The Modi Government has enacted a comprehensive and forward-looking law for the telecommunication sector. The Telecommunication Bill, 2023 received the President's assent on December 24, 2023, thereby formally codifying it into law. The Central Government has notified June 26, 2024 ("Appointed Date") as the date of commencement for certain provisions of the Telecommunication Act, 2023 ("Act").
Over the past few decades, the Central Government has introduced various reforms to address the growing needs of the telecom sector. The first major policy for the sector was the National Telecommunication Policy 1994 ("NTP 94"), which aimed at deregulating, liberalizing, and encouraging private participation in the telecom sector. The NTP 94 was soon replaced by the New Telecommunication Policy 1999 ("NTP 99"), which addressed technological changes that facilitated the conversion of voice, data and video to a digital form. However, the NTP 99 fell short of keeping up with the disruptive technological developments of the early 21st century, prompting the Central Government to frequently refine its policies.
The last decade witnessed unprecedented developments in the telecom sector, resulting in India becoming the second-largest telecom market in the world, with a subscriber base of 1.201 billion as of April 2024 (wireless and wireline subscribers). The scope for growth is tremendous considering the vast untapped market with tele-density in rural India still slightly below 60% while exceeding 133% in urban India.1 The active internet user base is reportedly expected to reach 900 million by 2025.2 The 5G spectrum auction earned USD 18.77 billion in revenues for the Central Government, reflecting the confidence of market players.
Against this backdrop, the Act is a welcome change that recognizes the disruptive potential of the telecommunication sector. It acknowledges that the telecommunication sector is a "key driver of economic and social development" in India and has undergone a massive transition in the past decade. Consequently, the Act emphasizes the need for a "safe and secure telecommunication network that provides for digitally inclusive growth."
The Act will, once the relevant provisions are made effective, repeal and consolidate three colonial-era laws that currently govern the telecom industry in India: the Indian Telegraph Act, 1885 ("Telegraph Act"), the Indian Wireless Telegraphy Act, 1933 and the Telegraph Wires (Unlawful Possession) Act, 1950. It will also amend certain provisions of the Telecom Regulatory Authority of India ("TRAI") Act, 1997. The Central Government has not made the amending and repealing provisions of the Act effective on the Appointed Date as the rules and regulations under the Act are yet to be framed. Further, provisions related to authorization, assignment, and adjudication of offences have also not been made effective.
KEY FEATURES OF THE ACT
Scope of the Act
The Act seeks to create a framework for authorizing, developing and maintaining telecommunication services and networks. It provides standards, conformity assessments and other measures for national and user security. The Act governs all types of telecommunication and services, including the assignment of spectrum.
In comparison to the Telegraph Act, the Act expands the scope of certain key terms and introduces new, holistic and forward-thinking concepts. For instance, the Act introduces inclusive concepts such as 'Telecommunication Services' meaning "any service for telecommunication"3 where 'Telecommunication' means "the transmission, emission, or reception of any messages, by wire, radio, optical, or other electromagnetic systems."4 These concepts were not used in the Telegraph Act.
The Act also expands the definition of 'Message' to include any "sign, signal, writing, text, image, sound, video, data stream, intelligence, or information sent through telecommunication."5 Similarly, the definition of 'Telecommunication Equipment' includes various types of equipment used or capable of being used for telecommunication and any "software and intelligence integral to" such equipment, recognizing the use of artificial intelligence for telecommunication.6
These are changes that would allow the Act to cover any technology or manner of communication developed in the future within its scope.
Powers of Authorization and Assignment
The Telegraph Act vested the "exclusive privilege of establishing, maintaining, and working telegraphs" with the Central Government, granting it the power to license telegraph services.7 The Act retains these powers but alters the position by not granting the Central Government exclusive privilege. However, these provisions have not come into effect on the Appointed Date.
Once effective, the Act will create an authorization regime similar to the licensing regime under the Telegraph Act, requiring authorization from the Central Government to (a) provide telecommunication services, (b) establish, operate, maintain, or expand telecommunication networks, or (c) possess radio equipment.8 Existing licenses will remain valid until their expiry or five years from the Act's commencement, whichever is earlier.9
Spectrum
Under the old regime, the Central Government, through the Wireless Planning and Coordination Wing ("WPC Wing") of the Department of Telecommunication, managed all spectrum-related matters. As the Act has not come into effect concerning spectrum assignment/ auction, the WPC Wing remains the concerned authority.
The Act streamlines rules and regulations related to spectrum by directly engaging with its allocation/ assignment. It envisions that the Central Government, as the owner of spectrum on behalf of the people, will assign spectrum through auctions except in specific instances where the allocation will be done through an administrative process and not auction, such as national security, defence, law enforcement, public broadcasting services, and satellite-based communication services.10 The administrative assignment of satellite-based spectrum aligns with global norms for dealing with such spectrum.
The administrative assignment contemplated under the Act may potentially conflict with the Supreme Court's decision in the landmark 2G Spectrum11 case in which the court observed that the State must adopt the method of auction for transferring or alienating natural resources. The Act upholds the essence of this judgement by introducing enabling provisions that allow the re-farming or harmonizing of assigned spectrum frequencies,12 allow the free and transparent auction of spectrum, promotes the utilization of spectrum in a "flexible, liberalized and technologically neutral manner",13 permits the re-assignment of particular parts of a spectrum14 and allows sharing, trading, leasing and surrender of assigned spectrum15. However, by allowing the administrative assignment of spectrum, the Act tries to strike a balance between the Supreme Court's judgement and the executives' responsibility towards promoting, developing and maintaining the telecom sector.
Identification of Users
The Act authorizes the Central Government to allot telecommunication identifiers16 to authorized entities17 for user18 identification. It mandates authorized entities to collect 'verifiable biometric-based identification' from users19 and obliges users to furnish true information while availing telecommunication services.20 These provisions have not come into effect on the Appointed Date.
A similar provision was introduced in the Telegraph Act via an amendment in 2019.21 The 2019 amendment obligated a license holder to identify and collect the 'core biometric information' of a user. Unlike the 2019 amendment to the Telegraph Act, the Act does not define 'verifiable biometric based identification' and the modalities around the collection of such data. The privacy advocates would perhaps be interested in seeing how the policy of 'Data Minimalization' that is enshrined in the Digital Personal Data Protection Act, 2023 ("DPDPA") and the Puttaswamy Judgement22 would interact with these provisions of the Act, once in effect.
Right to Intercept Telecommunication
The Act confers significant powers upon the Central and State Governments, as well as authorized officers, to manage telecommunication services during public emergencies or when public safety is at risk. These powers include intercepting, detaining and blocking messages, requiring disclosure of messages in an intelligible format23 and suspending telecommunication services.24 This is a notable shift from previous requirements, which only mandated message disclosure. However, prior to exercising these powers, the authorities must be "satisfied that it is necessary or expedient" to act in the interest of national sovereignty, integrity, security or public order or to prevent incitement to offences.25 The exercise of these powers could lead to legal challenges if not used judiciously.
Further, the authorities may temporarily take possession of telecommunication services or prioritize the delivery of certain messages during disaster management or in the interest of public safety.26 The Act also allows the Central Government to set encryption standards and identify users, raising significant privacy concerns and potentially undermining end-to-end encryption.27 With undefined terms such as 'public emergency,' 'public safety,' and 'necessary and expedient,' the Act's provisions are open to interpretation and may face constitutional scrutiny, as seen with the recent challenges against the 202128 and 202329 amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 respectively.
Right of Way
The Act allows the Central Government or authorized entities to seek the right of way for telecommunication networks on properties owned by public entities or private entities.30 The refusal of the right of way by private entities can be overridden by the Central Government if deemed necessary in public interest.31 This power, similar to the powers of the government to acquire private land for public purposes, can have a far-reaching impact and may lead to litigation.
Any disputes concerning the right of way have to be adjudicated by the District Magistrate or other notified authorities.32
Universal Service Obligation Fund
The Digital Bharat Nidhi33, which is a rebranded version of the Universal Service Obligation Fund, is a pool of funds collected from a universal service levy on telecommunication service providers.34 The Act mandates that these funds have to be utilized exclusively for promoting access to telecommunication services in underserved areas and supporting research and development.35 The Act leaves the administration of the Digital Bharat Nidhi to be decided by rules framed by the Central Government.36
Regulatory Sandbox
The Act introduces "Regulatory Sandboxes"37 with a view to encourage innovation and technological development in the telecom sector.38 This would allow companies to test new products and services in a controlled environment with access to live data, easing regulatory compliance and fostering innovation.39 This would also ease the requirement of complying with the full range of regulatory compliances40 and encourage the participation of stakeholders in coming up with relevant use cases for technologies and testing new products and services before public launch.
Protection of Users
The Act, along with other data protection laws such as the DPDPA, aims to provide greater user autonomy by making it a prerequisite to obtain consent before processing personal data. It mandates user consent for specified messages and establishes a new 'Do Not Disturb' register to protect users from unwanted communications.41
Power to Remove Difficulties
In order to mitigate risks associated with implementing the Act, the Act empowers the Central Government to issue orders to remove any difficulties in interpreting or implementing the Act for three years from its commencement.42
Enforcement and Dispute Resolution
The Act establishes an Adjudicating Officer43 ("AO") to conduct inquiries into contraventions and impose penalties on authorized entities.44 Appeals against the AO's orders can be made to the Designated Appeal Committee45 ("DAC"), and further to the Telecom Disputes Settlement and Appellate Tribunal or in certain cases, a civil court.46 The AO and DAC will have powers similar to that of civil courts.47
The Act encourages digital dispute resolution mechanisms and requires authorized entities to participate in online dispute resolution, complementing the Consumer Protection Act, 2019.48
Penalties
The Act provides penalties of up to INR 50 million and imprisonment of up to three years for various offences, including unauthorized telecommunication services, damage to infrastructure and unauthorized access to networks.49 The Central Government is empowered to search premises and take possession of unauthorized equipment, though the procedural safeguards and norms for the exercise of these powers have been left to the rules to be framed under the Act.50
Conclusion
The Act is a bold and welcome initiative of the Modi Government. It will likely have far-reaching consequences and has been drafted keeping in mind the rapid expansion and technological developments in the telecom sector. Key provisions of the Act relating to assignment, authorization and spectrum management are yet to come into effect. Once these come into force, the success of the Act will depend on its implementation and one would expect the rules to be framed under the Act to provide the necessary safeguards.
Footnotes
1. Press Release No. 31/2024 titled "Highlights of the Telecom Subscription Data as on 30 April 2024" released by the Telecom Regulatory Authority of India, accessible at https://trai.gov.in/sites/default/files/PR_No.31of2024.pdf
2. Report titled "Internet in India 2022" accessible at https://www.iamai.in/sites/default/files/research/Internet%20in%20India%202022_Print%20version.pdf
3. Section 2(t) of the Act.
4. Section 2(p) of the Act.
5. Section 2(g) of the Act.
6. Section 2(q) of the Act.
7. Section 4(1) of the Telegraph Act.
8. Section 3(1) of the Act.
9. Section 3(6) of the Act.
10. Section 4 of the Act.
11. Centre for Public Interest Litigation and Ors. vs. Union of India (UOI) and Ors. (MANU/SC/0089/2012)
12. Section 5 of the Act.
13. Section 6 of the Act.
14. Section 7 of the Act.
15. Section 8(2) of the Act.
16. "Telecommunication Identifiers" is defined under Section 2(r) of the Act to mean "a series of digits, characters and symbols, or a combination thereof, used to identify uniquely a user, a telecommunication service, a telecommunication network, elements of a telecommunication network, telecommunication equipment, or an authorised entity."
17. "Authorized Entity" is defined under Section 2(e) of the Act to mean a person holding authorization under Section 3 of the Act.
18. "User" is defined under Section 2(u) of the Act to mean "a natural or legal person using or requesting a telecommunication service, but does not include person providing such telecommunication service or telecommunication network."
19. Section 3(7) of the Act.
20. Section 29 of the Act.
21. Section 4(3) of the Telegraph Act.
22. Justice K.S. Puttaswamy and Ors. vs. Union of India (UOI) and Ors. (MANU/SC/1604/2017)
23. Section 20(2)(a) of the Act.
24. Section 20(2)(b) of the Act.
25. Section 20 of the Act.
26. Section 20(1) of the Act.
27. Section 19(f) of the Act.
28. Live Law Media Private Limited and Ors vs. Union of India (UOI) and Ors. (W.P.(Civil) No. 6272 of 2021)
29. Kunal Kamra vs. Union of India (UOI) and Ors. (W.P.(Civil) No. 9792 of 2023)
30. Section 11 and Section 12 of the Act.
31. Section 12(6) of the Act.
32. Section 18 of the Act.
33. Section 24 of the Act.
34. 'Universal Service Obligation' has been defined under Section 3(1A) of the Telegraph Act as the "obligation to provide access to telegraph services to people in the rural and remote areas at affordable and reasonable price."
35. Section 25 of the Act.
36. Section 26 of the Act.
37. "Regulatory Sandboxes" has been defined under Section 27 of the Act as a "live testing environment where new products, services, processes and business models which may be developed, on a limited set of users, for a specified period of time, with certain relaxations from the provisions of the Act."
38. Section 27 of the Act.
39. Consultation Paper of "Encouraging Innovative Technologies, Services, Use Cases, and Business Models through Regulatory Sandbox in Digital Communication Sector" released by Telecom Regulatory Authority of India on 19 June 2023, accessible at https://www.trai.gov.in/sites/default/files/CP_19062023.pdf.
40. Consultation Paper of "Encouraging Innovative Technologies, Services, Use Cases, and Business Models through Regulatory Sandbox in Digital Communication Sector" released by Telecom Regulatory Authority of India on 19 June 2023, accessible at https://www.trai.gov.in/sites/default/files/CP_19062023.pdf.
41. Section 28(2) of the Act.
42. Section 58 of the Act.
43. "Adjudicating Officer" has been defined under Section 31 of the Act to mean an officer appointed under Section 35 of the Act which shall be an officer of the Central Government not below the rank of Joint Secretary as one or more Adjudicating Officers for holding an inquiry in such manner as may be prescribed.
44. Section 32 of the Act.
45. "Designated Appeals Committee" has been defined under Section 31 of the Act to mean the committee appointed under Section 36 of the Act comprising of officers of the Central Government not below the rank of Additional Secretary.
46. Section 37(2) of the Act.
47. Section 37(2) of the Act.
48. Section 37(1) of the Act.
49. Chapter IX of the Act read with the Second Schedule and Third Schedule of the Act.
50. Section 43 of the Act.
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