TMT LawsDecoding Telecommunications Act 2023

The Telecommunications Act, 2023(hereinafter referred to as “Telecom Act”) received Presidential assent on 24 December, 2023. The Telecom Act seeks to consolidate laws relating to the development and operations of telegraphs, telecommunication networks and possession of radio equipment. It will repeal the existing legislation namely Indian Telegraph Act, 1885, Wireless Telegraphy Act 1933 and the Telegraph Wires (Unlawful Possession) Act 1950.

KEY PROVISIONS UNDER THE TELECOM ACT

1. Assignment of spectrum

Spectrum refers to the range of electromagnetic radio frequencies used for wireless communication. These frequencies are allocated and regulated by governments to ensure efficient use and prevent interference between different communication services. The Telecom Act typically includes provisions related to the management, licensing, and allocation of spectrum to various telecommunications operators and service providers. This allocation is critical for enabling the operation of wireless networks, including mobile phones, Wi-Fi, broadcasting, and other wireless communication technologies. Efficient spectrum management is essential for promoting competition, expanding access to telecommunications services, and fostering innovation in the telecommunications sector.

The Telecom Act declares spectrum as a national asset owned by the Government on behalf of the people. Accordingly, any person, intending to use spectrum will be required to apply for an assignment from the Government of India. This assignment will be done through an auction in accordance with the Telecom Act and the National Frequency Allocation Plan.

The spectrum will be assigned on an administrative basis and not through auction for specified purposes such as national security and defence, disaster management, BSNL, MTNL and public broadcasting services, weather forecasting, transport and satellite services like DTH and satellite telephony etc.

The new law allows the Government to ‘harmonise’ and ‘re-farm’” any assigned frequency range to enable more efficient use of spectrum. It also provides for flexible, liberalised and technologically neutral use of spectrum and allows the Government to assign an already assigned spectrum to other organisations to encourage optimal use.

In the case of Centre for Public Interest and Ors Vs. Union of India  (2012) 3 SCC 1), the Supreme Court held the practise of first come first serve basis for spectrum and license allocation as arbitrary and advocated for publicised auctions. The Telecom Act provides statutory backing to spectrum assignment through auctions.

2. Powers of Interception and Search – The Telecom Act provides that the Government has the power to take possession of telecommunication network during an emergency or in the interest of public safety. It states that the Government can intercept, detain, or require disclosure of any messages from any person or any telecommunication equipment in an intelligible format.

It also prescribes measures for national security, friendly relations or in the event of war by way of notification in relation to taking over control and management of telecommunication services and network and standards to be adopted by authorised entities and manufacturers, importer and distributor of telecommunication equipment.

• Right of Way – The  Telecom Act provides for a framework through which a Right of Way (hereinafter referred to as “RoW”) can be obtained in a uniform and non-discriminatory manner by the authorised entities. RoW is provided for establishing, maintaining and expanding telecommunication network. It can be obtained through both public and private entities. If the private entity does not accept the application then in public interest, Government may permit the RoW subject to terms and conditions and compensations as may be prescribed.

The Telecom Act also states that the telecommunication network installed on any property will not be considered as a part of such property and thus will not be subject to any claims, encumbrances or liquidation. Any dispute arising in relation to RoW will be dealt by the district magistrate or any other authority notified by the Government.

Considering Telecom Act provides for the provisions related to RoW, the already existing Telegraph Right of Way Rules, 2016 will be applicable only to the extent when they are not inconsistent with the provisions of the  Act.

3. Biometric Identification Tool – The Telecom Act provides that authorised entities providing telecommunication services will be required to identify persons to whom the services are provided using verifiable biometric based identification tool.

This will help in prevention of cyberbullying and financial frauds as user verification through KYC for all telecommunication services is a step towards advanced security not only for traditional phone calls and SMSs but also payment apps like Paytm, PhonePe and messaging apps, emails, and even video conferencing.

However, the Telecom Act does not specifically provide the form this biometric based identification would take.

4. Protection of Users– The Telecom Act provides for measures to protect users, such as prior consent to receive specified messages like advertising messages, creation of ‘Do Not Disturb’ Registers and a mechanism to allow users to report malware or specified messages. Online mechanism must be established in order to register and redress the grievances.

5. Authorisation for telecom-related activities – The Telecom Act uses the term “authorisation” which is a permission provided by the Government of India under the Telecom Act. It states that :

Any person intending to— (a) provide telecommunication services; (b) establish, operate, maintain or expand telecommunication network; or (c) possess radio equipment, shall obtain an authorisation from the Central Government, subject to such terms and conditions, including fees or charges, as may be prescribed.

Earlier the Department of Telecommunication (hereinafter referred to as “DoT”) issued different kinds of licenses with specific authorisations. The licenses provide for certain terms and conditions that the service provider has to comply with. In order to simplify this process and to encourage ease of doing business the Telecom Act omits the language of the previous Telegraph Act which used the words “vested the exclusive privilege” upon the Government to grant license and instead used the term “authorisation” which is a permission.

• Extraterritorial Applicability – The Telecom Act will have extraterritorial applicability with respect to any offense or contravention of the statute that is committed outside India by any person involving telecommunication service provided in India, or telecommunication equipment or telecommunication network located in India.
• Digital Bharat Nidhi – The Universal Service Obligation Fund earlier created under the Telegraph Act has been repurposed as the Digital Bharat Nidhi under the control of the Government for encouraging research and development in new telecommunication service as well as to ensure widespread access to telecommunication services.
• Regulatory sandboxes – In order to encourage and facilitate innovation and technological development the Government may create one or more regulatory sandboxes in such manner and for such duration as may be prescribed.

The expression “regulatory sandbox” refers to a live testing environment where new products, services, processes and business models which may be deployed, on a limited set of users, for a specified period of time, with certain relaxations from the provisions of this Act.

6. Adjudication Process – The Telecom Act establishes a three-tier adjudication process

• Adjudicating Officer – He is authorised to conduct inquiry, impose civil penalties in respect of breach of any terms and conditions of the authorisation or assignment of spectrum, or violation of any provision of the Telecom Act, either on receipt of complaint or suo moto.
• Designated Appeal Committee – A bench comprising of members from executive branch of the Government will hear appeal against the Adjudicating Officer’s order.
• Telecom Dispute Settlement and Appellate Tribunal – An appeal against the Designated Appeals Committee’s (hereinafter referred to as “DAC”) decision will be heard before Telecom Dispute Settlement and Appellate Tribunal (hereinafter referred to as “TDSAT”) regarding matters related to breach of terms or revocation/suspension of an authorisation/assignment. An appeal before a civil court will lie in the matters related to contraventions of certain provisions of the Telecom Act which are outlined in the Third Schedule.

It also provides for voluntary undertaking for breach by authorised entity or an assignee of the spectrum. The acceptance of a voluntary undertaking will result in a bar on proceedings, or considered as a mitigatory measure in determining civil penalties.

7. Offences and Penalties – The Telecom Act states that all the offenses are cognizable and non-bailable and depending upon the nature of the offense, the offender may face imprisonment upto three years and fine up to INR 2 crore.

The Second Schedule of the Telecom Act provides for a graded approach in determining civil penalties on the basis of severity of the offence.  Civil Penalties range from a mere written warning to upto Rs. 5 Crore. It is important to note that even by way of amendment, the Government cannot raise the value of penalty beyond Rs. 10 Crore.

8. Restructuring of authorised entities – The Telecom Act provides that any authorised entity wanting to merge, demerge or restructure can do so subject to the laws in force without the prior approval of the Government. The emerged new entity that holds the authorisation, post such corporate action will comply with the terms and conditions applicable to the original authorised entity as well as any additional terms and conditions prescribed by the Government.

IMPACT ON TECHNOLOGY, MEDIA AND TELECOMMUNICATIONS AND FINTECH

• The earlier draft of the Telecommunication Bill expressly included Over The Top (hereinafter referred to as “OTT”) providers in the definition of “telecommunication service”, however such inclusion was done away with under the Telecom Act.

The definition of “telecommunication” under the Telecom Act is defined as “transmission, emission or reception of any messages, by wire, radio, optical or other electro-magnetic systems, whether or not such messages have been subjected to rearrangement, computation or other processes by any means in the course of their transmission, emission or reception.” The transmission through electromagnetic systems is the backbone of Internet technology being utilised by many OTT players to provide their services. Thus this definition has caused concerns for the OTT industry.

• Although, one may consider the view that since OTT technologies cannot independently transmit or enable reception of any message, they are not in fact in the business of telecommunication service. The official notification by the Ministry of Electronics and Information Technology (hereinafter referred to as “MeitY”) stated that OTT will be regulated by MeitY and not Telecom Act. Although having said that, any activities where OTT players invest in expanding telecommunication networks in furtherance of their service will be examined closely.
• The Biometric Identification provision included in the Telecom Act is provided to prevent SIM based fraud, currently prevalent in the country. This will help address the user security concerns. Although there are concerns over the misuse of the stored biometric data and records.
• The First Schedule of the Telecom Act provides for certain entries where the allocation of the spectrum will not happen through an auction but by an administrative process. The entries include DTH, NLD, mobiles satellite services and Global Mobile Personal Communication by Satellites (hereinafter referred to as “GMPS”). Many reputed service providers like Jio and Starlink have licensed the GMPS from the Government and this change will help this industry in ramping up their operations.
• The Telecom Act requires the authorised entities to priorly obtain specific consent for sending specific messages through any medium (SMS, Email or App) and also maintain a Do Not Disturb register. Thus, such authorities have to comply with the incremental consent requirements arsing under the new Act.
• Section 20 of the Telecom Act gives power to central as well state Government to intercept any message or class of messages exchanged between two or more persons in an intelligible format, monitored and prevented from being transmitted in the interest of public safety and public emergency. This gives a broad discretion to the Government.

The provision enabling identification of first originator of information on its platform may have concerns on the guarantee of the end-to-end encryption provided by the messaging platforms. Along with this it also infringes upon the fundamental right of privacy. In the case of K.S Puttaswamy Vs. UOI , ((2017) 10 SCC 1), the Supreme Court laid down the test for the State to infringe the privacy of the citizen.

The test enumerated the following –

a) the action must be sanctioned by law;

b) The proposed action must be necessary in a democratic society for a legitimate aim; c) The extent of such interference must be proportionate to the need for such interference;

d) There must be procedural guarantees against abuse of such interference. Thus, the above power if not utilised proportionately will lead to infringement of fundamental right.

 In the case of People’s Union for Civil Liberties vs. Union of  India ((1997) 1 SCC 301) the Supreme Court held that there should be a procedure established by law through which the power of interception should be exercised by the Government, otherwise it would infringe upon the fundamental rights.

It held that right to privacy is embedded in Article 21of the Constitution and that telephonic conversations in the privacy of one’s own home comes under this right. Telephonic conversations come under the citizen’s right to freedom of speech and expression and this can only be restricted on the grounds mentioned in Article 19(2) of the Constitution. The Supreme Court upheld the constitutionality of Section 5(2) of the Indian Telegraph Act and stated that the two conditions as well as the five grounds mentioned in the section should be followed before the passing of the interception order.

The power of interception when misused or arbitrarily exercised by the Government will have serious repercussions on the citizens, The Government will be empowered to go through any “message” which is defined under the Telecom Act as “ any sign, signal, writing, text, image, sound, video, data stream, intelligence or information sent through telecommunication”

AMLEGALS REMARKS

The Telecom Act represents a pivotal moment in the evolution of telecommunicationspolicy and regulation. This landmark legislation addresses critical issues and sets the framework for the future of communication networks, services, and technologies.The  Telecom Act represents a significant milestone in our journey toward a more digitally connected society.

Its implementation marks a crucial step in leveraging telecommunications to boost economic growth, enhance social inclusion, and foster innovation. When considered alongside initiatives like the Digital India Act, which aims to expedite India’s digital evolution, this legislation becomes a key driver in advancing digitalization and ensuring its widespread accessibility.

-Team AMLEGALS assisted by Ms. Dhwani Tandon (Intern)

For any query or feedback, please feel free to get in touch with mridusha.guha@amlegals.com or liza.vanjani@amlegals.com.