India: The Communications Convergence Bill: India´s Tryst with Destiny

Pursuant to the recommendations of an expert group, the Government of India (hereafter "GOI" or "Government") has recently completed and released a draft Communication Convergence Bill, 2000 that aims to provide a clear regulatory framework for keeping pace with the convergence of telecom, Internet and broadcasting services occurring worldwide. This new legislation, drafted along the lines of an amendment to the U.S. Telecommunications Act of 1996 and Malaysia’s 1998 Multimedia Act, would make India the second country in the world after Malaysia to adopt legislation covering the convergence of high-tech media.

One of the most notable features of the Bill is the creation of the Communications Commission of India (hereafter the "CCI" or the "Commission") and the consolidation of India’s ministries of Information Technology, Communications, and Information Broadcasting. The Commission is proposed to be established as the regulatory authority in convergence of Information Technology, communications and broadcasting, and is expected to be responsible for managing the spectrum, granting of licenses and enforcing their conditions, determining tariff rates and ensuring a competitive marketplace.

The Bill, and eventually the Communication Convergence Act, is expected to repeal a number of legislations such as the Indian Telegraph Act (1885), the Indian Wireless Telegraphy Act (1933), the Cable Television Networks (Regulation) Act (1995) and the Telecom Regulatory Authority of India Act (1997). The proposed law would be short, with detailed rules and regulations promulgated by subordinate legislation so as to cope with rapid changes in technology, and to address problems faced by the industry as and when they arise. Delegated legislation is to be provided by the Central Government and Commission to implement the provisions of the proposed Act in letter and spirit. In order to avoid the vice of excessive delegation, the Bill provides that all rules and regulations framed under the proposed Act must be tabled before Parliament for approval and modification.

The term convergence has not been defined in the Bill. Convergence commonly refers to the provision of different kinds of services over the existing infrastructure and the enhancement of existing technologies so as to provide a wide variety of services. This results from the blurring of borders between telecommunications, computing and media. Quite obviously, it is a term that eludes precise definition and it is very difficult to formulate an exhaustive definition. Put simply, it is the ability of different network platforms to carry essentially similar kinds of services. To simplify further, it is the coming together of consumer devices like the telephone, television and personal computer as progress is made towards the transmission of information, whether data, sound or images over the same infrastructure.

For consumers, the convergence of technologies means the provision of various services like the cable television, basic telephone services and Internet access, through a single infrastructure resulting in the possibilities to make cheap phone calls over the Internet, using televisions to access the Internet, downloading movies from the Internet, and to have e-mail, data and Internet access over mobile phone networks, etc. The possibilities are endless!

Regulatory challenges thrown up for the provision of convergent services are many. As in the case of most countries, separate licenses have been issued in India for basic, cellular, ISP, satellite and cable TV operators, each with separate industry structure, terms of entry and varying requirements of creating infrastructure. However, the fact that convergence now allows operators to use their facilities to deliver some services reserved for other operators necessitated a re-look into the existing policy framework.

In India, at present, different departments of the Government regulate the Telecom, Broadcasting and IT industries differently. Whereas telecom services are regulated by the Union Government through the Ministry of Communications, separate and distinct licenses are required for Internet access services, basic telephony and cellular telephony under the antiquated Telegraph Act of 1885. On the other hand, radio and television broadcasting services are regulated by the Ministry of Information and Broadcasting under the Telegraph Act, 1885. New developments facilitated by the convergence of technologies, entailed this need for a paradigm shift in the regulatory framework to encourage the adoption of convergent technologies, and do away with differential treatment, resulting thereby in this effort to merge regulations governing various services and remove the multiplicity of licensing requirements.

As mentioned earlier, an expert group was constituted in order to recommend changes to the regulatory structure in the light of convergence. They made several far reaching recommendations, which have been incorporated in the Bill.

The following are some of the salient features of the recommendations:

• The proposed law to incorporate various aspects of the Broadcasting Bill, 1997, and to supercede and merge various other statutes, such as the Telecom Regulatory Authority of India Act, 1997, the Indian Telegraph Act, 1885, the Indian Wireless Telegraphy Act, 1933 and the Cable Television Networks Regulation Act, 1995.
• The Telecom Regulatory Authority of India Act, 1997 to be repealed. However, neither the functions of the Telecom Regulatory Authority nor the Appellate Tribunal constituted thereunder would be abolished. They only stand transferred to and get incorporated into the new enactment.
• Constitution of a single and independent regulatory authority for broadcasting and telecom services, namely the Communications Commission of India.
• The Commission to continuously interact with various sectors of industry to help set standards and formulate regulatory norms, both as to content and carriage of information. It would be required to establish a licensing framework in the scenario of convergence of telecommunication, broadcasting, multi media and other related technologies and set up a single regulatory framework for carriage and information content.
• The proposed law envisages the Commission initiating and establishing a regime of "enforced self-regulation", that is, service providers being persuaded to establish disciplinary regimes of their own to avoid the threat of formal legal intervention.
• Frequency allocation in a fair and facilitative manner as the "frequency spectrum" is a critical and scarce natural resource, to ensure that no single agency creates conditions inimical to the growth of industry, and at the same time, preventing any compromise of the country’s security requirements.
• As regards licensing, the model adopted envisages separate categories of licenses for network facilities, network services, application services and content application services and not to restrict licensing to certain specific services only. This is to ensure that the classification is both technology and service-sector neutral. The proposals also contemplate a specific category of "composite licenses" that could be granted for providing multiple telecommunication services or facilities. The proposal also envisages the Government considering amendments to existing licenses.
• The proposals also provide for the incorporation of social obligations or "Universal Service Obligations". However, as the range of obligations and their character and content would be different in different places and situations, left to be prescribed by rules.

Under Chapter IV, the objective of the Bill is to create a regulatory environment that aspires to be flexible enough to accommodate and propagate any permutation and combination of technologies and services, without any attempts to predict the future. In order to achieve a technology-neutral and service sector-neutral environment, the Bill outlines the creation of four categories of licenses that include network infrastructure facilities, network services, application services and content application services.

According to Section 19, the CCI while exercising its functions is required to be guided by the following principles:

• To ensure that a modern and effective communication infrastructure is established taking into account the convergence of information technology, media, telecom and consumer electronics.
• To ensure that the communication sector is developed in a competitive environment and that market dominance is suitably regulated. To ensure that communication services are made available at an affordable cost to uncovered areas like rural, remote, hilly and tribal areas.
• To ensure that there is increasing access to information for greater empowerment of citizens and towards economic development
• To make sure that quality, plurality, diversity and choice of services are promoted.
• To protect the security interests of the country.
• To facilitate the introduction of new technologies, investment in services and infrastructure, and to maximize communications facilities and services (including telephone density).
• To ensure equitable and non-discriminatory interconnection across various networks.
• To ensure that licensing criteria are transparent and to provide for an open licensing policy.
• To provide for a level playing field for all operators serving consumer interest.

The Bill states that no person would be allowed to use any part of the spectrum without assignment from the Central Government or the Commission (Section 3). Furthermore, no person would be allowed to own or provide any network infrastructure facility, or provide any network service, application service or content application service without a license granted under the proposed Act (Section 4). In addition, no person is permitted to possess any wireless equipment without obtaining a license (Section 30).

As per Section 26, Chapter VII, the Commission may grant license to any person for providing the following services technologies/ services:

1. Network infrastructure facilities¹;
2. Network services²;
3. Application services³; and
4. Content application services⁴.

It is expected that the classification mentioned above will be technology-neutral and service sector-neutral since setting up an infrastructural facility and its use is not linked to the provision of a particular service by using a particular technology. Therefore, services can be provided by using any facility and any technology.

The Bill envisages that in an era of convergence, an application service provider or content application service provider could utilize the services of any network service provider for carrying their application/content. In turn, the network service provider would have the flexibility to utilize the infrastructure provided by any network facility provider and to carry application/content from any application service provider or content application service provider. Similarly the network facility provider can provide the infrastructure to any network service provider.

According to Section 20, Sub Sections (1) and (2), the primary function of the Commission will be to facilitate and regulate all matters relating to the carriage and content of communications. Specifically, it shall be responsible for:

• Carrying out management, planning and monitoring of the spectrum for commercial usages.
• Granting licenses, determining and enforcing license conditions and fees.
• Determining appropriate tariffs and rates for licensed services.
• Ensuring competition in the market, and that service providers do not become dominant players to the detriment of other service providers or consumers.
• Promoting competition and efficiency in the operation of communication services and network infrastructure facilities.
• Formulating and determining conditions for fair, equitable and non-discriminatory access to a network infrastructure facility or network service such other related matters in respect thereof.
• Taking measures to protect consumer interests and to enforce universal service obligations.
• Formulating and laying down programme and advertising codes in respect of content application services.
• Formulating and laying down commercial codes in respect of communication services and network infrastructure facilities.
• Taking steps to regulate or curtail the harmful and illegal content on the internet and other communication services.
• Formulating and lay down codes and technical standards and norms to ensure quality and interoperability of services and network infrastructure facilities.
• Carrying out studies on matters of importance to the consumers, service providers and the communications industry.
• Institutionalizing appropriate mechanisms to interact on a continual basis with all sectors of industry and consumers.
• Making recommendations on matters that the Central Government refers to it.

According to Section 22, the Commission shall hear and decide complaints from any person regarding contravention of the provisions the proposed Act, rules, regulations or orders made thereunder. In particular, the Commission shall hear and decide:

• Disputes between two or more service providers on issues relating to spectrum interference, interconnectivity, denial of fair access and practices restrictive of fair competition.
• Disputes between a service provider and a group of consumers arising out of enforcement of any provision of the proposed Act.

In trying suits, the Commission shall have the same powers as are vested in a civil court under the Code of Civil Procedure. It would not be bound by the procedure laid down by the Code of Civil Procedure, but shall be guided by the principles of natural justice and shall have powers to regulate its own procedure.

According to Section 21, the Commission is expected to specify programme codes and standards that may include inter alia practices:

• To Ensure That Nothing Prejudicial To The Interests Of The Sovereignty And Integrity Of India, The Security Of State, Friendly Relations With Foreign States, Public Order Or Which May Constitute Contempt Of Court, Defamation Or Incitement To An Offence Is Contained In Any Programme.
• To Ensure Fairness And Impartiality In Presentation Of News And Other Programmes.
• To Ensure Emphasis On Promotion Of Indian Culture, Values Of National Integration, Religious And Communal Harmony, And A Scientific Temper.
• To Ensure In All Programmes Decency In Portrayal Of Women, And Restraint In Portrayal Of Violence And Sexual Conduct.
• To Enhance General Standards Of Good Taste, Decency And Morality.

The license can be for any one of the categories specified above, or may be in the nature of a composite license - jointly for one or more categories. While granting a license, the Commission may confine or limit the scope of the service to be provided. It may also specify by way of regulations (Section 26):

• Eligibility conditions for issue of licenses;
• Cross-media restrictions having regard to accumulation of interest; and
• Restrictions or otherwise on the number of licenses or extent of accumulation of interest in such licenses by a person.

Under Section 30, any person who intends to posses any wireless equipment must make an application with the requisite fees to the Commission for the grant of a license. The Commission is not to reject any application except on grounds of security of State, public order or other public interest. Every license issued by the Commission shall be subject to such conditions and restrictions as the Commission may determine by regulations.

According to Section 28, the Commission may, from time to time, determine obligations, conditions, restrictions, tariffs and rates subject to which the service provider shall provide services. As the range of obligations and their character and content would be different in different places and situations, it has been left to be prescribed by rules and is not provided for in the Bill.

The Bill specifies that every service provider shall:

• Provide such services to give effect to universal service obligations that may be prescribed;
• Provide such life saving services that may be prescribed;
• Provide service to any person on demand (within a reasonable period of time) and on a non-discriminatory basis;
• Follow the codes and standards laid down and specified by the Commission; and
• Register with the Commission any shareholder agreements, promoters agreements or inter-connectivity agreements.

In addition, every content application service provider shall:

• Endeavor to provide a suitable proportion of programmes of indigenous origin; and
• Ensure that none of its programmes infringes any copyrights.

In order to ensure the widest availability of viewing of national or international events held in India, the Bill provides under Section 32 that no person shall carry a broadcast of any event in India that has been previously notified by the Central Government, unless the public service broadcaster has also been offered the broadcasting rights, on such terms as may be determined by the Commission in advance of the bidding for the event.

According to Section 72, in the event of war or any other natural calamity, the Central Government may take over the control and management of any communication service or any network infrastructure facility connected therewith, suspend its operation or entrust any agency of that Government to manage it.

Similarly, in expediencies, the Central Government may request the Commission to direct a licensee to transmit announcements on its broadcasting service. It may also stop any broadcasting service that is prejudicial to the sovereignty or security of India, friendly relations with foreign States, or to public order, decency or morality, or communal harmony.

Under chapter X, Section 33, the Bill proposes to levy a stiff penalty of Rupees 50 crores if a licensee commits fails to observe any of the terms and conditions subject to which a license was issued. The same would apply to a failure to observe a rule, regulation or order made under the Act.

In addition, under the chapter the Commission may direct the licensee to do or abstain from doing any act, suspend the license, curtail the period of the license, or revoke the license. It may also authorize the seizure of the equipment being used for provision of such service. The equipment cannot be retained for over ninety days without the approval of the Appellate Tribunal.

As regards the consequence of providing communication services using unlicensed equipment, if a person transmits any communication by the use of unlicensed equipment, or equipment which is operated in contravention of the provisions of the proposed Act or any rules, or regulations made thereunder, he shall be liable to a penalty which may extend to Rupees 10 crores.

As for the consequences of delivering content through unlicensed equipment, if a person delivers content for transmission or accepts delivery of any content sent by the use of equipment which he knows or has reason to believe is operated without a license or in contravention of the provisions of this Act or any rules or regulations made thereunder, he shall be liable to a penalty which may extend to 10 crores.

Under Section 37, if a service provider fails to register an agreement which is required to be so registered, for example, shareholder agreements, promoters agreements or inter-connectivity agreements, he shall be liable to a penalty which may extend to Rupees 10 lakhs.

Under Section 38, if a person willfully fails to comply with an order of the Commission, he shall be liable to a penalty which may extend to Rupees 5 crores. In the event of a second failure, he shall be liable to pay a further penalty of up to Rupees 10 crores. In the event of continuing failure, his penalty may extend to Rupees 2 lakhs for every day during which such failure continues.

Complaints to the Commission must be filed within 60 days of the occurrence of the event. If the Commission believes that a prima facie case exists, it will refer the matter to the Adjudicating Officer who would be an officer of the Commission. The Commission may suo moto refer contraventions of the proposed Act to the Adjudicating Officer. In hearing the complaint and deciding it, the Adjudicating Officer shall have the powers of a civil court in a number of matters.

Under Section 41, while adjudging the quantum of penalty under this Chapter, the Adjudicating Officer is to have due regard to the provisions of this Act as well as the revenue loss to the Government, the amount of disproportionate gain, the loss caused to any person, the repetitive nature of the default and that fact that the penalty must act as a deterrent.

Under chapter XII, The Bill envisages the establishment of the Communications Appellate Tribunal to hear appeals from orders of the Commission or Adjudicating Officer. The Tribunal is expected to deal with matters expeditiously and dispose of matters within 90 days. In order to discharge its functions, it is vested with many of the powers of a civil court. However, it shall not be bound by the provisions of the Code of Civil Procedure, but shall have the power to regulate its procedure guided by principles of natural justice. Appeals from the Tribunal shall lie to the Supreme Court within 90 days. Decisions of the Tribunal shall be executable as decisions of a civil court. Failure to comply with orders of the tribunal may lead to a penalty of Rupees 50 millions.

Under Section 79, the Bill excludes the jurisdiction of civil courts over matters which an Adjudicating Officer or the Appellate Tribunal or the Commission is empowered by this Act to determine. They are also prohibited from issuing injunctions against actions taken or to be taken under the Act.

We believe that the Bill represents a significant step forward in developing a future oriented vision for India’s Information Technology, Communications and Broadcast industries. For a country with a teledensity level well below both the Asian and global average, the proposed Bill is significant in that it marks a major step towards revolutionizing telecommunications in India. In initiating this Bill, India has made a great stride in developing a flexible regulatory environment overseeing the converged interests of its Information Technology, Communications and Broadcast industries. Furthermore, by continuing to develop innovative and forward thinking regulatory strategies that promote industry led, market oriented developments in this essential sector, India is positioning itself to become one of the leading destinations of the global information economy, and a leading exporter of multi-media products and services.