lines of jurisdiction have been blurred. Overlapping jurisdictions have led to regulatory battles in the past.Even as India competes aggressively in the T20 World Cup being played in Australia, at home, the pitch is set for a different match between government departments, regulators and stakeholders. This has been triggered by the draft Indian Telecommunication Bill, which reimagines and reshapes the digital architecture while creating possibilities for the start-up ecosystem. The proposed draft Bill brings together telecom operators (providers of physical infrastructure), Over-the-Top service providers (OTTs) and internet-based communication systems under one roof.
Archaic and outdated laws have to make way for a trust-based system that systematically overhauls the old regime with clearly defined and demarcated areas without crossing the line. This way the government’s priorities and the policy objectives of improving the ease of doing business in the digital ecosystem, promoting innovation, and incentivising investments can be achieved. While modernising laws in the fast-moving world of technology, it is imperative to reflect contemporary times. The new-age legal framework must strengthen digital markets, aiding economic growth and development.
With the onset of the reforms to liberalise the economy in the early 1990s, there has been a paradigm shift in the legal and regulatory regime. For instance, electricity generating plants were liberated from licensing under the Electricity Act, of 2003, while telecom infrastructure providers only require registration. This change in the regulatory regime had a tremendous impact on the overall economic development across all major sectors of the economy. On similar lines now, the internet economy requires a supporting and facilitative legal framework and regulatory mechanism that is simple and easy to navigate and aids the digital economy.
The new law should thus only regulate the hard infrastructure/network layer, the essence of telecommunications, and not the software layer. Telecom service providers (TSPs) operate at the network level while the OTTs function at the software layer. The latter are governed by the Information (Intermediary Guidelines and Digital Ethics Code) Rules, 2021 and the Information Technology Act, 2000, while TSPs are regulated by separate legislation, governing telecommunications, which is now being replaced via the proposed Draft Telecommunication Bill,2022.
While the objective of the draft Bill is that it only seeks to consolidate and amend the laws governing TSPs, it extends the boundaries with an all-encompassing definition of telecommunications services, broad enough to include OTTs/internet-based communication systems within the regulatory regime. Such an omnibus and catch-all definition can compromise regulatory efficiency and affect the orderly growth of the internet economy. By extending licensing to OTT communication platforms and making it once again “licence-centric” — even though India jettisoned the licence permit raj decades ago — the Department of Telecommunication will be setting the clock back.
The draft Bill could also trigger turf wars between the DoT and MeitY and the DoT and TRAI as the lines of jurisdiction have been blurred. Overlapping jurisdictions have led to regulatory battles in the past. In fact, the telecom sector has, in the past, witnessed a tussle for regulatory supremacy between TRAI and the Competition Commission of India. The Supreme Court’s intervention was required to settle the matter. The Court has also recently resolved a 10-year long jurisdictional battle between the Central Electricity Regulatory Commission and the Security and Exchange Board of India to regulate and control forward trading/future contracts in the electricity markets. To avoid a similar fate in the present scenario and prevent such a clash, a clear Lakshman Rekha has to be drawn.
Moreover, the inclusion of OTTs under the regulatory regime for TSPs will be tested on the touchstone of the principles enshrined under Article 14 of the Constitution — “unequal cannot be treated equally”. A merger of two distinct service providers under one regulatory regime could offend the doctrine of equality as there is no reasonable basis to expand this into the arena of internet-based communication services/OTTs. Considering the implications of this framework, the government, which is in the midst of receiving comments on the draft, should reexamine these contentious issues and course correct.
Translating the vision of a $5 trillion economy into reality requires a regulatory framework that offers stability, predictability and legal certainty. A legal architecture based on the concept of “one sector one regulator” can help provide clarity to stakeholders and facilitate the growth of the digital economy.
The writer is a senior advocate, Supreme Court of India