Guest Post: The inclusion of “OTT” services in the Indian Telecommunications Bill 2022

This post is authored by Chiranjeev Singh

The Department of Telecommunications (“DoT”) released a draft for the Indian Telecommunications Bill 2022 (“the Bill”) on 21^st September 2022. It seeks to replace the Indian Telegraph Act 1885 (“the Telegraph Act”), among others, and provide a modern framework for regulating Telecommunications. One of the significant changes proposed by the Bill is to include over-the-top (“OTT”) communication services within the scope of regulation. This inclusion will be a paradigm shift in the Indian telecom law regime as non-spectrum services will now require a license. This article questions the rationale of including OTT services and critiques its formulation in the Bill.  

The Telegraph Act, which is the extant law, was enacted to deal with Telegraphs and Telephone Exchanges. Section 4 of the Telegraph Act states that a license is required to establish, operate and use a “Telegraph”, which is defined as any apparatus used for the transmission and emission of signals. These technologies have long been abandoned. To make this framework applicable to the modern forms of telecommunications, services provided by a “Telegraph” have been interpreted to include Access Services (voice calling, messages), Carrier Services (long distance communication) and Internet Access Services (providing access to the internet) among others. The entities which wish to provide these services (Telecom Service Providers or “TSPs”) have to obtain a license from the DoT, and abide by the conditions prescribed therein. Additionally, licensed entities must abide by regulations under the Telegraph Act, such as interconnection obligations and contributions to the Universal Service Obligation Fund.

Licensed services typically require the use of spectrum. Even though spectrum is non-depletable, it is limited in nature. The reason being, transmission of information can only take place in specific bands of spectrum, which is dependent on the nature of information. Further, the same part of the spectrum cannot be used by multiple persons at the same time and within the same geographical area. Interference of multiple signals over the same frequency can significantly worsen spectrum quality and reliability. In other words, it is a scarce rivalrous natural resource.

As is the case with other such resources, it becomes a duty upon the State to allocate the use of spectrum in a way which maximises the efficient use of the resource, maintains the quality of service and ensures that the public gets the benefit of such services to the fullest. Therefore, the State is justified in regulating the TSP’s economic exploitation of an exclusive natural resource, through licensing, national frequency allocation plans and other means.

At the same time, there has been a rise of another class of services, which are provided over-the-top of the existing network infrastructure. That is to say, entities are providing communication services over the internet, which in the first place is provided by a TSP. As an example, WhatsApp is a platform which allows users to have video and audio calls over the internet. While it provides a service which may seem similar to a traditional phone call, it neither requires any spectrum use nor a license under the Telegraph Act which a TSP would require.

Presently, OTT services act as intermediaries, i.e. they receive, store or transmit electronic records on behalf of others, are covered under the Information Technology Act 2000 (“IT Act”). The regulation of intermediaries under the IT Act involves content moderation, data privacy, lawful interception mechanism and safe harbour protections.

The Bill proposes to include OTT communication services under the telecom law regime. It seeks to regulate how communication takes place on these platforms, and intends to subject the providers of these services to regulations at par with TSPs.

The Bill introduces the term “Telecommunication Services”, which is defined as a service of any description given to a user through telecommunication. It includes, “voice, … internet and broadcast services, … internet based communication services, …  OTT communication services …” among other things. Section 3 of the Bill further states that it is the exclusive privilege of the Central Government to provide “Telecommunication Services”, and a license is required by an entity to operate the same.

A cursory look at the definition will make it evident that it is all encompassing in nature. It includes services which utilise spectrum and those that do not. In fact, one can say that it covers virtually all digital communication services.

There are a number of issues with such an approach. At the outset, the regulatory justification present for providing licenses for spectrum services does not exist for OTT services. Internet, unlike spectrum, is an abundant non-rivalrous resource which is not owned by the State. Thus, the scarcity of resources is not a concern here and the case for a licensing model is not made out. The issues pertaining to handling of sensitive personal information are taken care by the IT Act presently, and will be better addressed by the upcoming personal data protection regime. Concerns regarding quality of service also do not stand. The OTT environment is extremely competitive, and consumers have a wide range of options. As a result, consumers frequently change to higher-quality services.

The inclusion of OTT services in the telecom law regime also brings up the issue of incompatible compliance regimes. As highlighted before, OTT services are regulated by the IT Act as well. One area of dual regulation would be the lawful interception mechanism. Under the Bill as well as the Telegraph Act, there needs to be a public emergency for the State to make an interception order, which is not the case under the IT Act. Furthermore, the IT Act also recognises investigation of an offence as a ground for interception, which the Bill and the Telegraph Act do not. In such a situation, OTT services will be subjected to contradictory regulations.  

Several TSPs have welcomed this inclusion as it espouses the principle of “same services, same rules”. The argument is that while TSPs have to comply with several requirements and incur several costs (spectrum use charges, license fees etc), none of these rules apply to entities which provide OTT services which are the “same” as spectrum services. This reasoning is unfounded because the two services are based on different kinds of technologies, operate on different network layers and have different economic models.

OTT services are dependent on the network provided by the TSPs, and cannot function without them. Additionally, by subjecting OTT services to similar requirements, the net-neutrality principle will be violated. Certain websites which provide OTT services will be subject to greater barriers in the form of requiring a license to operate and other such compliances, as opposed to other websites on the Internet. This is not the case when TSPs are required to have a license. In essence, functional similarities should not be the only guiding factor for regulating them at parity.

In addition, the formulation of Telecommunication Services within the Bill is questionable. The definition of OTT services for the purpose of telecom law is disputed globally. Issues like what is meant by communication, what all is covered under OTT communication services, or should communication be a predominant function of the service to be included invite a lot of discourse as the response to them can drastically alter the scope of regulation. However, the Bill makes no effort to provide any clarity on these issues.

All these gaps make the definition vague. A law is termed vague when there is no reasonable opportunity to understand what conduct is regulated with an amount of certainty. The result is that it delegates to the law enforcers and judges the job of determining the positive content of the regulated act to an impermissible extent. Based on these reasons, the Supreme Court has previously struck down  provisions relating to the licensing powers of the executive concerning Gold dealers under the Gold (Control) Act 1968, stating that the grounds for the grant were uncertain and vague.

Presently, the Bill makes it an offence to provide Telecommunication Services without a license. However, given the sheer variety of different OTT communication services that exist, the service providers would simply not know whether they require a license to function in India. More so, the Bill is silent on the grounds on which a license may be granted, which is left to the rule making powers of the Central Government.  Thus, the constitutional validity of such a provision is suspect.

To conclude, the Telecommunications Bill 2022 leaves us with more questions than answers. It seeks to bring in a radical new individual licensing regime for OTT communication services without providing any clarifications on what it constitutes or why such a significant change is required. As can be seen from the discussion, the definition is vague in scope and can potentially include everything on the internet. Further, there is no basis on which services which are utilising spectrum are treated the same as OTT services. The policymakers need to address these concerns while revisiting the draft.

CCG’s Comments to the Department of Telecommunications on the Draft Telecommunication Bill, 2022

On 21st September 2022, the Department of Telecommunications (“DoT”) released the Draft Telecommunication Bill, 2022 for feedback and public comments. The draft is based on the consultation paper on ‘Need for a new legal framework governing Telecommunication in India’ which was published by the DoT in July 2022. The proposal aims to replace three laws: the Indian Telegraph Act, 1885, the Indian Wireless Telegraphy Act, 1933, and the Telegraph Wires (Unlawful Possession) Act, 1950.

CCG submitted its comments on the Bill, highlighting its feedback and key concerns. The comments were authored by Aishwarya Giridhar, Priyanshi Dixit, Sidharth Deb, reviewed and edited by Jhalak M. Kakkar, Shashank Mohan, Sachin Dhawan with research help from Shreenandini Mukhopadhyay and Shreya Parashar. 

CCG’s key comments on the Government of India’s proposals under the Bill are divided into 6 parts –

Exclude digital/ internet based services from telecommunication regulation

The Information Technology Act, 2000 (“IT Act”) exclusively deals with issues pertaining to the internet and digital platforms, and provides corresponding regulation and user safeguards. The Bill’s proposed inclusion of digital services within telecommunications law may create a parallel legal regime and regulatory confusion that hinders innovation and the ease of doing business. Additionally, this Bill would likely subsist in parallel to the forthcoming Digital India Act which is under development at the Ministry of Electronics and Information Technology (“MeitY”). Therefore, we propose that the telecommunication regulation in India should not include digital services as it would create dual compliances for services which will negatively impact India’s overall internet ecosystem.

Revisit the Premise of Licensing Internet Based Digital and Software Services

Telecom Service Providers (“TSPs”) require a license to operate in the market since their operations are dependent on the use of spectrum, which is a limited natural resource. It is based on this scarcity that the Government grants exclusive licenses to access and use spectrum to select service providers. The Government’s privilege in this regard emerges from spectrum scarcity and the public trust doctrines. Conversely, internet based services do not function with the same scarcities and resource requirements as TSPs. Instead, they offer their services over the internet/ telecom network infrastructure. The internet is an ecosystem of abundance and thus digital service providers need not contend with the same infrastructural scarcities as network operators. Since OTTs services do not require exclusive allocation of a scarce public resource like spectrum, imposing strict licensing requirements on them would hinder innovation, consumer choice and user accessibility.

The Bill Should Avoid One Size Fits All Regulation

The Bill in its current form deploys overbroad definitions for several terms including “telecommunication services” and “message”. This particular definition will envelope all OTT communication services, data communication services, email, and other digital platforms within a common licensing regime as all telecom services. Aside from compromising the principle of legal certainty, this overbroad definition contributes to a one size fits all regulatory approach for both carriage and content providers. Such a broad approach is antithetical to the internet’s innate characteristics and heterogeneities across its network stack. It is also inconsistent with the growing international and domestic consensus that the internet requires differential regulations which are curated to the features and contextual harms which are native to specific types of platforms and services. 

The Bill’s Interception Proposals are Overbroad and may Violate Constitutional Rights

The Bill allows the State to order the interception of messages transmitted over telecommunication services or networks in specific situations. The broad definition in the Bill allows this provision to broadly apply to all messages communicated over all digital services, which may amount to a disproportionate restriction on users’ right to privacy. Under Indian jurisprudence, measures restricting privacy must: (a) be provided by law; (b) pursue a legitimate aim and be necessary in a democratic society; (c) be proportionate to the need for the interference with the right to privacy; and (d) contain procedural safeguards to prevent against abuse. Existing provisions permitting interception must be re-examined for conformity with these standards and recent Supreme Court jurisprudence. Additionally, interception provisions in the Bill overlap with those in the IT Act and risks creating a parallel regulatory regime over digital services. 

The Bill’s ID Verification Proposals may Violate Constitutional Rights to Privacy and Free Expression

The Bill requires service providers to identify users of their services, and also requires the identity of persons sending messages over telecommunication services to be made available to the recipient. Although these measures may have sought to target cyber-fraud, they will also serve to effectively remove anonymity in online communications. Online anonymity and encrypted services can however play a key role in protecting user privacy and the right to free expression, and mandated identity verification systems can significantly restrict these rights, particularly for minorities and vulnerable populations.

Provisions relating to the Suspension of Telecommunications Services Would Restrict the Right to Free Expression

The Bill authorises the State to direct the suspension of communications transmitted or received by telecommunication networks. It allows for the suspension of ‘telecommunication services’, which would include all digital services, along with phone calls, text messaging, etc. This provision would expand the ambit of suspension powers to allow states to restrict or blacklist specific services, in addition to restricting access to the internet as a whole. The internet plays a key role in exercising fundamental rights such as free expression and education, and in accessing essential services. Wide powers to restrict access to the internet as a whole, as well as specific services can therefore significantly restrict the fundamental rights of users.

You can read CCG’s full submission to the DoT here.