The Telecommunication Act 2023 was passed by both houses of the Parliament in the third week of December' 2023 and was subsequently enacted as law on 24th December 2023. The new law has, however, not been implemented yet, and the government is empowered to appoint the dates from which it shall come into force.

The Act seeks to amend and consolidate the law governing operation of telecommunication services and telecommunication networks, assignment of spectrum, and other matters related thereto, and will replace India's current archaic and colonial era telecommunication laws, namely the Indian Telegraph Act 1885 ("Telegraph Act") and the Indian Wireless Telegraph Act 1933, once it comes into force.

Key Definitions

The Act defines 'telecommunication' very broadly to mean transmission or reception of messages using wire, radio, optical, or other electro-magnetic systems, and 'Messages' mean any sign, signal, text, image, sound, or data, sent using telecommunication. Notably and unlike its draft version, the Act does not expressly include OTT and broadcasting services within its ambit. The government has reportedly clarified that it does not intend to regulate OTT services under the Act, however, the wide definitions of 'telecommunication' and 'message' technically covers OTT and other internet-based communication services within its scope.

'Telecommunication equipment' means any equipment used for telecommunications including customer equipment, and the software integral to such equipment. A 'telecommunication network' is defined as a series of telecommunication equipment including terrestrial, satellite or submarine networks, or a combination of such networks, used for telecommunication. The Act does not appear to distinguish between active and passive telecommunication infrastructure.

Extra-Territorial Applicability

The Act applies to offences committed outside India if it involves a telecommunication service provided in India or a telecommunication equipment or network located in India. The language used is similar to that in the Information Technology Act 2000 ("IT Act"), and can potentially be invoked, for instance, in case of cybercrimes committed outside India which affects telecom networks or equipment in India. The extra-territorial applicability of the Act is relevant in the context of new-age communication services provisioned from centrally located systems which are often located outside India.

Telecom Authorizations

The Act replaces the current complex telecom licensing regime, with an authorisation mechanism. There are currently more than 100 different licenses issued by the Department of Telecommunication ("DoT") for providing various types of telecom services or operating telecom networks or handling telecom equipment, and multiple licenses are to be procured for engaging in multiple telecom related activities. The Act seeks to replace this with an authorisation regime whereby an entity providing telecommunication services; or establishing, operating, maintaining, or expanding telecommunication networks; or possessing radio equipment; will need to obtain an authorisation from the government. The Act empowers the government to prescribe the terms and applicable fees for obtaining an authorisation, and different terms and conditions can be stipulated for different types of telecommunication services, network, or equipment.

While the intention behind the shift to an authorisation regime appears inter-alia to enable ease of doing business, the actual impact can be determined only once the enabling terms are prescribed and authorisations under the Act are issued in practice. Further, it remains to be seen whether the fees for authorisation would be based on the Adjusted Gross Revenue of telecom service providers.

A telecom license granted prior to the effective date of the Act will continue to be in force until such date the government prescribes in case of a term bound license or until 5 years from such date in case of an indefinite license. A license issued under the present law, will need to be thereafter migrated to the terms and conditions of the relevant authorisation under the Act.

Spectrum Allocation

One of the biggest reforms introduced by the Act is the change in the manner of assignment of spectrum from an auction-based model to an administrative process, for services such as satellite communications, space research, launch vehicle operations and ground stations for satellite control, in-flight and maritime connectivity services, public broadcasting services, etc. In contrast to the auction model where service providers bid for exclusive allocation of spectrum, under the administrative model the government directly allocates spectrum to eligible service providers and depending on the relevant telecommunication service, the same spectrum can be assigned to multiple service providers.

Administrative assignment of spectrum would be advantageous for India's nascent satellite communications market, since unlike spectrum for terrestrial networks, spectrum for satellite communication is generally shared and re-used by multiple service providers to serve the same geographical area. This is also considered the best practice internationally, and almost all countries follow this model since allocation of satellite communication spectrum by auction can potentially lead to spectrum fragmentation and inefficient use of spectrum and create entry barriers in the market.

The Act empowers the government to: (i) 'harmonise' and 're-farm' already assigned spectrum; and (ii) assign spectrum assigned to a particular entity to other entities. Both said measures would likely result in accelerated adoption of 5G and 6G networks in India. For instance, the same spectrum already assigned for 3G and 4G networks can be re-farmed and assigned for 5G and 6G networks. Further, harmonisation, re-farming, and spectrum sharing would enable efficient use of spectrum which would in turn lead to cost savings for telecom service providers and end-consumers.

Protection of Users

The Act defines 'specified messages' to include messages offering, advertising, or promoting goods, services, business opportunities, employment opportunities, or investment opportunities. The Act empowers the government to prescribe rules for protection of 'users' of telecom services in consonance with those already issued by the Telecom Regulatory Authority of India, such as the Telecom Commercial Communications Customer Preference Regulations 2018 ("TCCCPR"). Such rules may include measures such as users' prior consent for receiving certain specified messages, preparation of 'Do Not Disturb Registers', mechanisms for users to report malware or specified messages, etc.

The TCCCPR already includes similar measures, and one will need to wait for the government's rules in this regard to understand how it will coexist with the TCCCPR. However, the ambit of 'specified messages' is broader when compared to that of 'commercial communications' under the TCCCPR, and 'users' under the Act include both individuals and businesses availing telecommunication services.

Government's Surveillance Powers

By and large, the provisions under the Act prescribing the government's powers to intercept, monitor, detain, and suspend telecommunication services and the grounds for invoking such powers, are similar to those under the Telegraph Act. However, considering the wide definition of 'telecommunication', the scope of said powers is broader under the Act. Further, similar to the government's powers under the IT Act, the Act empowers the government to direct disclosure of messages in an 'intelligible format'.

The Act does not stipulate any oversight mechanism for exercise of government's interception and monitoring powers and empowers the government to do so. It is hoped that the oversight mechanism prescribed under the Act provides for judicial oversight. This would also ensure greater conformity with the Schrems II judgment and the European standards on essential guarantees for surveillance methods, while enabling processing of EU based personal data in India.

The Act also empowers the government to issue directions in the interest of national security, friendly relations with States, or in case of war, in relation to inter-alia: (i) use of telecommunication services, networks, and equipment; (ii) standards applicable to telecommunication equipment; (iii) suspension or prohibition of use of telecommunication equipment or services from certain countries; (iv) taking over the control and management of any telecommunication service; etc.

Penalties and Offences

The Act prescribes both civil and criminal penalties. A civil penalty of up to INR 50 million (approximately USD 0.6 million) can be imposed in case of violation of any terms of an authorisation granted under the Act. There are monetary penalties prescribed for violations such as possessing radio equipment without an authorisation, contravention of measures for protection of users, etc.

A term of imprisonment of up to three years and/ or a fine of up to INR 20 million (approximately USD 0.24 million) is prescribed in case of various offences such as unauthorised provision of telecommunication services, unauthorised access to a telecommunication network, obtaining SIM cards through fraud, cheating, personation, etc. The offences under the Act are cognisable and non-bailable.

Miscellaneous Provisions

The Act empowers the government to prescribe among others, standards, and conformity assessment measures in respect of: (i)telecommunication equipment and networks; (ii) telecommunication security including identification, analysis, and prevention of intrusion in telecommunication services and networks; (iii) cybersecurity; and (iv) encryption and data processing in telecommunication. Once issued, such measures would potentially result in greater compliance burden, particularly for start-ups and smaller Original Equipment Manufacturers. The DoT will also need to work with other sectoral regulators such as the Computer Emergency Response Team (CERT), Data Protection Board of India while issuing these measures, to ensure consistency in regulations and to prevent regulatory overlap.

The Act also prescribes procedures to seek permission for 'Right of Way' for telecommunication networks from public entities and private persons. It is clarified that a telecommunication network installed on any property will not be subject to any claims or encumbrances related to such property and will not be considered part of such property for the purposes of payment of taxes, statutory levies etc., applicable to such property.

Conclusion

The Act once implemented, would significantly overhaul India's existing telecommunication law framework. The current law which was framed to regulate communications in the telegraph era has long been outdated. In fact, India stopped telegraph services in 2013. There was therefore an urgent need for a new law which is equipped to regulate telecommunication technologies in the smartphone era such as 5G, 6G, satellite communications, M2M communications, edge computing, etc, and the Act is a good first step. The Act however heavily relies on delegated legislation and empowers the government to prescribe rules in respect of 36 matters. Therefore, the operational impact of the Act will be known only once the rules are notified and the law is implemented in practice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.