Bill proposes to regulate internet-based OTT telecommunications services

The Department of Telecommunications on Wednesday proposed to regulate communications services, including voice, video and data offered by over-the-top (OTT) platforms such as Whatsapp as telecommunications services, requiring them to obtain a government license, just like other telecommunications operators.

In a draft Indian Telecommunications Bill, 2022, made public on Wednesday evening, the DoT also proposed to dilute some crucial powers and responsibilities of the Telecom Regulatory Authority of India (TRAI) over issuing new licenses to service providers.

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

In the bill, the government has included internet and OTT based communication services such as WhatsApp calls, Facetime, Google Meet, etc. in telecom services, responding to a long-standing demand from telecom operators who have repeatedly called for a level playing field. field. Currently, while telecom companies need a license to offer services, OTT platforms do not.

Bringing OTT into the scope of telecommunications services means that both OTT and Internet communications would require a license to offer services. In the draft, the DoT also said it could exempt entities from the requirement to
obtaining a license if it is “in the public interest”.

The bill also provides that information transmitted and received through telecommunication services may be intercepted by an authorized government official in the interest of India’s sovereignty, integrity or security, friendly relations with foreign states, public order or the prevention of incitement to crime. It is unclear how this particular provision could potentially impact calls via WhatsApp which are generally end-to-end encrypted; which means that the company itself does not have access to the information transmitted on these calls.

The bill proposes amendments to the Indian Telecommunications Regulatory Authority Act 1997. Currently, the TRAI Act requires the government to seek recommendations from the regulator before issuing licenses to service providers. It also allows the TRAI to request the government to provide information or documents needed to make recommendations.
It has been proposed to remove these powers in the new bill.

The bill also states that the TRAI can order operators “to refrain from predatory pricing” which is detrimental to the overall health of the telecommunications sector, competition, long-term development and fair market mechanism. It has also been proposed to delete in the new bill a current provision of the TRAI law which prohibits the appointment of a government official as president of the TRAI who has not served as a secretary or additional secretary.

The DoT also proposed that in the event of the bankruptcy or insolvency of a telecommunications entity in possession of the spectrum, the spectrum assigned to it would revert to the control of the central government. So far, in insolvency proceedings, there has been a lack of clarity about whether spectrum held by a failing operator belongs to the Center or whether banks can take control of it.

The bill also grants the Center the power to defer, convert to stock, delist, or grant relief to any licensee under extraordinary circumstances, including financial hardship, consumer interest, and maintenance of competition, among others. It also proposes replacing the Universal Service Obligation Fund (USOF) with the Telecommunications Development Fund (TDF). The USOF is the pool of funds generated by a 5% universal service tax on the adjusted gross income of telecommunications companies. It has been widely used to facilitate rural connectivity; with the TDF, the aim is also to strengthen connectivity in underserved urban areas, R&D, skills development, etc.

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