THE POLICY LAB (TPL) - 48
JULY 29, 2024

By J B Mohapatra

WHILE no denying that the Telecommunication Act, 2023 (TA23) marks a significant transformation from the statutory regime established under the Telegraph Act, 1885, both in its coverage and in the processes laid out for administration of the provisions, an insight into the strategy that went behind the new legislation reveals 3 clear pathways that the establishment chose to adopt.

(A): First, by broadening the scope to address the entire telecommunication sector.

(a) Contrast the purpose and objects of the two Act in their respective forewords.

Purpose and objects of the Telegraph Act, 1885 reads as follows: An Act to amend the law relating to Telegraphs in India. Whereas it is expedient to amend the law relating to telegraphs in India; It is hereby enacted as follows:

Purpose and objects of TA 23 reads as below: An Act to amend and consolidate the law relating to development, expansion and operation of telecommunication services and telecommunication networks; assignment of spectrum; and for matters connected therewith or incidental there to.

(b) Definition of 'message' in both Acts is another example.

Under the Telegraph Act, 1885: "message' means any communication sent by telegraph, or given to a telegraph officer to be sent by telegraph or to be delivered"

In TA 23, it is defined thus : "'message' means any sign, signal, writing, text, image, sound, video, data stream, intelligence or information sent through telecommunication"

(c) The necessity to address the challenges of emerging technologies so as that the legislation remains relevant in spite of technological advancements is also apparent in many instances. Section 27 of TA 23 for example envisages regulatory sandboxes or live testing environment for products, services, processes and business models to encourage and facilitate innovation. The old Act did lack these statutory provisions to facilitate and augment innovation in the sector

(d) Protection of users including measures such as prior consent of users for receiving 'specified messages', and maintenance of a Do Not Disturb register are the new additions in the statute.

(e) A detailed dispute resolution process in TA 23 stands in contrast to what was available in the Telegraph Act, 1885. Clause 15 of the unified licence agreement drawn on the back of the Telegraph Act, 1885 provided as under:

"15.1 All disputes relating to this License will be subject to jurisdiction of Telecom Disputes Settlement and Appellate Tribunal (TDSAT) as per provisions of TRAI Act, 1997 as amended from time to time. Dispute in any matter outside the domain of TDSAT will lie in the jurisdiction of competent Courts in NCT of Delhi only."

The TA 23 on the other hand creates 2 additional supervening adjudicating / appellate authority in form of Adjudicating Officer under section 35 and a Designated Appeals Committee under section 36, before matters of dispute reach TDSAT as per section 39 or the appropriate civil court under section 40 of TA 23.

(B): Second, by drawing upon, refining and importing specific licence conditions issued under the Telegraph Act, 1885, or in some instances creating a new framework qua the earlier Act to surmount longstanding operational challenges in working out the provisions under TA 23.

There is a long list of provisions in the TA 23 which fall in this category.

For example, section 7(1) of TA 23 mandating assignment of spectrum to a secondary assignee draws upon allocation of licence on a non-inclusive basis under section 4 of the Telegraph Act, 1885 as per agreements for unified licences.

Section 19 of TA 23 which authorises the government to notify standards and conformity assessment measures for telecom equipment etc is contained in the scope of the unified licence agreement.

The right of the licensor to take over the services, equipment and networks of the licensee in the interest of public safety or in case of public emergency appearing in clause 10.5 of the unified licence agreement is now under section 20(1) of TA 23.

The licensee's obligation to facilitate the priority routing of emergency/public utility or any other type of user calls as per guidelines /directions as may be prescribed by licensor as per clause 28.2 of the unified licence agreement is now at section 20(2) of TA 23.

The obligations of the licensee to ensure adequate verification of each and every customer before enrolling him as a subscriber in clause 38.17 of the unified license appears in a modified form in section 3(7) of TA 23, the latter mandating a 'biometric based identification' of subscribers.

Right to use spectrum at specified frequencies only on the basis of an assignment by the central government in section 4 of TA 23 is derived from clause 40.1 of the unified licence agreement and also from the notice inviting applications for spectrum assignment issued by DOT from time to time.

Right of way in section 10 to 19B of the Telegraph Act, 1885 is now addressed in section 10 to section 18 of TA 23 intending to fill in the perceived gaps in the earlier provisions, aid in streamlining the operational processes and bolster infrastructure development.

While the provisions for universal service obligation fund (USOF) as appearing in sections 9A to 9D in Part II A of the Telegraph Act, 1885 remain largely unmodified, the objects of USOF (now named Digital Bharat Nidhi in TA 23), have been enlarged. While the earlier objects of USOF included providing widespread and non-discriminatory access to ICT services at affordable prices to people in rural, remote, and unserved, areas, the objects under TA 23 in section 25 now include the following:

"(a) support universal service through promoting access to and delivery of telecommunication services in underserved rural, remote and urban areas;

(b) support research and development of telecommunication services, technologies, and products;

(c) support pilot projects, consultancy assistance and advisory support towards provision of service under clause (a) of this section;

(d) support introduction of telecommunication services, technologies, and products."

(C1): Third, by introducing in the new statute certain provisions to let the dispensation exercise its powers in larger public interest without fetters imposed upon through the earlier statute or judicial pronouncements .

The provisions for authorisation to provide telecommunication services and to establish, operate and maintain or expand the telecommunication network are a case in point.

Section 4(1)Telegraph Act, 1885 on the powers of the government to grant licences reads as follows:

"Within India, the central government shall have exclusive privilege of establishing, maintaining and working telegraphs:

Provided that the central government may grant a licence, on such terms and conditions and in consideration of such payments as it thinks fit, to any person to establish, maintain or work a telegraph within any part of India". Likely intendment is that license cannot be granted except against a payment

Contrast the above against section 3(3) of TA 23 which governs conditions for obtaining authorisation to provide telecommunication services:

3(3): The Central Government, if it determines that it is necessary in the public interest so to do, may provide exemption from the requirement of authorisation under sub-section (1), in such manner as may be prescribed.

Or section 4 of TA 23 for assignment of spectrum and for prescribing terms and conditions for such assignment of spectrum, including the frequency range, methodology for pricing, price, fees and charges, payment mechanism, duration and procedure. Sub Section 4(4) of TA 23 reads as follows:

"4(4) The Central Government shall assign spectrum for telecommunication through auction except for entries listed in the First Schedule for which assignment shall be done by administrative process."

The First Schedule of TA 23 includes many sectors, areas and agencies including assignment of spectrum for national security and defence, law enforcement and crime prevention, disaster management, scientific research, global mobile personal communication by satellites, assignment of spectrum to BSNL, MTNL and many other purposes.

It is evident that one of the intendments for ensuring an exemption from auction or opting for an administrative route for allotment of spectrum against the mandatory auction route is to overcome the hurdles created by the Telegraph Act, 1885. The second intendment to my mind is to factor in the impact of the decision of the SC dated 2-2-12 in Centre for Public Interest Litigation Vs Union of India, when it stated the following :

"We have no doubt that if the method of auction had been adopted for grant of licence which could be the only rational transparent method for distribution of national wealth, the nation would have been enriched by many thousand crores".

(It may also be noted that after the 2G judgement in 2012, on a Presidential reference, Supreme Court clarified that the 2G judgment was specific to the 2G spectrum allocation and not a blanket rule for all natural resources. However, the DoT again approached the Supreme Court in 2023 on this issue of allocating spectrum. However, The Registrar invoked Order XV Rule 5 of the Supreme Court Rules, 2013 to decline the application)

The new dispensation is a statutory carve-out from the mandatory licensing regime created under the erstwhile Act and SC's judgement. It is therefore expected to provide a degree of latitude to the licensor in deciding issues of assignment or allotment of spectrum from a public interest perspective as well, and not just on commercial basis.

(C2): One more aspect would be the statutory recognition of spectrum as a valuable asset, absolute ownership of spectrum with the central government, the limited right to use spectrum with the allottees, and simultaneously permitting commercial exploitation of allotted spectrum by the allottees in all legally permissible manner.

Section 8(2) of TA 23 reads :

The Central Government may permit the sharing, trading, leasing and surrender of assigned spectrum, subject to the terms and conditions, including applicable fees or charges, as may be prescribed.

An attendant provision section 45 of TA 23 quoted below indicates in some manner an obligation of the central government to ensure that the limited rights of the allottee are leveraged for operational and financial needs of the entity.

45 The Central Government may provide for such security interest which an authorised entity may provide to lenders financing such entities on such terms and conditions of such security interest as may be prescribed.

Though 'security interest' is not defined in TA 23, one suspects that the definition of the term would be in terms of the definition given in the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 introducing an amendment to section 2(zf) of SARFAESI Act, 2002. That amendment reads as below:

'(zf) "security interest" means right, title or interest of any kind, other than those specified in section 31, upon property created in favour of any secured creditor and includes-

(i) any mortgage, charge, hypothecation, assignment or any right, title or interest of any kind, on tangible asset, retained by the secured creditor as an owner of the property, given on hire or financial lease or conditional sale or under any other contract which secures the obligation to pay any unpaid portion of the purchase price of the asset or an obligation incurred or credit provided to enable the borrower to acquire the tangible asset; or

(ii) such right, title or interest in any intangible asset or assignment or licence of such intangible asset which secures the obligation to pay any unpaid portion of the purchase price of the intangible asset or the obligation incurred or any credit provided to enable the borrower to acquire the intangible asset or licence of intangible asset;'.

One will wait for the 'terms and conditions' as may be prescribed for section 45 of TA 23 to see the contours of the security interest that the central government may extend in case of lending and financing that the entity may be seeking, whether in form of counter guarantee or a joint guarantee or letter of comfort or some other formulation.

In conclusion, TA 23 is an ambitious step towards future-proof statutory framework for the growing telecommunication sector. Getting the provisions effective on-ground at its most expeditious though is critical to its success. TA 23 got notified on 24-12-23. Each provision of the Act in terms of section 1(3) will have different effective date as the central government may by specific notifications decide. TA 23 has 62 sections. 39 of the 62 sections have been notified on 21-6-24. 5 sections have been notified on 4-7-24. 18 sections of TA 23 therefore await notification. Rules required for 23 sections and 35 sub-sections are yet to be made. Sooner the remaining sections and rules are notified, that we may have a deeper understanding of the implementation challenges and things to do next.