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The general public session on the draft Indian Telecommunication Invoice, 2022 is about to shut in a day. Maybe it’s a good time to get one final phrase in.
Many commentaries have been written on varied points of the invoice, not least on the inclusion of OTT or over-the-top providers within the definition of telecommunication within the invoice. For the uninitiated, OTT providers seek advice from providers supplied over the web—streaming providers, textual content, voice and video messaging, e-commerce, and so on. Since then the Division of Telecommunications or DoT has clarified that it intends to solely regulate communications OTT from primarily a security and safety perspective, drawing an equivalence between voice and web calling.
From a regulatory perspective, one must differentiate between telecom operations—involving bodily and technological points of the infrastructure and enterprise points of the community—and the telecommunication service supplied utilizing these operations. That’s, distinguish the technique of provision from providers supplied utilizing these means.
In most jurisdictions, together with in India, each of those are regulated or ruled in some type. Telecom operations together with entry into the market, pricing choices, and so on. are all very carefully regulated. Equally, there are some necessities on the providers supplied utilizing these means—for instance, prioritization of emergency calls or provision of providers to people topic solely to sure situations. The rationale for the 2 regulatory interventions could be very completely different. It simply so occurs that with telecommunications the identification of the suppliers of the community, and providers is identical—the telecom firms. And subsequently not a lot consideration is paid to this distinction.
However with the appearance of OTT providers, this has modified.
Telecom infrastructure is now used to supply providers over the web—telecom firms normally present entry networks. And these providers usually are not supplied by telecom firms. Therefore, the excellence between regulation on the technique of provision and the service supplied utilizing these means turns into necessary.
Telecom regulation is an out-and-out financial regulation.
Telecom provision makes use of a scarce public useful resource—frequency spectrums. For varied causes together with rationalization and optimization, avoiding and fixing interference spectrum administration requires coordination among the many varied gamers. That is, throughout the globe, carried out centrally by a regulator. Over time there have been improvements in spectrum administration and it has change into extra versatile. An instance is the introduction of a secondary market. However spectrum administration could be very a lot a regulatory area. And provided that the task of the spectrum is unique this grants the assignee market energy within the telecom sector.
The technological and bodily options of the telecom sector imply that there are economies of scale in telecom provision. That’s, the price of offering telecom providers falls over the complete vary of operations. The extra customers the telecom firm providers, the extra customers it might unfold the preliminary prices of operation over. And as soon as the infrastructure is put in the price of servicing a brand new person is negligible. These options imply that for environment friendly operation telecom firms have to have scale – there can’t be an excessive amount of competitors within the telecom market.
Since there will likely be pure monopolies in telecom provision competitors can’t be relied upon for investments in high quality. The federal government thus makes use of licensing necessities to manage entry into the telecom sector. The rationale for licensing is to keep up a sure high quality of provision by specifying, amongst different issues, technological and high quality management necessities. Licensing creates entry limitations into the market and turns into one other supply of cementing the market energy of incumbents.
All of those boring particulars indicate that regulation of the operations of the telecom firms together with enterprise choices reminiscent of pricing might also be required. There could also be a pure tendency to boost costs in the direction of monopoly ranges.
The governance of the providers supplied by way of these means is pushed by totally completely different causes, like client safety and security or a broader purpose like nationwide safety. However these providers don’t require centralized coordination, there isn’t a scarce socially valued useful resource getting used (it’s used to supply the means however not the service that sits on prime), their market constructions are usually pretty aggressive, and licensing is not going to solely elevate entry limitations the place there are none, however it would additionally kill innovation and entrench incumbents.
The legacy of telecom derives from a sector the place the infrastructure and repair—telecommunications—are indistinguishable from one another. However with the expansion of the web and the emergence of OTT providers that’s not the case. An analogy is likely to be drawn right here with highway infrastructure. Governments play an enormous function within the provision of highway infrastructure and varied authorities entities, native our bodies, public works departments, state governments, and the NHAI are concerned on this course of. They supply funding, construct or get constructed, regulate operations and different contracting, set high quality requirements, and so on. However these our bodies usually are not concerned in setting automobile security requirements. They only make sure the technique of provision of transport providers. Any governance of these providers is separate.
India already has a regulation concerning providers supplied by the web, the Info Expertise Act. By the way, this Act can also be within the means of being revised. OTT providers must be ruled by way of these provisions.
Simplifying the aim of regulation and sticking to it additionally makes positive that so far as potential rules are technology-neutral and future-proof. And introduces much-needed regulatory certainty
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