The Indian telecom sector witnessed a flurry of activity on the policy and regulatory fronts in 2022. The government initiated a slew of structural and procedural reforms, the key among them be­ing the issuance of the Draft Indian Tele­com­munications Bill, 2022. The bill, once pa­ss­ed, will replace the existing legal fra­me­work governing the telecom sector, co­m­prising the Indian Telegraph Act, 1885; the Wire­less Telegraphy Act, 1933, and the Tele­gra­ph Wires (Unlawful Possession) Act, 1950. The government also sought to improve the ease of doing business and alleviate the financial stress on the industry by announcing new amendments to the Indian Tele­graph Right of Way (RoW) Rules, 2016, scrapping the 3 per cent floor on spectrum usage charges (SUC) and introducing digitisation initiatives on various fronts. Meanwhile, the Telecom Re­gu­latory Au­tho­rity of India (TRAI) released numerous recommendations and consultation papers on several pertinent issues such as using street furniture to deploy telecom infrastructure, and creating the regulatory fra­me­work for satellite broadband and the supervisory architecture for data centres. takes a look at the major policy and regulatory initiatives taken during the past year, and the outlook for 2023…

Key policy moves

  • Draft Indian Telecommunications Bill, 2022: In September 2022, the government initiated the process of restructuring the legal and regulatory architecture of the Indian telecom sector by in­troducing a draft Indian Telecommu­ni­cations Bill. Amongst various other provisions, the bill seeks to simplify the fra­me­work for mergers, demergers and ac­quisitions, as well as other forms of re­structuring, by only requiring the licensing authority to be intimated. Further, the draft bill proposes that spectrum all­o­cation can occur through auction or administrative routes, and includes provisions for waiving fees, charges and penalties for companies to protect consumer interests and promote fair competition. It also expands the definition of telecommunications services to include over-the-top services such as WhatsApp, satellite-based communication, internet and broadband, as well as in-flight and maritime connectivity.

Moreover, the bill suggests that the government can defer payments and convert them into shares, write off am­ounts, or provide relief in certain circumstances. The bill also gives the government the power to waive fees, grant exceptions to licensees and allow insolvent licensees to continue operating under certain conditions. Meanwhile, in cases of public emergency or national security, the government can restrict or intercept communications and take control of telecommunication services. The draft also proposes to rename the Uni­versal Service Obligation Fund as the Telecommunication Development Fund, which will be used to improve connectivity in underserved areas, and for research and development. Furthermore, the bill allows for spectrum sharing, trading, leasing and surrender, with penalties for license violations.

  • RoW amendments to facilitate 5G roll-out: In August 2022, the DoT ann­ou­n­ced new amendments to the Indian Telegraph RoW Rules, 2016, to expedite the deployment of telecom infrastructure for 5G networks. The amendments simplify the RoW application procedures for the deployment of small cells, and enable telecom licensees to use street infrastructure to deploy telecom equipment at a no­­minal cost of Rs 150 per annum in rural areas and Rs 300 per annum in urban areas. To facilitate quicker fiberisation, the rules prescribe that street infrastructure can be utilised at a nominal cost of Rs 100 per annum for installing overground optical fibre. The new rules also provide for a single-window clearance system for all telecom-related RoW app­lications in the form of the Gati Shakti Sanchar portal.
  • Second revival package for Bharat Sanchar Nigam Limited (BSNL): In a fresh attempt to infuse new life into state-run telecom operator BSNL, the government announced a revival package worth Rs 1.64 trillion and approved its merger with Bharat Broadband Network Limi­ted. With these measures, the government hopes BSNL will turn profitable by 2026-27. The revival plan included allo­w­ing BSNL to raise funds by issuing long-term bonds, settling adjusted gross revenue (AGR)-related dues by converting them to equity, increasing the company’s authorised capital, and providing funding for capital expenditure over the next four years. The plan also included measures to improve service quality and enhance BSNL’s 4G footprint by allocating spectrum in the 900/1800 MHz ban­ds. This move is expected to enable BSNL to compete with private players in providing high speed 4G services, particularly in rural areas.
  • Scrapping of 3 per cent floor on SUC: DoT removed the 3 per cent floor on SUC in June 2022, a move that is expected to reduce the overall payout of operators to 1-2 per cent of the AGR. Rece­ntly, the DoT also clarified that an operator’s actual AGR will exclude the revenue from wireline services when calculating the total SUC payable with the weighted average method.
  • Release of the National Frequency Acti­on Plan (NFAP), 2022: DoT relea­sed the NFAP 2022, outlining the usage of spectrum by various government de­partments and agencies, including DoT, the Department of Space, and the Defen­ce, and Information and Broad­ca­sting mi­nistries. The plan includes the allocation of nearly 17 GHz of new spectrum for 5G implementation across different radio frequencies. Additionally, the plan consists of new policy changes for satellite communication services to make the roll-out of these services easier, particularly in remote areas. Further­more, the plan has delicensed certain frequency bands for internet of things and machine-to-machine (M2M) communication, and wireless charging. These delicensed spectrums can be allocated admi­nistratively, for a fee. The document also provides in­formation on the usage of frequency bands from 8.3 kHz to 3,000 GHz for a range of radio services.
  • New data protection bill: The government released a revised Personal Data Protection Bill for public consultation in November 2022. The new bill has relaxed the data localisation req­uireme­nts of the earlier version, which raised co­ncerns among large multinational technology companies. The bill includes penalties of up to Rs 2.5 billion for data fiduciaries that fail to take precautions to prevent personal data brea­ches. Further, as per the re­vi­sed draft, the government will now no­tify a list of countries or territories outside India to which the transfer of personal data will be allowed after considering any necessary factors. The bill also provides for the appointment of an independent Da­ta Protection Board of India by the central government, which will determine non-compliance with the bill’s provisions and impose penalties.
  • Licensing norms for M2M communications: The government updated the telecom licensing norms to allow service providers to offer M2M communication services in the country. The new norms enable operators to offer M2M services with a pan-Indian permit, with fees and guarantees varying depending on the level of service. The licensing framework also includes a clause for providing audiotex or interactive voice response services.
  • Spectrum leasing guidelines for setting up captive private networks: In June 2022, DoT issued guidelines to allow operators to lease spectrum to co­m­panies to set up captive non-public net­works. As per the guidelines, operators and private companies leasing spectrum have to ensure that there is no in­terference caused to any public network or any other licensed user of spectrum. Further, telecom players will have to submit the details of spectrum bands, the quantum of spectrum in each band, the period and geographic area of the lease, geo-coordinates of the logical perimeter of the defined premises, and use of spectrum to DoT within 15 days of entering into the lease agreement. Also, as per the new guidelines, enterp­rises setting up private captive networks can obtain spectrum directly from DoT. The government also allowed operators to offer captive networks as a service to enterprises through network slicing over its public network.

Key regulatory moves

  • Recommendations on using street furniture for the deployment of telecom infrastructure: In November 2022, TRAI released its much-awaited recommendations on using street furniture for small cells and aerial fibre de­ployment. The regulator suggested that all central government entities should allocate dedicated spaces in their existing and planned buildings for the installation of digital connectivity infrastructure, including small and macro cells. Further, TRAI re­commended that the government issue advisory guidelines to the states mandating controlling administrative authorities that own or control traffic lights to share these assets with telecom operators and infrastructure providers for the deployment of small cells. To encourage infrastructure sharing among service provi­ders, TRAI recommended that charges paid by lessee telecommunication service providers (TSPs) to lessor TSPs for the use of shared infrastructure should be deducted from the gross revenues of the lessor TSPs to arrive at the applicable gross revenue of such lessor TSPs. TRAI also reiterated its previous recommendation of forming a National Fibre Autho­rity with expanded responsibilities beyo­nd co­mmon ducts and telegraph posts, in­cluding above-ground contrivances, ap­p­liances and apparatuses.
  • Supervisory architecture for data ce­ntres, content delivery networks and interconnect exchanges: To encou­rage the establishment of data centres and da­ta centre parks, TRAI proposed creating a data centre incentivisation scheme co­mprising financial and non-financial incentives that the central government can implement, as well as guidelines for states to offer their own incentives th­rough their policies. The regulator also recommended the creation of a data ce­n­tre-specific portal on the national single-window system for clearances, on­line registration of new data centres/ data centre parks, and other kinds of in­vestor and operator support. Additio­na­lly, TRAI recommended the development of India-specific building norms, standards and security certification fra­me­­wo­rks, and addressing power and connectivity issues to promote the es­tablishment of data centres. TRAI also recommended promoting green data ce­n­tres and capacity building, and addressing demand-side issues of digital data infrastructure such as data digitisation, sharing and monetisation, data ownership, and data ethics. Further TRAI, so­ught to address various policy and regulatory concerns related to the collaboration of content delivery networks (CDNs) and internet service providers. The regulator recommended that CDNs be registered with the DoT th­rough a simple online process, requiring a one-time registration fee of Rs 10,000. Additionally, the re­gulator suggested several incentives for CDNs to encourage their proliferation in the country and benefit the digital infrastructure eco­system, including interconnect ex­ch­an­ge providers.
  • Regulatory framework for satellite broadband: In November 2022, the re­gulator recommended a separate pan-Indian permit (outside the ambit of unified licences) for setting up satellite ear­th station gateways, a key resource for offering fast broadband-from-space services. The suggested satellite earth st­a­tion gateway (SESG) licence under Se­ction 4 of the Indian Telegraph Act will have a validity period of 20 years with a 10-year renewal provision. TRAI also suggested that the licensee may establish SESGs with respect to one or more government-approved satellite systems. Further, the regulator recommended th­at telecom and broadcasting service permit-holders that are eligible to provi­de satcom services can either establish their own SESGs or connect their baseband gear with the satellite gateways set up by SESG licensees. Separately, TRAI suggested that SESG licensees not be required to submit any bank guarantees.

Among other key initiatives, TRAI initiated discussions on promoting networking and telecom equipment manufacturing in India, putting in place a ratings framework for digital connectivity in buildings, and the rationalisation of entry fees and bank guarantees for telecom operators. The regulator also started the consultation process on adopting artificial intelligence and big data to improve telecom services and enhance network security and effici­enc­ies, and on formulating a licensing framework and regulatory mechanism for submarine cable networks, which offer higher reliability and stability than terrestrial optical fibre cable networks.

What’s in store for 2023

Over the past one year, the government and the regulator have announced several measures to revitalise the Indian telecom sector. It is expected that 2023 will be even more significant in terms of policy ad­van­cements, as the proposed Indian Tele­com­munication Bill is likely to become a legislation this year. The government has also announced that it will continue with its reform agenda, with a view to further lowering the cost of operations for telecom players – a move that will help alleviate the financial distress in the sector and enhance the ease of doing business.

India’s 5G ecosystem is expected to expand considerably in 2023, with Re­liance Jio Infocomm Limited and Bharti Airtel announcing massive 5G roll-out plans. The uptake of 5G by enterprises is also set to increase this year, driven primarily by grea­ter policy and regulatory clarity on 5G private networks. Moreover, the current year is likely to witness the la­unch of satellite-based internet services, with the spectrum auction for these services slated to take place by the end of 2023. Meanwhile, issues related to quality of service are likely to domi­nate the discussions between the gover­­nment and the in­dustry. The government has already as­ked players to identify problem areas and make suggestions on policy interventions that could improve call connectivity. It is also looking at putting legal frameworks and policy-level measures in place to ensure better quality of telecom services.

The government has put in place the necessary policies and regulations for the industry to improve its financial performance. Therefore, the onus is on telcos to bring the sector out of the woods. However, it remains to be seen if the in­dustry can match the government’s re­form agenda by undertaking higher in­vest­ments in infrastructure, taking steps to reduce operational inefficiencies and increasing the focus on improving service quality.