Draft Bill moves to regulate Internet-based, OTT telecom services

The Ministry of Telecoms on Wednesday proposed regulating communication services such as voice, video and data offered by over-the-top (OTT) platforms such as Whatsapp as telecom services and requiring them to be licensed, just like other telecom operators to be obtained from the government.

In a draft Indian Telecommunication Bill, 2022, made publicly available late Wednesday, the DoT has also proposed watering down some crucial powers and responsibilities of the Telecom Regulatory Authority of India (TRAI) when issuing new licenses to service providers.

The bill consolidates three separate acts that currently govern the telecommunications sector – the Indian Telegraph Act of 1885, the Indian Wireless Telegraphy Act of 1933 and the Telegraph Wires (Unlawful Protection) Act of 1950.

In the bill, the government has included internet-based and OTT communication services such as WhatsApp calls, Facetime, Google Meet, etc. in telecom services, responding to a long-standing request from telecom operators who have called for level playing on several occasions to be put in place. Currently, telcos need a license to offer services, but OTT platforms do not.

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Bringing OTTs into the realm of telecommunications services means that OTT and Internet-based communications would require a license to offer services. In the draft, the DoT also said it could exempt companies from the requirement
Obtaining a license where it is in the “public interest”.

The bill also states that information sent and received via telecommunications services may be used by an authorized government official in the interests of India’s sovereignty, integrity or security, friendly relations with foreign states, public order or to prevent incitement to commit a crime. It’s unclear how this particular provision could potentially impact calls over WhatsApp, which are typically end-to-end encrypted; This means that the company itself does not have access to the information transmitted via such calls.

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The bill proposes amendments to the Telecom Regulatory Authority of India Act 1997. Currently, the TRAI Act requires the government to seek the regulator’s recommendations before issuing licenses to service providers. It also allows the TRAI to request the government to provide any information or documents necessary to make recommendations.
It has been proposed that these powers be removed from the new draft law.

The draft law also states that the TRAI can order operators to “forego predatory pricing” that harms the overall health of the telecoms sector, competition, long-term development and fair market mechanisms. A current provision in the TRAI Act prohibiting the appointment of a government official to chair the TRAI who has not served as Secretary or Associate Secretary was also proposed to be removed in the new bill.

The DoT has also suggested that in the event that a telecom company that owns spectrum suffers bankruptcy or insolvency, the spectrum allocated to it would fall back under central government control. So far, in insolvency proceedings, it has been unclear whether the spectrum of a defaulting operator belongs to the center or whether banks can take control of it.

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The bill also gives the Center the power to defer, convert to equity, write off or grant relief to licensees in exceptional circumstances, including but not limited to financial stress, consumer interests and maintaining competition. She also proposes replacing the Universal Service Obligation Fund (USOF) with the Telecommunication Development Fund (TDF). USOF is the pool of funds generated by a 5 percent universal service levy on telecommunications companies’ adjusted gross revenues. It has been used extensively to support rural connectivity; With the TDF, the goal is also to promote connectivity in underserved urban areas, R&D, skills development, etc.

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