This is Part 2 of a 7 part series on Technology, Media and Telecommunications Review. It was authored by AnantLaw and published by Law Business Research Limited in December 2022.
Part 2: Regulation
2.1 The regulators
Who is the regulator for telecommunications law in India?
The regulatory body set up to oversee the telecom and broadcasting sector is the Telecom Regulatory Authority of India (TRAI) under the Telecom Regulatory Authority of India Act, 1997 (TRAI Act).
On the regulatory side, fixing and regulating tariffs for telecom and broadcasting services is one of TRAI’s core functions. It is authorised to publish directions, orders and regulations covering a wide range of subjects including tariff, interconnection and quality of service as well as governance of the Authority. It also publishes consultation papers and issues recommendations to the DoT established under the Ministry of Electronics and Information Technology (MeitY).
The adjudicatory and disputes functions are taken up by the Telecom Disputes Settlement Appellate Tribunal (TDSAT), which was established in 2000 through an amendment in the TRAI Act. TDSAT, therefore, is the appellate authority and adjudicates all the disputes pertaining to the TRAI Act, tariff orders issued by TRAI, and inter-party telecom and broadcasting disputes.
The DoT was created with the intention of bringing safe, cost-effective, and quality-converged telecom services for swift and inclusive socio-economic growth of the nation. With regard to telegraphs, telephones, wireless, data, facsimile, telematics services, and other comparable kinds of communications, the DoT takes up tasks of policy creation, licencing and coordination.
It also provides financing for the advancement of research and study in telecommunications technology and for building a trained workforce for the telecom programme, including endorsing institutions, supporting scientific institutions and universities for advanced scientific study and research as well as granting scholarships in educational institutions and other financial aid to people including those studying abroad.
Who is the regulator for wireless and radio broadband?
In 1952, the DoT created the Wireless Planning and Coordination Wing (WPC). The WPC is India’s national radio regulatory body, in charge of overseeing and issuing licences for spectrum frequencies. This wing works as an extension of the DoT by issuing permits for the establishment, upkeep and operation of wireless stations. The WPC’s operations are roughly divided into three sections: licencing and regulation, establishing new technology group, and the Standing Advisory Committee on Radio Frequency Allocation (SACFA).
The SACFA is essentially a high-level committee which includes heads of wireless users and administrative ministries of the government which recommends on issues relating to frequency allocation, clearance of wireless installation, including import of radio frequency devices, and issues related to the International Telecommunications Union and Asia Pacific Telecommunity. Moreover, for the installation or import of equipment for wireless transmission of radio frequency, the clearance and approval from both WPC and SACFA is mandatory.
Who is the regulator for broadcasting services (media and entertainment sector)?
For broadcasting services like cable television, direct-to-home (DTH), headend in the sky (HITS) and internet protocol TV (IPTV), the TRAI is the national regulatory authority. Its functions include releasing annual tariff rates for cable television services, enact interconnection (broadcasting) regulations to provide signals on a non-discriminatory basis to distributors, must-carry provisions mandating broadcasters to carry channels of national interest, etc.
However, there is also a complex web of actors that regulate this section such as the Ministry of Broadcasting (MIB) and self-regulatory bodies like the Broadcasting Content Complaints Council (BCCC) and the News Broadcasting Standards Authority (NBSA).
The primary function of the MIB is to regulate uplinking and downlinking permissions, content regulation, and overall governance of the same. It also releases advisories for television channels, resolves complaints received from viewers and issues penalties to broadcasters.
The contents of private satellite channels and networks of multi-system operators and local cable operators are monitored by the broadcasting wing of the MIB under the provisions of the Cable Television Networks (Regulation) Act, 1995 and policy guidelines issued therein. Similarly, the regulation of the film industry in India is monitored by the film division of the MIB under the Cinematograph Act, 1952.
Additionally, the Central Board of Film Certification (CBFC) regulates theatrical and non-theatrical films, its public exhibitions, its promotional and developmental activities, organising film events (in collaboration with other departments like the Ministry of Culture), etc. The CBFC not only grants content-based certification to films, but also certifies the same for export, and provides certification for the import of international films.
The self-regulating bodies like BCCC, NBSA, the Advertising Standards Council of India (ASCI) formulate guidelines, self-regulatory codes and regulations for industry players to follow.
2.2 Main sources of Law
There are a number of legislations that deal with the telecommunication and broadcasting sector in India. Apart from the legislations, the regulators have also introduced a number of rules, policies, guidelines and regulations that govern the sector. The Telegraph Act, 1885 and the Indian Wireless Telegraphy Act, 1933 are some of the early legislations that govern telegraph and telecommunications in India.
The Telegraph Act deals with wired as well as wireless telegraphy, telephones, teletype, radio communications and digital data communications. Under the Act, the government established, maintains, operates, licences and oversees all wire and wireless communications within India. The Wireless Telegraphy Act, on the other hand, provides for regulation of wireless telegraphy apparatus.
The Prasar Bharti (Broadcasting Corporation of India) Act, 1990 also governs broadcasting in India and provides for the establishment of the Broadcasting Corporation of India which regulated the matters connected therewith or incidental thereto.
The Cable TV Networks (Regulation) Act, 1995 regulates operations of cable television networks, broadcasting conditions for television channels, content of programmes and advertisements, etc. Further, the Cable Television Network Regulation Rules, 1994 also provides for programming and advertisement codes.
Apart from these legislations, the following policies and guidelines have been introduced to regulate the telecommunication and broadcasting sector:
(01) National Digital Communications Policy 2018 (NDCP 2018): The NDCP was adopted succeeding the National Telecom Policy of 2012, with an aim to develop next generation technologies and achieve strategic goals of ensuring digital sovereignty, providing broadband for all, creating jobs in the sector, and enhancing global value chain by India’s contribution to international telecommunications, while also keeping the interests of the stakeholders in mind.
(02) The Broadband Policy, 2004: The Policy is aimed at enhancing the quality of services and the growth of GDP by creating a technological infrastructure compatible with various technologies like optical fibre, digital subscriber lines on copper wire, cable TV network, satellite media, terrestrial wireless and any other future technology.
(03) Policy guidelines for uplinking and downlinking television channels: The guidelines were issued by the government in 2011 and mainly regulate private television channels. However, in April 2020, the government introduced new draft policy guidelines for uplinking and downlinking with the view to curb illegal broadcast of channels that do not have licences for a free dish. But the draft is still under consideration and the stakeholders’ and inter-ministerial consultations have been conducted.
2.3 Regulated activities
In the telecom sector, the regulated activities include services like access service, data service, internet service, spectrum use, radio trunking service, VSAT, GMPCS service, etc. In the broadcasting sector, these services include operating satellites, uplinking and downlinking of channels, content regulation and registration of channels, etc.
The regulators in the telecom and broadcasting sector majorly regulate all activities related to service in the sector. These services were, for the first time, brought under the ambit of unified license (UL) per the Telecom Policy, 2012 with the motto, ‘one nation – one licence’. In simpler terms, the Policy aimed at simplifying the procedure to obtain licences for different telecom services and recommended a unified licence for all service areas. The UL covers the following areas:
Access services
Internet service (all-India jurisdiction)
Internet service (jurisdiction in specific service area)
Internet service (jurisdiction in a secondary switching area)
National long distance service
International long distance service
Global mobile personal communication by satellite service
Public mobile radio trunking service
Very small aperture terminal closed user group service
Audio conferencing, audiotext and voice mail services
Machine to machine (all India jurisdiction and service area jurisdiction)
The Indian national satellite system mobile satellite system reporting service
Resale of international private leased circuit service
Guidelines for granting a UL dated 17 January 2022 provide guidelines for granting a UL whereby the applicant must be an Indian company and meet eligibility conditions, and the grant would be subject to fulfilment of all requisites under the application (provided in Annexure II of the guidelines). The licence is issued for a period of 20 years and then can be further renewed for a period of 10 years.
2.4 Ownership and market access restrictions
For a UL authorisation, application to the DoT is made, after which the process of granting the licence begins. The licence is an agreement between the government and the licensee (i.e., the company looking to acquire the licence). Such licence is acquired only when the company duly files all the requisite documents, complies with the terms and conditions, and completes the financial obligations, as prescribed in the UL Agreement.
The unified licence allows a company to apply for more than one service area in a single licence. Unified license and authorisation under UL is issued on a non-exclusive basis (i.e., without any restriction on the number of entrants for provision of any service in a service area). One company can have only one UL.
This application must be subject to fulfilment of all the conditions of entry simultaneously or separately at different time. The tenure of the authorisation will run concurrently with the unified license. Apart from these terms prescribed in the Agreement, the licensee must also comply with the applicable laws in the sector.
In terms of the extant policy governing foreign direct investment (FDI) (see Press Note No. 4 - 2021 series), 100 per cent FDI is permitted in the telecom sector in all service areas. No prior approval is required from the government of India for making an investment in a company holding any telecom licence.
However, if the investors or foreign company has operations in a country sharing a land border with India, then a prior approval (before making any investment or acquiring shares in an Indian company holding any telecom licence) from the DoT shall be required.
2.5 Transfers of control and assignments
In India, the scheme of compromise, arrangement and amalgamation of companies is governed by the Companies Act, 2013, and every such scheme is confirmed by National Company Law Tribunal constituted in the Act. Thereby, whenever a scheme is introduced before the tribunal wherein the UL is granted to companies, the tribunal ensures that the entity to whom that licence would be transferred is eligible to acquire the authorisation or licence in terms of the extant guidelines.
The licence imposes restrictions on the transfer of a licence, under Article 6, to a third party without the consent of the DoT. Additionally, the DoT has also issued guidelines for transfers and mergers of various categories of telecommunication service licences and authorisation. These guidelines are issued considering the TRAI’s recommendation dated 11 May 2010 and 3 November 2011, along with the National Telecom Policy, 2012. The guidelines ensure free and fair market competition and, therefore, allow only intra-service area mergers.
The guidelines provide that the licensee must notify the government while filing the scheme before the tribunal and only upon the approval by the DoT within 30 days of receipt of the notice can the scheme be approved. Moreover, subsequent to the approval of this scheme, the time period will be allowed to be one year for various licence service areas. In cases when the licensee participates and proposes to merge into another licensee, the lock-in, in such case, would apply in respect to new shares issued to the resultant company.
As per the guidelines, in addition to being surrendered, the spectrum may also be traded. However, all mergers would be subject to a spectrum cap of 25 per cent of the total spectrum assigned in a particular service area, as well as a cap of 50 per cent in a given band in the respective service area. Any such scheme will only be permitted when market share for access service of the resultant entity in a service area is up to 50 per cent. On exceeding this limit, the entity will have to reduce its resultant market share and bring it equivalent to the required per cent within the specified period of one year.
In 2018, the guidelines were amended and now allow the trading and surrender of this access spectrum, when it exceeds the prescribed limit, within one year of permission granted by the department. If any company fails to comply with the same, it shall be open to action.
To give an example, the merger of Vodafone India with Idea Cellular resulting in the formation of Vodafone-India (Vi) was one of the most discussed mergers in the telecom sector in 2018. This merger created India’s largest telecom company with 408 million active subscribers and 32.2 per cent revenue market share. However, in the spectrum holding cap, the combined entity was shooting over 25 per cent in Gujarat, Kerala, Maharashtra, Madhya Pradesh and western Uttar Pradesh. The merger was in controversy as it resulted in leaving only three players in the telecom industry, namely Vi, Reliance Jio and Bharti Airtel; however, it was approved by the DoT because the companies complied with the guidelines and surrendered the excess spectrum cap. Additionally, the Supreme Court’s order to them to pay adjusted gross revenue also required that the two companies consolidate and satisfy the obligations.
Along the same lines, see the order of the MIB, dated 30 December 2020, the Guidelines for obtaining a licence for providing a DTH broadcasting service in India provides that any vertically integrated entity would not reserve more than 15 per cent of operational channel capacity for its operator and they are under an obligation to offer the rest of the capacity to other broadcasters on a non-discriminatory basis.
The CCI is another regulator for all transactions having appreciable adverse impact on competition in the market in India. It regulates the mergers of companies meeting the asset and turnover threshold prescribed in the Competition Act, 2002.
On 23 October 2019, the government of India approved the revival plan of BSNL and MTNL, inter alia, approval for their merger because of high debts. When, in 2019, the companies were given a relief package of around 700 billion rupees, MTNL and BSNL were expected to turn profitable by 2020–21 and 2023–24, respectively. However, on 6 April 2022, the government deferred the merger because of financial reasons and the huge debts of MTNL.
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