Legal Issues In The Telecommunication Sector

INTRODUCTION

The Telecommunication sector is rapidly growing in India and plays a pivotal role in the socio-economic development of the country. The telecom sector was first initiated in India by the means of postal in 1950. In 1885, the Indian Telegraph Act was enacted and it is one of the oldest Legislations still in effect in India. India is the world’s second largest telecom market, and it has surpassed the US to become the second largest market in terms of number of app downloads. Telecommunication sector has played a remarkable role in narrowing down the rural-urban digital gap to a great extent. It is the age of privatization, globalization and digitalization of the telecommunication sector and it has been ever evolving and growing.

ACTS AND STATUES REGULATING TELECOMMUNICATION SECTOR

The telecommunication sector is regulated by a number of statues, rules, regulations, guidelines and such formulated by the Government of India. Certain Acts regulating the telecommunication sector are[1]:

• The Indian Telegraph Act, 1885;
• The Indian Wireless Telegraphy Act, 1933;
• The Telecom Regulatory Authority of India (TRAI) Act, 1997;
• The National Digital Communications Policy (NDCP) 2018;
• The Broadband Policy, 2004;
• The Information Technology Act, 2000.

However, the Telegraph Act is the primary legislation of the telecom regulatory framework and prescribes various powers of the government to operate and regulate telecommunication sector in India. Apart from the abovementioned statues, the Department of Telecommunications, the Ministry of Communications and Information Technology (DoT) formulates and implements the telecommunication licensing regime. It is responsible for formulating policy frameworks for accelerating the growth of telecom services.

The Telecom Regulatory Authority of India (TRAI) Act, 1997 has set up the TRAI and certain regulations are also issued by TRAI including the ‘do not call’ regulations and interconnection rules. The TRAI is authorized to issue regulations and provide recommendations to the DoT. The TRAI is not controlled by the Government, the Government only appoints its officers.[2] TRAI is empowered with quasi-judicial authority to adjudicate upon and settle telecom dispute. [3]

SOME LEGAL ISSUES IN TELECOMMUNICATION SECTOR

• ISSUE BETWEEN TRAI AND DOI:

In the case M/s Bharti Cellular LTD And Another v. Union of India (2010), it was alleged that DoT had taken a decision regarding network operations and date services without taking the permission and recommendation from TRAI. Furthermore, there was a revocation of license by DoT without the involvement of TRAI in the matter.

It was held by the Court that even though there is an independent body governing and regulating the telecom sector in India, it is mandatory for both the government and DoT to take prior approval of TRAI before proceeding with any decision/step. This provides TRAI with a quasi-judicial authority.

• GOVERNMENT AUTHORITY OVER TRAI:

The Government exercises control over TRAI in certain ways. Section 25 of the Act enables the Central Government to issue binding directions to TRAI for:[4]

1. India’s sovereignty and integrity;
2. Friendly relation with foreign states;
3. State security;
4. Public order;
5. Decency; and
6. Morality.

Further, the fundings of TRAI is mostly derived through grants made available to the government. Also, the Government has the authority to make rules under Section 35 of the TRAI Act on a wide range of subjects and the said rules are binding on TRAI. According to Section 25(3), the Central Government has the final say on all policy decision. Hence, it can be said that Section 25 acts as an hinderance in fulfilling the legislative intent to establish an independent regulator for telecom sector.

• ROLE OF INTELLECTUAL PROPERTY RIGHTS (IPR):

IPR plays an important role in the rapid growing telecom sector. It is important to safeguard any innovations occurring in the telecom sector. The role of IPR is evident in the landmark case of India-Ericsson vs. Micromax (2016), where the plaintiff (Ericsson), world’s biggest telecom network equipment maker filed a suit for patent infringement against the Respondent (Micromax), alleging the infringement of eight of its telecom patents for a range of wireless technologies, including 3G, AMR and Edge.

During this case, two new concepts were apprised in the arena of Telecom IP Laws, i.e., Reasonable and non-discriminatory terms (RAND), and Fair, reasonable, and non-discriminatory terms (FRAND), with the help of which the court ruled. The Court held them to be the licensing obligation that is often required by standard-setting organizations for members that participate in the standard-setting process.[5] Standard-setting organizations (SSO) are those industry groups which set common standards for a particular industry for ensuring the compatibility and interoperability of devices manufactured by different companies.

This case is the premier example of the negligence of the IP challenges in telecom sector. It is concluded by the Court that all companies working in this sector should adhere to RAND and FRAND and SSO should include this obligation in their bylaws.

• DATA SECURITY AND PRIVACY CONCERNS:

There is an omnipresent problem in the telecommunication sector that is the data security and safeguard of our privacy. There are certain jurisdictions restrictions in the TRAI’s policies and infringement of privacy is constant when it comes to the telecom sector. With the increase in the use of network devices, there are often cases of breach of privacy of individuals or organizations and the problem of protection of a huge number of data transfer and private texts through these devices is a serious concern. [6]

Certain serious questions are posed by the Information Technology Act, 2000 related to the data security and privacy concerns. Some of them includes:

1. Whether the consent of the individual must be taken before their personalized data is shared?
2. Under which legislation will the Data Controller be governed?
3. What are the roles and liabilities of the Data Controller?

Hence, there is a huge legal conflict pertaining to the data security and privacy matter in telecommunication sector which are yet to be resolved.

• THE ADJUSTED GROSS REVENUE (AGR) DISPUTE:

The Cellular Operators Association of India (COAI) challenged the government’s definition and the manner of calculation of AGR in 2005. The calculation included revenue from both telecom and non-telecom services. The Telecommunication Service Providers (TSPs) only wanted to include the revenue from core telecom services under AGR.

In 2015, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) stayed the case in favor of the TSPs and held that AGR includes all receipts except the capital receipts and revenue from non-core sources. [7] However, in 2019, the Supreme Court allowed the government’s appeal against this order and upheld the definition of AGR as stipulated by the DoT and directed the TSPs to pay the AGR dues in annual instalments over the next ten years. In 2021, the TSPs filed an application seeking a correction of the arithmetic errors in the calculation of AGR which was dismissed by the Supreme Court as the dues could be the subject matter of any future litigation.

This judgment by the Supreme Court has led the TSPs to owe the government more than Rs. 1.47 lakh crores combined. This judgement will play a major role in deciding the survival of major telecom providers in India. This judgement would further have serious implications on the expected rollout of 5G in India given the poor financial condition of the telecom providers. The judgement has led Vodafone Idea Limited on the verge of bankruptcy. [8]

CONCLUSION

It can be concluded that the telecommunication sector in India is a rapidly-growing industry which plays a great part in the economy of the country and lessens the urban-rural gap in the country while augmenting connectivity throughout the country. However, there are still a number of legal issues in the telecommunication sector which continues to grow with each passing day. In order for the telecommunication sector to grow without any hinderance, these legal issues ought to be solved to make India a telecom hub.

 

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[1] Anuradha Dua and Atul Dua, In brief: telecoms regulation in India, LEXOLOGY, (Jan 18, 2022, 8:47 PM), https://www.lexology.com/library/detail.aspx?g=45ac7f16-f40c-42ea-b3df-dfe6e357e2c0.

[2] DLA PIPER, https://www.dlapiperintelligence.com/telecoms/index.html?t=laws&c=IN, (last visited Jan 19, 2022).

[3] CHAIR ON CONSUMER LAW AND PRACTICE, https://clap.nls.ac.in/?page_id=262, (last visited Jan 19, 2022).

[4] Shreya Mazumdar, Telecommunication laws in India and its drawbacks, LEGALSERVICEINDIA.COM, (Jan 19, 2022, 11 AM), http://www.legalservicesindia.com/article/1670/Telecommunication-laws-in-India-and-its-drawbacks.html.

[5]Priyanka Rastogi and Aayush Sharma, India: Telecom industry under the regime of IPR, MONDAQ, https://www.mondaq.com/india/telecoms-mobile-cable-communications/272350/telecom-industry-under-the-regime-of-ipr-a-brief-narration-on-the-ericsson-vs-micromax-frand-case#:~:text=Telecom%20technology%20development%20is%20greatly,forwarded%20Indian%20telecom%20technology%20companies, (Jan 19, 2022, 10 PM).

[6] Dignath Raj Sehgal, Transforming the Telecom Sector: A legal and economic analysis, IPLEADERS, (Jan 18, 2022, 10:12 PM), https://www.google.com/amp/s/blog.ipleaders.in/transforming-telecom-sector-legal-economic-analysis/%3famp=1.

[7]Lakshya Sharma and Raghav Prasad, How does the SC ruling on Telecom AGR affects the sector, INVESTINDIA, https://www.investindia.gov.in/team-india-blogs/how-does-sc-ruling-telecom-agr-affects-sector, (Jan 19, 2022, 8 PM).

[8] Akil Hirani, Will the changes proposed to India’s telecom sector have the desired effect, THELEGAL500, https://www.legal500.com/developments/thought-leadership/will-the-changes-proposed-to-indias-telecom-sector-have-the-desired-effect/, (Jan 19, 2022, 7:15 PM).

 

YLCC would like to thank Riya Singh for her valuable insights in this article.