India, the world's second-largest telecom market, has recorded stupendous growth over the last few years and is one of the country's biggest success stories. However, the sector is still governed by legacy laws, which are not geared toward new technologies and evolving market requirements.
Earlier this year, the Department of Telecommunications (DoT) introduced the draft Telecom Bill 2022, which combines the three acts, Indian Telegraph Act 1885, the Indian Wireless Telegraphy Act 1933 and the Telegraph Wires (Unlawful Protection) Act 1950.
The Telecom Bill primarily focuses on the ease of doing business, making it easier for the telcos to build networks, use spectrum most optimally and streamline litigation rules and regulations.
Licensing for OTT players
As per the draft Telecom Bill 2022, the over-the-top (OTT) players will need to apply for a license to operate in India. Further, they will also need to enforce Know-Your-Customer (KYC) practices. This is possibly the most controversial part of the draft bill; predictably, concerns were raised by the industry bodies.
"The importance of these services in the social, economic growth of the country cannot be undermined. They are the backbone of the digital economy and by including such services as telecommunication services and subjecting them to licensing, it could stifle the entire social economic ecosystem, kill innovation and stymie the GDP growth," says the press release issued by Broadband India Forum (BIF), an industry association.
Controlling the regulator
The new draft Telecom Bill 2022 proposes to limit the powers of the Telecom Regulatory Authority of India (TRAI) by doing away with the requirement for the telecom department to seek views from the regulator before issuing a new license to a service provider.
If this becomes a norm, there is likely to be a power struggle between DoT and TRAI, and in the long run, TRAI may even become obsolete, which does not bode well for the industry's growth. "The implications of the draft bill may prove to be a backward step, taking us to the pre-1997 era, by diluting the critical role and powers of the independent regulator," says the BIF press note.
One of the Act's key proposals is to ease the licensing processes. For instance, it has proposed a framework to facilitate Right of Way (RoW) issues. Indian service providers have had to tackle complex rules and regulations regarding RoW approvals. In addition, the rules and charges differ in different parts of the country, making it tough to lay fiber. The bill says that a RoW application needs to be from a facility provider granted permission expeditiously, and any rejection can only be for limited substantive grounds.
Reframing bankruptcy and mergers and acquisitions norms
Significantly, the draft Telecom Bill 2022 says that if a service provider declares bankruptcy, the assigned spectrum will be reverted to the government, which can continue providing services subject to some terms and conditions. The bill has also simplified the framework of mergers and acquisitions.
This is crucial as India has witnessed a spate of mergers and acquisitions over the last few years. Until a few years back, India boasted around 11-12 service providers in every circle (service area), but consolidation ensured that now there are three private service providers and one government carrier in every circle.