Telecommunication Regulation

Future of Law: Telecommunication Regulation

The telecommunication sector providers experienced a massive windfall over the last few years, owing to the significant revenues and margins from new businesses such as cloud, security, payments, and insurance services, to name a few. While the revenue streams gained traction, the requirement for the service providers to comply with stringent regulations, pay for licenses and other service fees, continues to be a pain point.

With the incidence of the new draft Indian Telecommunication Bill, 2022 (the Bill), we see that the regulations in this sector, and allied sectors as well, are moving towards a consumer centric approach. This is not specific to India, but even in the advanced jurisdictions, like the European Union and the United States, we have witnessed a focus to move away from adding compliance burdens on the consumers / customers, and approach regulation in a graded manner, in its application on private parties. The gradation is dependent on the underlying technology that is deployed or built for the purposes of providing end services to the last mile customer. The European Union makes a distinction on the basis of “phone number”, to make determinations on whether a particular service which relies upon phone number, or is independent of it, qualifies for licenses, authorizations, or a similar regulatory framework, or not.

We have also witnessed how the telecommunication laws in the US, also moved away from strict regulation of “customer premises equipment”, which is managed by the end users, and is already subject to several qualitative checks prior to their availability and adoption by the end users. Unfortunately, the draft Bill as is structured now, does not provide any clarity with respect to customer equipments, and seems like the end users will also have to seek some form of registration, authorization, license, or the likes, from the end users. In furtherance of the consumer centric regulatory approach, which has become a global trend, this approach seems to escape this requirement, and intends to over-regulate services which have been left out of licensing regime elsewhere.

The Bill has also blurred the lines which existed between services which are used on a commercial scale, and that which merely connects two individuals connecting over the medium of an audio, video or data service. Drawing from closer to home, a light touch graded framework, akin to Malaysia, may be instituted in India, to demarcate compliances between pure software providers and cloud computing resellers - this may also allow some semblance of distinction being made, while factoring in: (i) the kind of service; (ii) the underlying technology; (iii) the intended service providers and recipients.

The rapid spread of IoT – connected devices that are proliferating through our homes, workplaces, and wider society, such as smart cities – are reliant upon 5G services for connectivity. In order to manage these devices, service providers will also need to take advantage of the scalability and flexibility offered by cloud, in the backdrop of a nuanced regulatory framework. The viability and success of any policy intervention in this regard will be heavily reliant upon capex concerns; accordingly, infrastructure and network sharing will assume greater importance in order to cap initial investment amount and generate create value and efficiencies in the deployment of next-generation communications infrastructure. In order to ensure that such sharing exercises do not morph into a cartelization scheme, regulations on price fixing, supply scarcity, investment limitations will be vital.

There exists several telco – multi network operator alliances, and the proliferation of 5G across the world, may just nudge this bundling exercise, to go beyond just video and audio streaming, but also add gaming formats to be available too. While the national antitrust regulator does not deem the current scenario to merit an investigation, rules, guidelines may be proposed by legislators to ensure that the telecom market in India is not driven towards any further consolidation.

With privacy discussions ripe in the country, the focus of regulations much like any other country, are moving towards ensuring that the consumers are highly empowered and do not have to rely upon the whims and merciless discretions of the service providers, for enforcing their rights. The Digital India dream approaches its realization in the form of technology, innovation, as well as the regulatory framework, where the intent of the legislature seems to bring about recognition to technical convergence and a future proof, technology agnostic law and policy environment. There have been discussions to re-orient the telecom, innovation, and associated segments, by bringing in a comprehensive legislative framework under a singular Digital India Act – and we now see that the government machinery is not digging into its own heels to make accommodations for the private sector. We are all hopeful that the outcome of this conversation between public and private parties, will culminate in a coherent, cohesive, and forward looking, consumer-friendly framework. Going back to basics, borrowing from Occam’s Razor, the future of law lies in keeping it simple, and not making efforts duplicating same intent, beyond necessities.