The draft Telecommunication Bill, 2022
Background
The Ministry of Communications released a draft of the Indian Telecommunication Bill, 2022 last week for public comments. Since then, the draft has generated a significant amount of discussion on various changes that it proposes to make to the current telecom regulatory framework.
What is the draft Indian Telecommunication Bill, 2022?
- It seeks to replace the age-old laws such as Indian Telegraph Act enacted in 1885, the Indian Wireless Telegraphy Act enacted in 1933 and the Telegraph Wires (Unlawful) Possession Act in 1950.
How does the draft telecommunication Bill affect OTT/over-the-top communication services?
Over-the-top (OTT) communication services refer to services that provide real time person-to-person telecommunication services. Some popular examples of these include messaging platforms like Whatsapp, Telegram, Signal, Messenger, Duo, Google Meet etc. These platforms use the network infrastructure of telecom service providers like Airtel, Vodafone and Jio and provide features that compete with telecommunication services such as voice calls and SMS services.
Telecom Service Providers (TSPs) allege that these features result in a double whammy for them as they cut into their sources of revenue (voice calls, SMS) while not having to deal with infrastructure and licensing costs that they have to undertake.
Therefore, TSPs have been demanding a level playing field with OTT services.
The current draft of the Bill expands the definition of “telecommunication services” to include OTT communication services. As a consequence of this, OTT telecommunication services may be subject to the same licensing conditions as TSPs.
If OTT communication services are required to obtain the same licence, they would also be subject to a number of conditions such as maintaining ‘know your customer’ details of their users, adhering to certain encryption regulations and allowing lawful access to the government of their equipment and networks.
What are some of the consumer protection measures in the draft Bill?
To curtail the ever-increasing incidence of spam calls and frauds, the draft Bill proposes that the identity of the person communicating using any form of telecommunication services shall be available to the user receiving such communication.
This would mean that unlike now where only the phone number of the person making the communication is displayed, going forward the name of the person would also be displayed. As per the Communications Minister, this facility would not only be available for voice calls but also for users of OTT communication services.
To ensure that a user provides correct details, the draft Bill penalises providing wrong identification details with a ₹50,000 fine and suspending the operation of the specific mobile number or barring the person from using the telecom service for a certain duration.
Further, the draft Bill also provides that commercial communications which are advertising and promotional in nature should be made only with the prior consent of a subscriber.
While the Telecom Regulatory Authority of India (TRAI) has previously issued the “Telecom Commercial Communications Customer Preference Regulations” in 2018, spam communications and sharing of contact details without any safeguards continues to be rampant. Its inclusion in the draft Bill takes it out from the purview of TRAI and gives government the power to take stringent measures against violators.
How does the draft Bill impact the position of the TRAI?
The TRAI was set up in 1997 as an independent and specialised regulator for the telecom sector. Given that the government is a major player in the telecom sector in various roles such as provisioning of services, licensing and allocating spectrum, the need was felt to institute a regulator that is at an arms’ length from the government to ensure a level playing field, fairness for private TSPs and for the protection of consumer interests.
However, the current draft considerably dilutes TRAI’s position in a number of ways reducing it from a regulatory to a recommendatory body.
- First, the government would no longer be required to seek recommendations from the TRAI before issuing licences.
- Second, it also removes the power of the TRAI to requisition from the government information or documents that are necessary to make such recommendations.
- Moreover, the Department of Telecommunications (DoT) will no longer be required to refer back to TRAI the recommendations for reconsideration — those recommendations that it does not agree with, as it was required to do previously.
The removal of such powers would not be keeping with international practice where telecom regulators are endowed with a greater degree of independence to ensure that investor confidence and consumer protection is maintained in the market.
What are the draft Bill’s provisions on internet shutdowns?
For the first time in the Indian legal framework, a specific provision enabling the government to order suspension of internet power has been introduced through the draft Bill.
Currently, suspension of internet services is ordered under the Temporary Suspension of Telecom Services (Public Emergency and Public Safety) Rules, 2017 that have been made under the Indian Telegraph Act, 1885.
However, civil society has raised concerns that the proposed provision gives the government power to order internet shutdowns while failing to incorporate safeguards such as judicial oversight that have been recommended by the Standing Committee on Information Technology.
How does the Bill facilitate TSPs?
The draft Bill clears up a lot of confusion around the allocation of spectrum. It lays down that while the primary route for allocation of the spectrum is auction, when spectrum is to be allocated for certain functions of the government such as defence or transportation, the administrative process is to be followed.
It also allows the TSP to exploit its spectrum resource fully by enabling sharing, trading, leasing, surrendering or returning unutilised spectrum. The Bill also simplifies the process for restructuring, merging or demerging.
On the issue of right of way (the legal framework for setting up telecom towers), it mandates that land owned by a public entity should be available expeditiously unless there is an express ground of refusal. This is likely to face opposition from States which have the power to administer lands within their territorial jurisdiction.
Lastly, the draft allows the funds under the Universal Service Obligation Fund to be utilised for other purposes such as urban areas connectivity, research etc, expanding its current mandate from the limited aspect of enhancing rural connectivity.
Recent Posts
Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.