India’s Quest for a New Digital Order

The telecom bill policy regime is called the National Digital Communications Policy. And what the bill seeks to govern is not just telecom, but all communications — digital or otherwise. Governance, however, is not the same thing as licensing. Whether to include “apps” that ride on modern communications networks under the ambit of licensed services was discussed extensively during the net neutrality debates and it was decided to exempt these Over the Top (OTT) services from licensing. After all, there are too many of such apps to conceivably licence.

The new definition of telecommunication services is expansive and covers services such as broadcasting, electronic mail, voice mail, video and data communications, satellite-based communications, in-flight and maritime connectivity, interpersonal communications, machine-to-machine communications, OTT communication, besides traditional ones. All communications services will be licensed unless the government decides to exempt these. The explosion of data and packet-based communications, the bill leaves nothing to chance. It, however, does specify an exit option; the government can “in the public interest exempt any communication service from the requirement of licence”.

This confers immense power on the government and opens the possibility of lobbying and dishing out patronage. Service definitions in modern communications are fluid and impossible to box in. Rather than cover all communications by a presumptive licence and place the burden of proof on the service provider, it might be practical and efficient to exempt such communication services from licensing until proven otherwise. After all, allowing the government to discriminate, even in theory, on service definitions opens the possibility of discrimination between those providing the services. We know the kind of damage that has, and can cause, to the telecom industry. The government could turn around and say, “Trust us, we will not do anything that damages innovation and rapid development of the sector”. But that trust has been eroded steadily ever since the sector was liberalised in 1994 and it may take more than a new law to set it right.

Trust is also necessary to successfully implement one of the many good ideas in the draft bill. The Supreme Court-prescribed auctioning of spectrum “for all times to come” is sought to be supplemented, or with some luck, substituted, by “administrative allocation, and [in] any other manner as may be prescribed”. Auctions along with high reserve prices have taken a toll both in terms of increasing operator cost and lost government revenue because of unsold spectrum. Spectrum scarcity also affects quality of service and call drops are its most observable manifestation. To create an incentive for efficient utilisation of the scarce but inexhaustible spectrum, the draft bill encourages surrender, trading, refarming and leasing.

The bill has many other welcome proposals. The creation of a regulatory sandbox to encourage research and development (R&D) reflects India’s ambition to export equipment and services and create standards in telecom. India has been an adapter of standards rather than a creator and this must change to match India’s perceived prowess in information technology. This welcome initiative will require resources for R&D and backchannel diplomacy at the international standards-setting organisations. The Universal Service Obligation Fund is to be renamed as the telecom development fund with a broader mandate, including R&D. It will have to confront the fact that this fund has accumulated faster than it has dispersed, despite initiatives such as broadband to every panchayat and internet for all facing hurdles. One impediment to fulfilling these aims has been the cumbersome Right of Way (RoW) regimes (which make up the regulatory framework for creating infrastructure) across states that cause avoidable delays. The draft bill rightly seeks to make the RoW regime non-discriminatory and affordable, recognising that until the basics are in place, the $1-trillion digital economy goal will remain either unfulfilled or unevenly spread.

The replacement of the 1885 India Telegraph Act has been a long-awaited piece of legislation. In the 137 years in between, communications have undergone transformational change. While the extant act has been amended to incorporate technological and regulatory changes, benefits of the new one lie not only in consolidating changes into a single legislation, but also to signal intent. The draft bill does well on reassessing the spectrum assignment methodology and attempting to put in place a non-discriminatory regime for RoW in a federated structure. Where it falls short is recognising service convergence but not institutional convergence. More crucially, it appears to succumb to the temptation to control rather than liberalise telecommunications services — not ideal for a modern convergent law on communications.