Primer on the Telecommunications Act, 2023

This document aims to serve as a primer for businesses helping them demystify the complexities of the Telecom Act and understand the applicability and impact of its provisions on their business interests.

Overview:

The Telecommunications Act (‘Act’) was passed by the Lok Sabha on 20th December 2023 and the Rajya Sabha on 21st December 2023. It received the assent of the President on 23rd December 2023. The Act aims to consolidate the law relating to the development, expansion and operation of telecommunication services and telecommunication networks, the assignment of spectrum and incidental acts thereto. It repeals the Indian Telegraph Act, of 1885, and the Indian Wireless Telegraphy Act, of 1933. Until the time the government notifies new rules, all rules and orders made under the now repealed acts shall, in so far as they are not inconsistent with the provisions of the Telecommunication Act, continue to be in force. The provisions of Part III of the Indian Telegraph Act shall continue to apply in all cases relating to the laying down of transmission lines under section 164 of the Electricity Act, 2003.

Features of the Act:

1.?????? From Licensing to Authorization

2.?????? Spectrum Allocation?

The Act adopts a dual approach to spectrum allocation, (1) auction as the default mechanism and (2) allocation through the administrative process for specific circumstances listed in the First Schedule.

Spectrum auctions foster competition and maximize revenue. However, some delineated cases are exempt from auctions due to their critical nature or public interest value. These exempt cases, encompassing diverse areas, can be categorized as follows:

3.?????? Effective Utilization of Spectrum

Spectrum is a public good, to enable repurposing of any frequency range for a different use, re-arrangement of the frequency range is often required. Therefore, the Act provides for re-farming and harmonization of the frequency range.

4.?????? Verification of Users

?Authorized telecommunication service providers are mandated to employ verifiable biometric identification to authenticate the identities of their customers, to prevent spam calls, messages and SIM-based fraud [1].

5.?????? Right of Way

?Telecom networks faced difficulties in deploying and expanding critical infrastructure in India due to several prevailing bottlenecks.

A licensee had to comply the Indian Telegraph Right of Way Rules, 2016. These rules were the first step to simplify the procedure for granting the right of way. While these rules had a lengthy mechanism of approvals, inspections and procedures required to lay down underground and overground telecom infrastructure, neither the Telegraph Act nor the rules had a provision for the Licensee to directly approach a private property owner for the establishment of telecom infrastructure through his property, everything had to be done through the authorities designated by the government, increasing red tape.

Right of Way provisions under the new Act

The Act provides a clear statutory framework to ensure that the Right of Way can be obtained in a uniform manner by the facility provider for establishing, maintaining, or expanding telecommunication networks.

Section 11 establishes the Right of Way for telecommunication networks in public property. Facility providers may petition public entities (Central Government, State Government or Local Authority) that own or manage public property for right-of-way permissions for telecommunication networks under, over, along or across such property.

Public entities shall generally grant permission for surveying or entering the property to establish, operate, and maintain networks, subject to reasonable administrative expenses and compensation. Rejections must be based on reasonable grounds recorded in writing.

Facility providers must minimize damage to public property and ensure uninterrupted operations. If damage occurs, they must either restore the property or pay mutually agreed compensation.

Section 12 provides for the Right of Way for telecommunication networks over private property. The facility provider applies for permission from the person under whose ownership, control, or management the private property is. The person can review the request and then enter into an agreement for the grant of Right of Way. Suppose the occupier of the private property does not accept the application of the facility provider. In that case, the government can provide the Right of Way over that private property to such facility provider in the interest of public interest and subject to terms and conditions as may be decided and after prescribing adequate compensation to the property owner.

The equipment installed on any property is not to be considered a part of such property and cannot be the subject of any claims, encumbrances property taxes or the like. The facility provider also does not get any right, interest, or title over the property on which the telecom network is established.

Section 15 grants the central government power to establish common ducts and cable corridors for installation of telecom network

6.?????? Adjudicatory Mechanism

The Telecom Act has introduced a system where the Adjudicating Officer (“AO”) and Designated Appeals Committee (“DAC”) are digital by design to provide a more lean and transparent mechanism for resolving disputes between telecom companies and the government. Disputes related to provisions of Chapter III; Right of Way will be referred to the district magistrate under whose jurisdiction that land is situated.

7.?????? Continuity of Telecommunication Services

To ensure uninterrupted telecommunication services, an Online Dispute Resolution Mechanism shall be established by the Central Government to resolve disputes that may arise between users and authorized telecom service providers. This mechanism will ensure that the telecom sector remains free of cumbersome litigation that hampers continuous service. There is also a provision for voluntary undertaking by service providers for contraventions which leads to a bar on proceedings under the Act. This leniency provision ensures that service providers can accept omissions on their part and pay fines to remedy them before being subjected to the adjudication mechanism.

8.?????? Simplification of Restructuring Norms

9.?????? Creation of Regulatory Sandboxes

To facilitate innovation and development, the Central Government may create Regulatory Sandboxes, which are live testing environments for new products, services, and business models.

10.??? Offenses and Penalties

The Act provides for stringent penalties, it has made all described offences cognizable and non-bailable.? Unauthorized provision of telecom services or causing damage to critical telecommunication infrastructure has been made punishable with imprisonment up to three years or with a fine extendable up to two crore rupees or both.? The Act applies to offence committed or contravention made outside India by any person if such act involves a telecommunication service, equipment, or network provided in India.?

11.??? Protection of Users

To ensure user protection, the Central Government may enact rules that include measures like, (1)obtaining the prior consent of users to receive specified messages such as messages offering, advertising, or promoting goods, services, etc. whether such offers are legitimate, (2) Creation of ‘Do Not Disturb’ registers to ensure that users do not receive specified messages without prior consent and (3) creation of a mechanism to report any malware or specified messages.

12.??? Cyber Security Measures

To provide for the cyber security of telecom networks and services, the Central Government may provide measures which include collection, analysis, and dissemination of traffic data from telecom networks. It can notify standards and conformity assessment measures for cyber security, encryption, and data processing in telecommunication.

Gaps in the Act:

While the new Act promised to replace the archaic laws created during the British Raj, it retains many provisions of the old laws. Some of these provisions continue to cause concerns due to perceived neglect of the Fundamental Right to Privacy given to each citizen of India by the Supreme Court.[2]

The Central Government has retained powers to take temporary possession of telecom networks and intercept, monitor or bar the transmission of messages considering public safety, national security, or public emergency. The government has also assumed powers to take over control of any telecom network or service in pursuance of national security or public order.[3] The retention and increase in the scope of powers assigned to the government raises concerns in the industry about bureaucratic overreach.

Reception of the Act by Telecom Industry:

The enabling of administrative allocation of spectrum has come as a boon for satellite-based broadband services such as Bharti Airtel’s One Web, Elon Musk’s Starlink and Amazon’s Kuiper which had made representations to the government that the auction-led process led to cost overruns. This provision is a setback for Jio which had argued for an auction-based approach.

Global best practices have been incorporated by the government to ensure a smooth rollout of 5G, 6G and other future-ready technologies.[4]? The Digital Infrastructure Providers Association (‘DIPA’) and the Cellular Operators Association (‘COA’) have commended the ?Right of Way provisions in the Act as they will streamline the procedure of establishing infrastructure on public and private property by allowing the telecom service providers to directly engage with the owner of the property and enter into an agreement for laying telecom infrastructure. Since the telecom infrastructure shall not be considered a part of the property for tax calculation purposes, this provision has also been hailed by the Associations for providing relief from the prospect of additional tax burden.

The Indian Space Association hailed the administrative allocation of spectrum for satellite-based communication networks as it will “help spur growth in the nascent space sector, foster healthy competition, ensure a level playing field for all stakeholders involved, promote global cooperation and also help drive innovation, create opportunities for start-ups, and strengthen the country's position in the global satellite market.”

While the Act has been received positively by the telecom industry, some sections of society have raised concerns over certain provisions of the act.

Civil Society Groups have alleged that the power of the Central Government to notify standards on encryption creates uncertainty on the ability of service providers to develop strong end-to-end encryption mechanisms and other data privacy-related mechanisms.[5]

Concerns about the excessive workload on the Telecom Disputes Settlement Appellate Tribunal have been raised following the introduction of the three-tier adjudicatory mechanism. Calls have been made to the government to strengthen the capacity of the TDSAT to ensure the timely resolution of cases before it.[6]

Conclusion:

The Telecommunication Act of 2023 is a milestone in India’s journey to become a digital superpower. It lays the groundwork for an expansive and dynamic telecom sector by replacing antiquated laws with a more streamlined and ready-to-future framework.

The Act’s use of a globally accepted assignment process and focus on fostering innovation through sandboxes holds the potential to discover and unleash new technologies and services. Satellite-based broadband, 5G and 6G applications are just a glimpse of the horizon.

The act promises seamless connectivity, enhanced consumer protection including cyber security measures and a robust grievance redressal mechanism for users. For players in the telecom industry, the act promises an expedited infrastructure expansion process through the right-of-way provisions.

The act paves the way for India to become a global leader in the digital age whilst establishing a more inclusive and connected society.

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[1] The Hindu Bureau, "Omnibus Telecom Bill introduced in LS to replace 138-year old law; allows interception, right of way, spectrum harmonization,” https://www.thehindu.com/news/national/omnibus-telecom-bill-introduced-in-ls-to-replace-138-year-old-law-allows-interception-right-of-way-spectrum-harmonisation/article67651128.ece .

[2] (2017) 10 SCC 1, AIR 2017 SC 4161

[3] The Telecommunications Act, Chapter IV, Act No. 44, Acts of Parliament, 2023

[4] Chetan Thathoo, Big Win for Musk’s Starlink as Telecom Bill Mandates Licensing Regime for Satcom, https://inc42.com/buzz/big-win-for-musks-starlink-as-telecom-bill-mandates-licensing-regime-for-satcom/ .

[5] Jagriti Chandra, Will the new telecom Bill streamline the sector? https://www.thehindu.com/news/national/will-the-new-telecom-bill-streamline-the-sectorexplained/article67669834.ece#:~:text=The%20Bill%20also%20marks%20a,who%20offers%20a%20service%20without .

[6] Jatin Grover, Telecom to be free of litigation: Ashwini Vaishnaw, https://www.financialexpress.com/business/industry-telecom-to-be-free-of-litigation-ashwini-vaishnaw-3358046/ .