The Department of Telecommunications (DoT) under the Ministry of Communications, has recently initiated a consultation process to revise the legal framework governing the telecom sector. This decision was proposed considering the advancements in technology and changing times since the initial laws dating back to pre-independence India. Pressure from stakeholders demanding a review of the legal framework to match contemporary technology prompted this action.
Need for an Overhaul in Legal Framework
The original legal basis for telecommunications in India was established long before the country’s independence, with the Indian Telegraph Act enforced on October 1, 1885. With rapid technological advancement, numerous stakeholders have emphasized the need for evolution of the legal framework in tune with these changes.
Suggestions Proposed
Several suggestions have been made to improve the regulation of the telecom sector. These include evolving a new legal framework that ensures technologically impartial spectrum utilization, restructuring the frequency range, simplifying the merger and acquisition process, enhancing security protocols, and ensuring service continuity even in cases of insolvency.
The Current State of India’s Telecommunication Sector
The telecommunications industry in India is divided into multiple subsectors including infrastructure, equipment, Mobile Virtual Network Operators (MNVO), White Space Spectrum, 5G, telephone service providers and broadband. The sector is substantial, being the second-largest in the world with a subscriber base of 1.17 billion as of April 2022. The teledensity (the number of telephone connections per hundred individuals) in rural and urban areas stands at 58.16% and 134.70%, respectively.
Challenges in the Telecommunication Sector
The telecom sector in India is faced with several challenges despite its massive growth. A notable issue is the declining Average Revenue Per User (ARPU), exacerbated by falling profits and losses, which has resulted in the industry considering consolidation to boost revenues. Another significant problem is the lack of telecom infrastructure in semi-rural and rural areas due to the high initial fixed costs. Moreover, stiff competition is putting pressure on margins, most notably with the entry of Reliance Jio causing a substantial drop in tariff rates.
Government Initiatives in the Telecom Sector
Proposed government initiatives aim to alleviate these challenges. The Department of Information Technology plans to establish one million internet-enabled common service centers across India per the National e-Governance Plan. Foreign Direct Investment (FDI) in the telecom sector has been increased to 100% from 74%, with up to 49% permitted through the automatic route. Several structural and process reforms in the Telecom sector were also approved by the Union Cabinet in 2021.
Looking Forward
The need for active government involvement in the telecom sector is starkly apparent given its potential opportunities. Independent and statutory body, Telecom Regulatory Authority of India (TRAI), has a critical role in safeguarding the sector. Prompt dispute resolution by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) is necessary. The new regulatory act should include provisions to ensure public safety and national security in emergency situations. Additionally, punishments should be proportionate to violations, warranting an updated law with consolidated provisions on fines and offenses.
