Editorial: Memories of Licence Raj

India has come a long way from the infamous ‘licence-permit raj’ era that stifled entrepreneurship, innovation and growth. However, the much-maligned system is threatening to make a comeback if the provisions of the draft Telecommunications Bill get the go-ahead. Though there are several aspects in the draft legislation that will help in boosting the growth […]

India has come a long way from the infamous ‘licence-permit raj’ era that stifled entrepreneurship, innovation and growth. However, the much-maligned system is threatening to make a comeback if the provisions of the draft Telecommunications Bill get the go-ahead. Though there are several aspects in the draft legislation that will help in boosting the growth of the sector, what raises concerns is the proposal to extend the licensing to Over-The-Top (OTT) communication platforms such as WhatsApp and Telegram. The draft Bill seeks to consolidate three separate Acts that govern the telecommunications sector — Indian Telegraph Act, 1885, Indian Wireless Telegraphy Act, 1933, and The Telegraph Wires, (Unlawful Protection) Act, 1950. The OTT players use telecom networks to offer value-added services for which the telcos get paid by customers, based on the latter’s data utilisation. Moreover, the OTT players are already regulated under the Information Technology Act as intermediaries while the telecom service providers are regulated by separate legislation, governing telecommunications, which is now being replaced by the proposed Telecommunication Bill, 2022. The draft Bill seeks to extend the boundaries with an all-encompassing definition of telecommunications services to include the OTTs or internet-based communication systems within the regulatory regime. This one-size-fits-all approach could harm OTTs and telecom services. Bringing OTT players under the telecom Bill will increase regulatory overlaps, and create a licensing regime for them. Since the Bill is looking at telecom services, which are carriage-based, and OTT communication services, which fall in the domain of the internet and are content-based, it is important to separately regulate the two services.

A licensing regime, as proposed under the draft legislation, might increase barriers to entry, impact innovation and the growth of the startup ecosystem as compliance costs would increase. A merger of two distinct service providers under one regulatory regime could offend the doctrine of equality as there is no reasonable basis to expand this into the arena of internet-based communication services/OTTs. The Bill empowers the government to direct service providers to intercept messages on end-to-end OTT platforms and disclose messages sent through these channels in the interest of public safety and national security. This amounts to compromising user privacy. The Telecom Regulatory Authority of India too, in its recommendations to the Department of Telecommunication, had cautioned against tinkering with encryption as it would affect the privacy and security of citizens. What the country needs is a regulatory framework that offers stability, predictability and legal certainty. A legal architecture based on the concept of ‘one sector, one regulator’ can help provide clarity to stakeholders. For a country that hopes to create a vibrant digital economy, formulating a law that would require every app developer on the internet to obtain a government licence would amount to throttling innovation.

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