INDIA S COMMUNICATION CONVERGENCE BILL, 2001 A CRITIQUE

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1 INDIA S COMMUNICATION CONVERGENCE BILL, 2001 A CRITIQUE Background and objectives Recent technological developments have blurred the line between telecommunications, satellite and terrestrial broadcasting, data-communication, cable television, multimedia and other related technologies and services. Services are not based on a particular delivery technology anymore. Broadcasters transmit by satellite or by wire. With the emerging third generation mobile telephony technology, for example, users of mobile phones will be able to watch live video broadcasts on their phone, download music files, send s, etc. Service operators will want to bundle services in order to make optimal use of their infrastructure. Under the present regime, however, different services, i.e., basic telecom, mobile phone, Internet, satellite television broadcasting, require different licenses and are regulated by different authorities. In this scenario, the Communication Convergence Bill, 2001 (the Bill ) proposes to establish a single regulatory framework addressing all issues pertaining to carriage and content of communications, including broadcasting, telecommunications and multimedia. The Bill will repeal the Indian Telegraph Act, 1885, the Indian Wireless Telegraphy Act, 1933, the Telegraph Wires (Unlawful Possession) Act, 1950, the Telecom Regulatory Authority of India Act, 1997, and the Cable Television Networks (Regulation) Act, The aims of the proposed legislation inter alia are: to promote, facilitate and develop in an orderly manner the carriage and content of communications (including broadcasting, telecommunications and multimedia), to facilitate the development of a national infrastructure for an information based society and to provide a choice of services to the people with a view to promoting plurality of news, views and information, and to establish a regulatory framework for carriage and content of communications in the scenario of convergence of telecommunications, broadcasting, datacommunication, multimedia and other related technologies and services. (See Statement of Objects and Reasons) License and registration of use of spectrum, provision of services, and possession of wireless equipment Majmudar & Co., International Lawyers, India 1

2 Clause 4 of the Bill states the general principle that service providers, other than public service broadcasters need a license for owning and providing any network infrastructure facility or providing any service linked to communication. The proviso to clause 4, however, states that all facilities and services exempt from licensing or registration immediately before the commencement of the proposed legislation shall continue to be so exempt. Furthermore, under clause 4(2) the Central Government may, by notification, exempt any person or class of person, or facility or service from the license and registration requirement. The license requirement under Chapter II applies not only to service providers but also to users. The use of any wireless equipment, i.e., any equipment capable of being used in wireless communication, without obtaining a license is prohibited, unless the person or equipment has been exempted in the past or will be exempted by the Central Government. This provision basically restates Clauses 3 and 4 of the Indian Wireless Telegraphy Act, This requirement under the proposed legislation suggests that even a person who uses a mobile phone may have to obtain a license. This quandary will be resolved only if the Central Government issues a notification exempting users of basic wireless equipment from the license requirement. The provisions relating to the grant of licenses by the Communications Commission of India (the CCI ) are stated in Chapter VII of the Bill. The Bill does not specify the eligibility conditions for grant of licenses or registrations, the restrictions regarding ownership and control of the media, or the restrictions on the number of licenses or extent of accumulation of interest in such licenses by a person. The Bill, however, grants the CCI the power to frame regulations regarding these issues (clause 26(1)). The CCI may also frame regulations relating to the obligations, conditions, restrictions, tariffs and rates subject to which a service provider can provide facilities and services, and those relating to the grant or transfer of license or registration (Clauses 26(2)(a) and (b)). Likewise the procedure, the terms and conditions and the fee for grant of a license or registration will be determined only by regulations (Clause 26(3)). The proviso for clause 26(3), however, specifies that the fee for registration shall not exceed thirty thousand rupees. The period for the grant of a license or registration will also be specified by regulations (Clause 27(1)). Majmudar & Co., International Lawyers, India 2

3 What is new in the Bill, besides the fact that a single authority is responsible for issuance of licenses and regulating the communications sector including infrastructure and the content delivered through it, is the restructuring of the categories of licenses to be issued by the CCI. Until now each service, e.g. like basic telecom, Internet, cellular, satellite television and cable television required a separate license. In order to enable service providers to offer a range of services within one category, the Bill proposes to replace the large number of categories of license with five broad categories. The object of this licensing regime is to optimise the use of resources and to encourage the development of infrastructure (See Statement of Object and Reason). The CCI will be responsible for providing licenses under the following five categories: (i) (ii) (iii) (iv) to provide or own network infrastructure facilities 1 (e.g. earth stations, cable infrastructure, wireless equipment, towers, posts, ducts and pits used in conjunction with other communication infrastructure, and distribution facilities including facilities for broadcasting distribution), to provide networking services 2 (e.g. bandwidth services, fixed links and mobile links), to provide network application services 3 (e.g. public switched telephony, public cellular telephony, global mobile personal communication by satellite, internet protocol telephony, radio paging services, public mobile radio trunking services, public switched data services and broadcasting (radio or television service excluding continued)), to provide content application services 4 (e.g. satellite broadcasting, subscription broadcasting, terrestrial free to air television broadcasting and terrestrial radio broadcasting), and (v) to provide value added network application services 5. 1 Network infrastructure facilities means any element or combination of elements of physical infrastructure, which would be utilized by licensees for providing networking services and includes such other facilities as may be prescribed (clause 2(17)). 2 Networking services means a service for carrying communications by means of guided or unguided electromagnetic waves (clause 2(18)). 3 Network application service means the service provided by means of one or more networking services (clause 2 (16)). 4 Content application service means an application service which provides content meant for the public (clause 2 (10)). Majmudar & Co., International Lawyers, India 3

4 It is interesting to note that in the final version of the Bill no license is required for internet-enabled and telephony based services, as suggested by the initial draft of the Bill. For the removal of doubts, the explanation to clause 26(6)(e) states that information technology enabled services, such as call centres, electroniccommerce, tele-banking, tele-education, tele-trading, tele-medicine, videotex and videoconferencing, shall not be licensed under the proposed legislation. The new classification is technology or carrier neutral. Networking services for example include the carrying of communication by cable as well as by unguided electromagnetic waves. This would allow operators to obtain licenses for an array of services and facilitate offering multiple services to users. A cable operator, for example, could apply for a license for all network application services that can be provided by means of his network, including telephony, interactive content and other services over cable. However many service providers seeking a license and registration will be faced with the same difficulties that they are currently facing, since they may want to combine service that fall under the different categories of licensing. Broadcasting services are a separate category, although they could have been defined as network application services. Likewise a rather artificial distinction is made between network application services and value added network application services. An Internet service provider who wants to carry voice needs one license for value added network application services and one for network application services. The single benefit that they will reap from the proposed legislation will be that they will only have to deal with one agency, namely the CCI. Moreover under clause 26(7) the CCI may, while granting a license for any of the categories of license, confine or limit the scope of the facility or service to be provided by the licensee in each category of license. This raises the question whether the proposed legislation will indeed bring about any change in the present situation since an applicant may require several licenses if the CCI restricts the scope of the license granted. However, clause 26(8) states that the CCI may also grant licenses either singly or jointly for one or more of the categories of facilities or services specified in clause 26(6). The CCI, therefore, has the discretion to either limit or extend the application of the license. The Associated Chambers of 5 Value added network application service means the service provided by means of value addition using one or more network application services (clause 2 (34)). Majmudar & Co., International Lawyers, India 4

5 Commerce and Industry in India (ASSOCHAM) Expert Committee on Telecom in an open letter addressed to the Indian Prime Minister advocated a composite license for all communication services. However, as the grant of a license is combined with duties of the service provider, especially to provide service to any person on demand within a reasonable period of time and on a non-discriminatory basis 6, it seems unrealistic to conceive that any service provider could ask for a license for the whole range of services without having very concrete projects to make comprehensive use of this license. In that case he may as well write a more detailed application for the same range of services and get the same result. It is not evident how the composite licence could under these circumstances speed up or simplify the license procedure. Institutional framework The objectives of the Bill are proposed to be achieved mainly by the new institutional framework prescribed by the Bill. The Bill provides for the constitution of a single regulatory and licensing authority, the CCI; a committee in charge of the allocation of spectrum, the Spectrum Management Committee (the SMC ); and, an appellate tribunal, the Communications Appellate Tribunal (the CAT ), responsible of reviewing decisions by the CCI. The Bill provides for the dissolution of the Telecom Regulatory Authority of India and the Telecom Dispute Settlement and Appellate Tribunal and the proceedings pending before them shall be transferred and deemed to be pending before the CCI and the CAT respectively. More importantly, the CCI will take on responsibilities that are, at present, distributed among several agencies. Communication Commission of India Composition of the CCI In contrast to the SMC, which will have a cabinet secretary as chairman and thus be under the strong control of the Government (clause 23(2)), the CCI may be administered impartially. Except for one ex officio-member, i.e., the Spectrum Manager, its members will be appointed by the Central Government from amongst 6 Clause 28 provides for the duties of the license holders, which are inter alia, to give effect to Universal Service Obligations, to provide such life saving services as may be prescribed, to provide service to any person on demand within a reasonable period of time and on a non-discriminatory basis and follow the codes and standards laid down and specified by the Commission Majmudar & Co., International Lawyers, India 5

6 experts recommended by a search committee (clause 7(1)). Any person, who is in the service of the Government, will have to retire or resign from service before entering the office of the Chairman or a whole-time member of the CCI (clause 7(6)). A majority of the members will be whole-time members, who will not be eligible for reappointment (clauses 6 (4), 8 (1)). Functions of the CCI The establishment of the CCI is the core of the Bill. The CCI will be in charge of a vast array of functions, aptly summarized by clause 18(1) of the Bill: It shall be the duty of the Commission to facilitate and regulate all matters relating to carriage and content of communications. The most important functions of the CCI can be summarized as follows: Assignment of Spectrum to Users The CCI will be responsible for the management, planning and monitoring of the spectrum for non-strategic or commercial usages (clause 18(2)(i)). This includes in particular the assignment of spectrum to individual users (clause 24). Frequencies that are not exclusively allocated to the CCI will be assigned only with the prior approval of the SMC. Grant of license or registration and related regulatory powers The CCI will also be in charge of granting licenses or registrations, in the field of telecommunication, broadcasting and multimedia, to service providers. In this context the CCI will also determine and enforce license or registration conditions and determine fees, including fees for the use of spectrum (Clause 18(2)(ii)). The Bill remains silent on the eligibility criteria for the grant of licenses, and the conditions that may be imposed on the applicant for the grant of the license or registration. Besides stating some guiding principles for the administration of the Act by the CCI, the Bill confines itself to giving regulatory powers to the CCI. Clause 17 states the objectives and guiding principles to be achieved by the CCI as follows: Majmudar & Co., International Lawyers, India 6

7 (i) developing the communication sector in a competitive environment 7 and in consumer interest, (ii) making communication services available to all areas at affordable costs, (iii) increasing access to information by the public, (iv) promoting the quality, plurality, diversity, and choice of services, (v) establishing a modern and effective communication infrastructure, (vi) encouraging investments in new technologies and infrastructure and the maximization of communication facilities, (vii) promoting equitable, non-discriminatory interconnection across networks, (viii) ensuring the transparency of licensing and registration criteria, (ix) promoting an open licensing policy allowing any number of new entrants (except in specific cases constrained by limited resources such as the spectrum), and (x) promoting the principle of a level playing field for all operators. In order to achieve these goals the CCI may by regulations specify: (i) (ii) (iii) eligibility conditions for granting of licenses or registrations (clause 26(1)(i)), restrictions regarding ownership and control of the media (clause 26(1)(ii)), restrictions on the number of licenses or the extent of accumulation of interest in such licenses by a person (clause 26(1)(iii), and 7 This is further emphasized by clause 18 (2)(iv) stating that the CCI shall ensure that the grant of license or registration shall not result in eliminating competition or in one or more service providers becoming dominant to the detriment of other service providers or consumers, and by 18(2)(v) stating that the CCI shall promote competition and efficiency in the operation of communication services and network infrastructure facilities. Majmudar & Co., International Lawyers, India 7

8 (iv) such other conditions as may be considered necessary from time to time (clause 26(1) (iv)), including terms and conditions of granting the license, and fees to be paid for registration provided that the fee for registration shall not exceed thirty thousand rupees (clause 26(3)). Determination of tariffs and rates for services and access to infrastructure, related regulatory powers With respect to the relationship between service provider and user, the CCI is in charge of determining appropriate tariffs and rates for services, wherever considered necessary, keeping in view the objectives and guiding principles of the Act (clause 18(2)(iii)), and must formulate and determine conditions for fair, equitable and non-discriminatory access to a network infrastructure facility or networking service (clause 18(2)(vi)). Under clause 18(2)(ix), the CCI is required to formulate and lay down commercial codes in respect of communication services and network infrastructure facilities. The only constraints on the wide discretionary powers of the CCI are the above-mentioned general guiding principles. Clause 26(2) provides powers to the CCI to determine by regulations, the obligations, conditions, restrictions, tariffs and rates subject to which a service provider must provide infrastructure facilities and communication services. Content related functions Pushing the idea of bringing all functions related to telecommunication, broadcasting, multimedia within the purview of one regulator even further, the Bill provides that the CCI shall lay down program and advertising codes in respect of content application services (clause 18(viii)), and take steps to regulate or curtail the harmful and illegal content on the Internet and other communication services (clause 18(x)). All tasks related to content would be assumed by an expert panel consisting of members of the CCI (clause 16). The scope for the misuse of the provisions relating to content seems broad. The Bill grants the CCI the authority to frame regulations specifying codes and standards for programmes. Such programme codes and standards may include practices to ensure that the contents are not prejudicial to public order and enhance the general standards of good taste, decency and morality. These requirements are very wide and could be used as a basis for a far-reaching censorship. Majmudar & Co., International Lawyers, India 8

9 Technical codes and standards Under clause 18(2)(xi) of the Bill, the CCI shall formulate and lay down codes and technical standards and norms to ensure in a technology neutral manner, the quality and interoperability of services and network infrastructure facilities, including equipment. Dispute resolution and adjudication functions Finally, the CCI will be entrusted with dispute resolution functions. The CCI is entrusted with the power to decide disputes or matters between service providers, service providers and consumers or those arising out of the enforcement of any provision of the proposed legislation (clause 21(1)(a)). Additionally, the CCI is in charge of hearing and determining complaints regarding the contravention of any provision of the proposed legislation, or the rules, regulations, or orders made thereunder, including, contraventions relating to any formulated codes and technical standards, and of other terms and conditions subject to which any license or registration was granted. The matters for adjudication may be referred to the Adjudicating Officer under Chapter X. Relationship between CCI and Government While the composition of the CCI seems to guarantee its independence from the government, its policy choices will be strongly influenced by the Central Government. Under clause 22(1), the Central Government has the power to communicate policy directives, apparently on all areas of responsibility of the CCI, that may include the procedure and the mode in which any services are to be licensed or registered, whether by way of auction in case of granting license, or in any other form. There is no mention of a consultation procedure between CCI and Government. The decisions of the Central Government will be final (clause 22 (3)). The only recourse that the CCI has is to request the Government, by means of a written communication, for a review of the policy directive to which the Government must respond with reasons (Clause 22(4). In framing these policy directives, the Central Government is required to take into account the objectives and guiding principles set out in clause 17 of the Bill. Communications Appellate Tribunal Majmudar & Co., International Lawyers, India 9

10 The second body to be set up under the proposed legislation is the CAT, that will hear appeals against any decision or order of the CCI (clause 43(2)), or of the Adjudicating Officers (clause 43(3)(b)). Every appeal must be preferred within a period of 60 days from the date of receipt of the order of the CCI, which may be extended if the CAT is satisfied that there was sufficient cause for the delay. The timeframe for disposal of the appeal has been stated in clause 43(6) as 90 days from the date of filing of the appeal. However, the CAT is only required to endeavour to dispose of the appeal as expeditiously as possible, and the parties are obliged to actively assist in ensuring that the 90 days deadline is observed. This leaves room for the appeals to become a prolonged process in spite of the proposed timeframe. The CAT will consist of a chairperson and up to six members to be appointed by the Central Government (clause 44(1)). The Chairperson will be appointed in consultation with the Chief Justice of India and the members will be appointed from amongst persons recommended by a search committee (clauses 44(2) and 44(3)). The prerequisite for the position of the chairman of the CAT is that the candidate must be or have been a Judge of the Supreme Court (clause 45(1)(a)). A member of the CAT must be or have been either a High Court Judge or a Secretary to the Government of India or a person holding any equivalent post in the Central Government or a State Government for not less than two years or an expert in the field of literature, performing arts, media, culture, education, films, telecommunications, broadcasting technology, information technology, finance, management and administration, or law (clause 45(1)(b)). Benches of two or more members may exercise the jurisdiction of the CAT, provided that each bench is presided over by a judicial member (clause 44(4)), i.e., a member who has been a High Court Judge. To ensure independence from the Government, the Bill provides that a person, who is in the service of the Government, has to retire or resign from office before joining the CAT (clause 45(6)). Spectrum Management Committee The third new body to be established under the proposed legislation is the SMC, which will co-ordinate with international agencies in relation to spectrum management, and will be in charge of spectrum planning, management, allocation and assignment. The Spectrum Manager and SMC will be outside the purview the CCI but will co-ordinate with it in relation to the assignment. Majmudar & Co., International Lawyers, India 10

11 The Cabinet Secretary will be the chairman of the SMC and the other members will be notified by the Government (clause 23(2)). The Wireless Advisor to the Government of India will be notified as the Spectrum Manager, who will act as the Member-Secretary of the SMC (clause 23(3)). Since the Cabinet Secretary is the chairman of the SMC, the Central Government will be able to exercise strong control over the SMC. The question that arises here is whether the Cabinet Secretary would be technically qualified to discharge his functions as the chairman of the SMC. A technically qualified professional would have been a more appropriate choice for the post. Frequency Spectrum Management Chapter II of the Bill regulates the use of the spectrum, the provision of communication services and the possession of network infrastructure facilities and wireless equipment. Under clause 3 the use of any part of the spectrum, without assignment from the Central Government or the CCI, is prohibited. Under Chapter VI, frequency spectrum management will be carried out at four levels. Clause 23(1) entrusts the Central Government with the general responsibility for the co-ordination with international agencies in respect of matters relating to spectrum management, and for the allocation of available spectrum for strategic and non-strategic or commercial purposes. In order to discharge this responsibility the government will rely on the SMC. The main function of the SMC is, however, to supervise and control Spectrum Manager. The Spectrum Manager shall, inter alia, perform the following functions (clause 23(4)): (i) (ii) (iii) co-ordinate with international agencies, matters relating to overall spectrum planning, use and management (clause 23 (4)(i)), carry out spectrum planning and assign frequencies to the Central Government and to State Governments to meet their vital needs, including those of defence, national security and of the public service broadcaster (clause 23 (4)(ii)), allocate frequencies or band of frequencies including frequencies which are to be assigned by the CCI and to reassign these frequencies from time to time (clause 23 (4)(iii)) (the frequencies will be assigned to the CCI only Majmudar & Co., International Lawyers, India 11

12 after meeting the requirements of the Central and State Governments under clause 23(4)(vi)), (iv) (v) review constantly and make available as much spectrum as possible for assignment by the CCI, in particular by optimising usages (clause 23 (4)(iv)), and monitor as appropriate, in consultation with the CCI the efficiency of the utilization of the spectrum by all users including investigation and resolution of spectrum interference (clause 23 (4)(v)). The distribution of tasks between the Spectrum Manager and the CCI relating to frequency spectrum management is not entirely clear. Clause 18(2)(i) states that the CCI shall carry out management, planning and monitoring of the spectrum for non-strategic or commercial usages. This is confirmed by clause 24(1) 8. Read together with clause 23(4)(iii) this would mean that the Spectrum Manager is in charge of allocating frequencies including those which are to be assigned by the CCI and reassigning the frequencies. This allocation of frequency is done after meeting the requirements of the Central and State Governments (clause 23(4)(vi)). The CCI is then vested with the responsibility of determining the amount of spectrum needed for a specific commercial use and of assigning the frequency to the user. When the CCI seeks allocation of additional spectrum for assignment, there shall be a process for mutual consultation. The manner of initiation of the process and the timeframe for the same have, however, not been stated in the Bill. Clause 23(5) states that the Spectrum Manager shall assign frequencies subject to the general supervision and control of the SMC, on payment of such fees as may be prescribed. It remains an open question as to the users, other than the Central or State Governments, to whom the Spectrum Manager may assign frequencies and whether fees are imposed on non-commercial users, i.e., the Central Government and State Governments. Despite the fact that the important task of assignment of the non-strategic or commercial spectrum has been given to the independent CCI, the Government also keeps strong hold in this area of spectrum management. Under Clause 25(2) the Central Government may, by notification determine the class or classes of persons 8 The Commission shall be responsible for assignment of the non-strategic and commercial spectrum to various users; Provided that the Commission shall assign such frequencies in case these are not exclusively allocated to it, only with the prior approval of the Spectrum Management Committee. Majmudar & Co., International Lawyers, India 12

13 or services for preferential assignment of any frequency or spectrum by the CCI. It is only at the very last level, i.e., the assignment to an individual user, that the CCI has the sole authority to decide. In several cases linked to assignment of spectrum to users, the law provides for interaction between the CCI and the SMC and Spectrum Manager. the CCI needs prior approval from the SMC while assigning frequencies that are not exclusively allocated to it (Proviso to clause 24(1)). Where the CCI sees a necessity for allocation of additional spectrum for assignment it can initiate a process for mutual consultation with the Spectrum Manager. The Bill remains vague regarding the mode and procedure for spectrum assignment by the CCI. Clause 25 only states that the Commission shall prepare and notify from time to time one or more schemes or plans for such assignment, after such public hearing as it may consider appropriate. Interception A provision, which raises a concern from a fundamental rights point of view, is clause 66 relating to interception of communication and punishment for unlawful interception. This provision gives the Central Government or State Governments or specially authorized officers the power to direct a Government agency or service provider to intercept communications, if he is satisfied that it is expedient to do so in the interest of the security, sovereignty and integrity of India, friendly relations which foreign States or public order or for preventing incitement to the commission of an offence. The Bill does not propose any safeguard against unjustified interceptions and could lead to an abuse of power and infringement of the fundamental right to life and personal liberty enshrined in Article 21 of the Indian Constitution. Conclusion While the proposed legislation contains some guiding principles with in relation to future licensing policy, it appears that the Government intends to provide for a flexible type of legislation leaving many crucial issues to future regulations by the CCI, or rules and policy directives (under clause 22) by the Government. The Government has vast powers under the proposed legislation, which extends from exempting certain classes of persons from the license or registration requirement, Majmudar & Co., International Lawyers, India 13

14 to determining a class of persons for preferential assignment of frequency or spectrum by the CCI. It is doubtful whether the Bill, by establishing a new institutional framework, providing some guiding principles for the licensing policy and restructuring the categories of licenses by regrouping them, will give the impetus to the telecommunications, IT and multimedia industry that would be necessary to achieve the objectives of the Bill. The success of the new legislation will depend on the independence and performance of the CCI and on the future policy decisions by the Government imposed on the CCI. Majmudar & Co., International Lawyers, India 14