Why A New Telecom Bill Is Necessary And How It Will Help The Sector. EXPLAINED

Communications Minister Ashwini Vaishnaw said the new draft Bill is expected to be in place in 6-10 months, but the government is not in a hurry

The new Bill proposes to include several internet-based over-the-top services such as WhatsApp, Signal, and Telegram under the "telecommunication services".

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The Department of Telecom (DoT) last week released a draft telecom Bill with an aim to replace the existing British-era framework governing telecommunications across India. Since the pre-Independence era until now, India’s telecommunication system was guided by legal frameworks such as the Indian Telegraph Act, 1885, the Wireless Telegraphy Act, 1933 and the Telegraph Wires (Unlawful Possession) Act, 1950. The new Bill aims to bring in some drastic changes to the sector as it will give more powers to the central government. 

Why did the Centre introduce a new Bill?

According to the government, the country needs a robust legal framework attuned to the realities of the 21st century, explanatory note to the Bill proposed to be named Indian Telecommunication Bill, 2022, said. The Bill will push for a slew of reforms, including a separate set of rules to deal with insolvency for stressed telecom assets, easier merger and acquisition norms, and empowering the government to waive off dues of financially stressed telcos. The draft Bill proposes a provision to waive off fees and penalties of telecom and internet service providers and seeks to regulate internet-based services.

According to an explanatory note by the Centre, “The existing regulatory framework for the telecommunication sector is based on the Indian Telegraph Act, 1885. The nature of telecommunication, its usage and technologies have undergone a massive change since the era of the ‘telegraph’. The world stopped using ‘telegraph’ in 2013.” The note further clarified that today’s era is about technologies such as 4G, 5G, Internet of Things, Industry 4.0, M2M Communications, and Mobile Edge Computing.

The new Bill may also give a fillip to the sector as Prime Minister Narendra Modi will launch 5G services in India on October 1.

Some major amendments on the cards

The new Bill proposes to include several internet-based over-the-top (OTT) services such as WhatsApp, Signal, and Telegram under the "telecommunication services". Besides OTTs, broadcasting services, electronic mail, voice mail, voice, video and data communication services, audiotex services, videotex services, fixed and mobile services, internet and broadband services, satellite-based communication services, internet-based communication services, in-flight and maritime connectivity services, interpersonal communications services, machine to machine communication services will be also be part of the “telecommunication services”, according to the draft Bill.

The draft Bill, which was released late on Wednesday night, has invited comments from stakeholders.

The note said it aimed to consolidate and amend existing laws governing provision, development, expansion, and operation of telecommunication services networks and infrastructure, and assignment of spectrum. The government said, “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 draft Bill proposed a special framework to address defaults in payment by a licensee 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 licensee or even write-off of such amounts.

It 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 DoT. 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.

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

Draft Bill deadline

The DoT has set the deadline of October 20 on the draft Bill. Last Friday, Communications Minister Ashwini Vaishnaw said the new draft Bill is expected to be in place in 6-10 months, but the government is not in a hurry. "After basis consultation process, we will create a final draft. That draft will then go through committee processes of Parliament. Then it has to go (to) Parliament. I see a timeline of 6-10 months but we are not in a hurry,” he mentioned.

Industry views

Kunal Bajaj, chief business officer, eSec Forte Technologies, said the stakeholders in the policy ecosystem should comprehensively deliberate on the requirements of telecom operators and customers in the wake of the upcoming 5G technology. The significantly faster data transfer speed of 5G is expected to bring high-quality and real-time streaming capabilities to customers through OTT platforms. Besides, the rollout is expected to strengthen the cloud infrastructure and computing facilities to support the allied products and services.

To accomplish all these tasks satisfactorily, service providers should eliminate the older equipment and replace them with new sophisticated technologies to maximise the benefits. The issues related to the spectrum fees are critical and addressing these appropriately will help in the successful rollout of new telecom services in the market. The policymakers can also help by waving past penalties on the Telecom Operators to support the creation of a win-win situation for the entire ecosystem of the telecom industry, Bajaj added.

On the other hand, the rating agency, India Ratings and Research, said the draft Bill may not help accelerate the resolution process for insolvent companies in the sector.

The Bill stipulates that the ownership of spectrum remains with the government, and hence implies that the value of spectrum cannot be sold by creditors under the Insolvency and Bankruptcy Code, the agency explained. The draft law also mentions that the government reserves the right to take back the spectrum if the ailing telecom operator fails to pay government dues, which further adds concerns to the operational viability of such telcos.

The report further said even the National Company Law Appellate Tribunal had ruled that government dues must be cleared before a stressed telco is admitted to insolvency proceedings in an order passed in July 2021. "Impact of the bill on the resolution process needs to be seen, given that the ailing telcos may not have the financial flexibility to clear government dues and/or have the operational cash flows to service the ongoing regulatory charges," the agency added.