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14 November, 2018
As you may recall, in May 2018, we reported on the Department of Telecommunications’ (DoT) release for public comments of the Draft National Digital Communications Policy 2018 in our previous blog post, “Draft National Digital Communications Policy 2018: Restructuring the Legal and Regulatory Regime”.
The Ministry of Communications, DoT has now notified the National Digital Communications Policy, 2018 (Policy) vide a gazette notification dated 22 October 2018 (Notification). With the coming of this Notification, it is expected that the Indian telecom sector may soon get a much-needed makeover.The Notification comes after the Union Cabinet on 26 September 2018 approved the Policy and also the re-naming of the Telecom Commission as the ‘Digital Communications Commission’. The change in the terminology, by way of a separate gazette notification dated 22 October 2018, has been done to ensure effective implementation and monitoring of the Policy.
The Policy not only caters to the needs of the telecom market but also focuses on digital communications and emerging technologies, thus preparing the country for the future. The Policy aims to achieve several strategic objectives such as provisioning of broadband for all and enhancing the contribution of the digital communications sector to 8% of India’s GDP etc.
The Policy recognises the importance of continued improvement in the regulatory framework for attracting investment and ensuring fair competition. To attract long-term, high quality and sustainable investment, the Policy aims to pursue regulatory reforms ensuring that regulatory structures and processes remain relevant, transparent, accountable and forward-looking. The Policy also seeks to remove regulatory barriers and reduce regulatory burdens that hamper investment, innovation and consumer interest.
For enabling convergence of new technologies in IT, telecom and broadcasting sectors, the Policy proposes to amend the Indian Telegraph Act, 1885 and related acts including restructuring of the legal, licensing and regulatory framework. The Policy also aims to allow benefits of convergence in areas such as IP-PSTN switching. Though one may anticipate unrestricted interconnection between IP and PSTN, it remains to be seen how the DoT will construe the “benefits of convergence in areas such as IP-PSTN switching”.
To create a robust digital communication infrastructure, the Policy aims to facilitate sharing of active infrastructure by enhancing the scope of Infrastructure Providers and incentivising common shareable passive as well as active infrastructure. Under the present regime, any entity registered as an Infrastructure Provider-I category is not permitted to carry traffic over dark fibre without obtaining a relevant telecom licence. It will be interesting to see whether the DoT permits use of active infrastructure under Infrastructure Provider-I category registration.
Given the high capital cost of infrastructure, the Policy proposes innovative approaches to infrastructure creation and access including through resale and Virtual Network Operators (VNO). Although the VNO regime is already in place and the DoT has granted VNO licences to several entities, it would be a significant move if the DoT further introduces new resale models that enable easy access to the infrastructure.
Spectrum is the underlying resource that enables wireless connectivity. But with spectrum being a capital-intensive resource in India, the Policy proposes to make spectrum more accessible, affordable and efficient. In this regard, the Policy recognises spectrum as a natural resource and proposes to optimise its utilisation by developing a transparent, normative and fair policy for spectrum assignments and allocations, liberalising spectrum sharing/leasing/trading, enabling light-touch licensing/de-licensing of spectrum for broadband proliferation, conducting audits for monitoring utilisation, etc.
Considering its scarce nature, the Policy ensures that spectrum is used in the most efficient and optimal manner. Accordingly, the Policy aims to promote co-use or secondary use of spectrum. This will help in the proper use of spectrum that is not being efficiently utilised, without causing interference to the primary user.
Another important aspect of the Policy is the emphasis on the ease of doing business through reforms in the regulatory and licensing regime, and the simplification of compliance obligations.
In view of the same, the Policy seeks to review the levies and fees including the licence fee, spectrum usage charges, definition of Annual Gross Revenue and rationalisation of the Universal Service levy. The Policy aims to reduce the compliance burden on companies so that companies can focus on doing business in India. The Policy also aims to simplify existing systems and procedures for grant of licences, approvals and clearances etc. by developing end-to-end online platforms. The Policy also proposes amendment to the Guidelines for Mergers and Acquisitions 2014 in the telecom sector to enable simplification, and the fast tracking of approvals.
Besides the above, the Policy also aims to review the concept of pass-through charges to avoid double incidence of levies. It is significant to note that the DoT has already started working in this direction and recently amended the VNO licence to allow certain charges paid by VNO licensees to the Telecom Service Providers (TSPs) as deductions by treating them as pass-through charges.
The Policy also recognises the need for ensuring adequate numbering resources by allocating 13-digit numbers for all M2M mobile connections and developing a unified numbering plan or fixed line and mobile services.
Another significant proposed change, which will benefit the business process outsourcing (BPO) and IT enabled services (ITeS) sector, is the improvement in terms and conditions for Other Service Providers (OSPs) including the definitions, compliance requirements and restrictions on interconnectivity. Such changes, if undertaken, will not only help in bringing in more foreign investment but will also assist in the creation of jobs.
For promoting foreign investment in India, the Policy envisages attracting investment of USD 100 billion in the digital communication sector, creating innovation led start-ups, expanding the Internet of Things (IoT) ecosystem, etc. It also suggests development of Standard Essential Patents in the Information and Communications Technology (ICT) sector.
For ensuring that advantages of new technologies are accessible, the Policy proposes to simplify the regulatory and licensing regime for IoT, machine to machine (M2M) and future services. In order to make India a global hub for cloud computing, content hosting and delivery and data communication systems/services, the Policy recognises evolving regulatory frameworks and incentives. For cloud-based systems, the Policy proposes to have light-touch regulations, allowing providers of cloud services to establish captive fibre networks.
The Policy also intends introduction of a policy framework for services such as over-the-top (OTT) that allow providers to stream content via the internet, cloud computing, data centres, etc. The creation of such a policy for OTT players will be a significant move, as the OTT sector has witnessed significant growth in recent years but still remains unregulated.
Another important area which the Policy covers is the digital sovereignty, safety and security of digital communications. The Policy aims to establish a comprehensive data protection regime for digital communications that safeguards the privacy and choice of individuals. The Policy also proposes development of security standards for equipment and devices; participation in global standard setting organisations to ensure consideration of the needs of Indian ICT industries; and formulating policy on encryption and data retention.
It is pertinent to point out that India is already considering enacting Personal Data Protection legislation. Therefore, any data protection and privacy framework which is enacted in India should ensure the flexibility to accommodate sector specific requirements as it will enable the DoT to achieve objectives of the present Policy.
The Policy also envisages a comprehensive plan for network preparedness, disaster response relief, and a unified emergency response mechanism, which also includes incorporating obligations under the licence for implementation of next-generation 112 services in all areas based on geo-location technologies.
Conclusion
The Policy is an important milestone for India as it not only addresses some of the key concerns of stakeholders but also prepares India for emerging digital infrastructure and technology. While the Policy is comprehensive and forward looking, the outcome of the Policy depends on its careful implementation and that too within the stipulated timelines.
For further information, please contact:
Rahul Goel, Partner, Cyril Amarchand Mangaldas
rahul.goel@cyrilshroff.com
