Decoding The Telecommunications Act 2023

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Decoding The Telecommunications Act 2023: Opportunities, Challenges, And Impact

The telecommunications industry has undergone significant changes over the years, with the rapid advancement of technology and the evolving needs of consumers. One of the crucial developments in this sector is the Telecommunication Act, 2023 (the “Telecom Act”), which seeks to address the challenges and opportunities that arise in the field of telecommunications. The President of India has given his assent to the Telecom Act on December 24, 2023. The Telecom Act will repeal the archaic Indian Telegraph Act, 1885, and Indian Wireless Telegraphy Act, 1933.

The Telecom Act by way of this significant legal development, explicitly removes reference of services like internet-based communications, and OTT platforms from the scope of telecommunication services (“telecom services”). Further, the Telecom Act asserts its jurisdiction not only throughout India but also for such offences and contraventions committed outside the Indian territory.

This analysis offers a comprehensive review of the Telecom Act. It not only highlights the legislative advances but also addresses the challenges and ambiguities, paving the way for a nuanced understanding of this landmark legislation in India’s telecommunications history. The Telecom Act, while poised to modernize the sector, necessitates careful consideration and further clarification to navigate the new challenges it introduces.

Key Highlights

  • Extra-territorial applicability:

Section 1(2)(ii) read with Section 50 of the Telecom Act extends its applicability beyond Indian territory addressing the offences and contraventions committed outside India if the activity involves: (i) telecommunication service provided in India, or (ii) telecommunication network or equipment located in India.

  • Definitions of Telecommunication Service:

The Telecom Act provides a broad definition of telecom services, encompassing services provided through telecommunication, which notably excludes video and data internet-based communication services, OTT communication services, among others. Unlike the initial telecommunication bill draft, the Telecom Act no longer categorizes OTT providers in the definition of telecom services, alleviating them from authorizations and related conditions. The definition of telecommunication still includes various mediums of communicating messages, raising concerns within the OTT industry. However, an official clarification in this regard by Information Technology Minister Ashwini Vaishnav reinforces that the Telecom Act doesn’t regulate OTTs, which will continue to be regulated by the

Ministry of Electronics & Information Technology.

  • Authorization:

According to Section 3 of the Telecom Act, authorization is a mandatory requirement for any person intending to engage in various telecommunication activities, including providing telecom services, establishing, operating, maintaining and expanding telecommunication networks, or possessing radio equipment.

While the Central Government may grant exemptions from the authorization requirement in the public interest, any exemptions provided beforehand are transitioned into the new framework subject to any other notification by Central Government. Additionally, authorized entities are permitted to undergo mergers, demergers, acquisitions, or other forms of restructuring, subject to prescribed terms and conditions and other compliances originally applicable on the authorised entity.

  • User verification

The Telecom Act also provides for authorised entities to mandatorily identify its customers using any verifiable biometric identification, as may be prescribed. This provision leaves no choice to the authorised entities but to collect biometric data of their users, which may create a complex compliance mechanism for them in light of the privacy laws of India.

  • Spectrum Allocation

According to Section 4 of the Telecom Act, any entity seeking to use spectrum must obtain authorization from the Central Government, which has the authority to establish terms and conditions for the assignment.

Section 4(4) of the Telecom Act provides for a dual approach to spectrum allocation: primarily favoring auctions, but exceptions are made for specific services listed in the First Schedule, where administrative processes, defined as spectrum assignment without auctioning, are employed. The government retains the flexibility to amend the First Schedule to address public interest, perform government functions, or when technical or economic reasons make auctioning unsuitable. Additionally, the Central Government may grant exemptions from the assignment requirement or specify certain usages within defined frequencies and parameters. Exemptions and assignments made under previous telecommunications acts are transitioned into the new framework, ensuring continuity and validity for a specified duration.

  • Right of Way

Section 11 of the Telecom Act outlines the process for facility providers to obtain permission for right of way on public property for telecommunication network infrastructure. Any facility provider may submit an application to the relevant public entity, and upon receipt, the entity is obligated to grant permission for activities such as surveying and establishing telecommunication networks, and rejection of an application must be based on recorded reasonable grounds. The facility provider is required to minimize damage to public property and ensure uninterrupted operations. In case of damage, the facility provider must either restore the property or agree to compensation. Further, Section 13 of the Telecom Act states that the right of way provided should be granted in a non-discriminatory manner and, as far as practicable, on a non-exclusive basis.

  • Notification of Standards

According to Section 19 of the Telecom Act, the Central Government has the authority to prescribe the standards for telecom services, manufacturing, import of equipment, encryption and cyber security for telecom services and network.

  • Public Safety or Public Emergency

According to Section 20 of the Telecom Act, in the event of a public emergency or concerns related to public safety, the government, whether at the central or state level, or any duly authorized officer, has the ability to temporarily assume control of any telecom service or network operated by an authorized entity through official notification.

  • Digital Bharat Nidhi

According to Section 24 of the Telecom Act, Digital Bharat Nidhi (“DBN”), is the successor of the Universal Service Obligation Fund established under the Indian Telegraph Act, 1885. Following the appointed day, the fund operates under the control of the Central Government and is designated to fulfill the functions outlined in the Telecom Act. Any funds directed to DBN through authorizations pursuant to Section 3 are credited to DBN. Importantly, the balance within the DBN does not lapse at the end of the financial year, ensuring its sustained Availability.

Furthermore, amounts payable under licenses granted before the appointed day for Universal Service Obligation purposes are now considered as amounts payable towards the DBN, reflecting the fund’s role in supporting and advancing digital initiatives in India.

  • Regulatory Sandbox

To boost innovation and technology development in telecommunications, the Central Government, pursuant tot Section 27 of the Telecom Act, can set up one or more regulatory sandboxes. These sandboxes are designed in a particular way and exist for a specific period, as decided by the government.

  • Measures taken for Users

According to Section 28 of the Telecom Act, the Central Government has the authority to establish rules for safeguarding users in line with regulations set by the Telecom Regulatory Authority of India. These protective measures may include obtaining users’ prior consent for receiving certain types of messages, creating, and maintaining a “Do Not Disturb” register to ensure users do not receive undesired messages, and implementing a mechanism for users to report malware or messages that violate these rules.

  • Dispute Redressal Mechanism

The Telecom Act comprises of a comprehensive dispute redressal mechanism. Firstly, under Section 32 and Section 33, in case of breach of any of the terms and conditions of authorisation or assignment granted under the Telecom Act, or upon receipt of a complaint, the Adjudicating Officer will issue a written order following an inquiry which may direct such authorised entity to do or abstain from doing any act or thing to prevent such breach or for such compliance; impose civil penalties; and make recommendations for the consideration of the Central Government regarding suspension, revocation, or curtailment of the duration of the authorization or assignment.

Further, under Section 36 of the Telecom Act, a Designated Appeals Committee is constituted. A person aggrieved by an order passed by the Adjudicating Officer under Section 32 or Section 33, may file for an appeal to this Committee.

Under Section 39 of the Telecom Act, any person aggrieved by an order of the Designated Appeals Committee under Section 36, regarding matters specified in Section 32(1), or an order of the Central Government under Section 32(2), can appeal to the Telecom Disputes Settlement and Appellate Tribunal established under Section 14 of the Telecom Regulatory Authority of India Act, 1997.

Offences and Penalties

Section 42 of the Telecom Act defines various offences related to telecom services and networks, each with corresponding penalties: Firstly, providing telecom services or establishing a telecommunication network without proper authorization under Section 3 (1), or causing damage to critical telecommunication infrastructure, is punishable with imprisonment for up to 3 (three) years, a fine extending up to INR 2,00,00,000 (Indian Rupees Two Crore), or both.

Secondly, individuals directly or indirectly attempting to gain unauthorized access to a telecommunication network, transferring data without authorization, or unlawfully intercepting a message shall be punished with imprisonment for up to 3 (three) years, a fine extending up to INR 2,00,00,000 (Indian Rupees Two Crore), or both

Thirdly, offences such as possessing or using equipment that blocks telecommunication, using unauthorized telecommunication identifiers, tampering with identifiers, possessing unauthorized radio equipment, obtaining identifiers through fraud, and knowingly possessing radio equipment with unauthorized or tampered identifiers are punishable with imprisonment up to 3 (three) years, a fine up to INR 50,00,000 (Indian Rupees Fifty Lakh), or both.

Critique and Conclusion

The Telecom Act is a significant piece of legislation that has the potential to shape the telecommunications industry for years to come. Despite its various positives, there are some prevailing concerns. The ambiguity in the definition of ‘telecom services’ raises concerns. By keeping the definition generic, the legislation opens itself to diverse interpretations, creating potential loopholes that might be exploited or lead to confusion.

Further, the provision granting the government the authority to “take temporary possession” of the network is a significant point of contention. The lack of clarity on the term “possession” and the duration of the “temporary” period might raise questions about the extent of government control.

In conclusion, the Telecom Act represents a comprehensive and forward-thinking approach to regulating the telecommunications industry, and has the potential to drive positive change in the industry. As the Telecom Act is implemented and its effects are observed, it will be important to continue evaluating its impact and making necessary adjustments to ensure that it continues to promote a fair and vibrant telecommunications market.


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