A Paradigm Shift: Evolving telecom regulatory landscape

The transformation of the Indian telecommunications sector has been nothing short of spectacular over the past few decades. In fact, it is often said that the sector reflects the success of the government’s economic liberalisation policy. Bold policy initiatives, coupled with the entry of private investors, have contributed to the exponential growth of the telecom industry. Today’s telecom consumers are spoilt for choice, a far cry from the days of limited options provided by state-owned undertakings. This article seeks to touch upon some of the key regulatory milestones and developments that highlight the growth of the sector over the years.

From government ownership to private enterprise in India

An analysis of the developments over the past few decades indicates that the telecom sector in India has evolved over three broad phases. Up until 1990, the space was dominated by public sector undertakings and the government effectively exercised monopolistic control. The sector remained largely stagnant until the 1980s, when the government began investing in modernising telecom infrastructure. The Department of Telecommunications (DoT), as we know it today, took shape in 1985. This marked the first phase of the evolution of India’s telecom sector, which had remained almost unchanged since the enactment of the Indian Telegraph Act,1885.

India’s economic liberalisation in the 1990s ushered in true sectoral reforms, and the entry of private investors became a significant turning point for the telecom industry. This phase also coincided with global developments such as advancements in technology, coupled with market-driven strategies.  The introduction of the National Telecom Policy (NTP) in 1994 provided the sector with the necessary impetus for rapid expansion. In addition, the establishment of the sectoral regulator, the Telecom Regulatory Authority of India (TRAI), in 1997 was a landmark step. The launch of mobile services in the late 1990s significantly transformed the way the sector had been positioned. These developments following India’s economic liberalisation would constitute the second phase of the Indian telecom sector’s journey.

The third phase of development is characterised by the transition from a voice-based industry to a voice-cum-data-centric industry, eventually evolving into a predominantly data-driven one. This phase is characterised by the expansion of high speed internet access, the introduction of new-age technology, the government’s Digital India initiative and an overall shrinking of the digital divide between urban and rural India. Further, this phase of the sector’s evolution is expected to witness exits and consolidation of businesses in the wireless segment.

Stellar statistics 

Indian policymakers have outlined a vision of the country becoming a trillion-dollar digital economy. As per current data, India is the world’s second-largest telecommunications market. By 2025, it is expected that India will have around 1 billion internet users. The data-driven phase of the telecom industry can be illustrated with one key statistic – the average monthly data consumption per wireless data subscriber, which has surged from 61.66 MB in 2014 to 18.4 GB in 2024.

With 100 per cent foreign direct investment allowed under the automatic route, the telecom sector has attracted investments worth $40 billion since April 2000. Notably, the government has approved the production-linked incentive scheme for telecom and networking products.

In the next five years it is expected that mobile phone penetration and declining data costs will add almost 500 million new internet users, thereby creating opportunities for new businesses. It is also important to note that with advancements in technologies such as internet of things (IoT), artificial intelligence (AI), robotics and cloud computing, there will be significant demand for skilled workers in the sector. To further drive the development of 6G technology, DoT has established the Technology Innovation Group on 6G.

Regulatory and policy response

The statutory framework that, until recently, had regulated the Indian telecom landscape comprised the archaic Indian Telegraph Act, 1885 and the Indian Wireless Telegraphy Act, 1933. It is indeed ironic that while the telecom industry as a whole has witnessed sea changes since the days of economic liberalisation, the governing laws for the sector remained the relics of the colonial era until 2023, when the Telecommunications Act, 2023 was passed by Parliament.

Before delving into the salient features of the 2023 act, it would be useful to briefly summarise some of the significant policy measures taken since the 1990s:

• 1991: Private telecom companies were allowed to manufacture telecom switches.
• 1992: Value-added services were opened to private investments.
• NTP 1994 and NTP 1999: These milestone policies led to a slew of new measures, such as private sector participation in cellular mobile telephony services and fixed telephone services, liberalisation of VSAT services, opening up of national long distance services, restructuring of DoT, and spectrum management.
• 2003: The unified access service licensing regime was introduced, allowing access providers to offer both fixed and mobile services under the same licence using any technology.
• 2007: Operators were allowed to provide cellular services using dual technologies (CDMA and GSM).
• NTP 2012: A unified licensing regime was introduced, enabling operators to offer converged services.
• National Digital Communications Policy, 2018: The policy had a three fold objective – Connect India (broadband for all as a tool for socio-economic development), Propel India (harness the power of new technologies such as AI, IoT and the cloud) and Secure India (focus on data ownership, privacy and security).
• National Broadband Mission 2.0 (2025): Goals include improved rural fibre connectivity, Right-of-Way norms (RoW) and faster internet speeds.

The aforesaid summary, while not exhaustive, offers a snapshot of government strategy articulation over the years to put in place a regulatory regime that genuinely facilitates the growth of the telecom sector. The industry had long advocated for a modern telecommunications statute that aligns with new-age technological advancements, market dynamics and aspirations. The 2023 act, which replaces the earlier statutes of 1885 and 1933, appears to be a step in the right direction.

The salient changes brought about by the Telecommunications Act, 2023 are outlined below:

• The process of spectrum allocation and management has been streamlined through the introduction of a framework for spectrum assignment. The act empowers the government to take measures for optimum spectrum utilisation.
• Regulatory burdens related to licensing have been eased.
• Data protection and data privacy issues have been given special attention.
• Infrastructure sharing among operators is encouraged, and RoW processes have been streamlined.
• To reduce litigation time, an independent adjudicatory body will address industry disputes.
• Provisions have been made for a regulatory sandbox.
• The adoption of new technology and the PPP model have been encouraged.

While the 2023 act has generated optimism that the regulatory regime is finally catching up with prevailing technology-business dynamics, concerns have been raised regarding its effectiveness in the real world. It is anticipated that the government will have to do a fine balancing act when it comes to issues of innovation, business disruption and competition, individual privacy rights, surveillance rights and national security. It is, therefore, imperative that policymakers continue engaging with stakeholders to calibrate appropriate responses wherever necessary to harness the full potential of the new law.

Role of the judiciary

This discussion would remain incomplete without a reference, to the role that the courts have played in shaping the telecom landscape. Some of the landmark judgments that have had a significant impact on the sector include the 2G spectrum allocation case, the Vodafone tax dispute, the adjusted gross revenue dispute, and the TRAI-Competition Commission of India primacy issue. While only illustrative, this list demonstrates the range of issues that have confronted the judiciary while dealing with the interpretation of telecom laws and policies and their implementation.

Notwithstanding the new regulatory framework and its avowed objective of reducing unnecessary litigation, it can be fairly assumed that the courts will remain busy dealing with issues around the ever-evolving telecom business landscape. The market dynamics and technological innovations that are the hallmarks of the sector are likely to continue posing challenging questions for both the litigants and the judiciary. The interplay of technology, intellectual property rights and competition/anti-competitive behaviour has strong potential to engage the courts in the coming phase. Another area where the courts may be called upon to intervene is the protection of individual freedom and choice in an increasingly digitalised era. All in all, a very interesting phase lies ahead for telecom experts and practitioners.

The author wishes to thank Govindshankar Krishnan, Senior Associate, and Shrishti Bose, Associate, for their assistance