Unveiling the Telecommunications Act 2023
- The recently passed Telecommunications Act 2023 replaces the Telegraph Act 1885 and the Wireless Telegraphy Act 1933.
- The new Act, while introducing several changes, faces scrutiny for contested provisions related to safety standards and government powers during public emergencies.
Key Objectives of the Act
- Promotion of competition
- Resource mobilization for infrastructure upgrade in the telecom industry, which is burdened with debt.
Positive Changes
- Providing flexibility for allocation of spectrum
- Mechanisms for improving right of way and building common ducts and cable corridors
- Expanding the application of USOF (now Digital Bharat Nidhi) and improving fund utilisation
Challenges in 5G Implementation
- India faces challenges in 5G adoption, marked by unattractive use cases, poor monetization, and underinvestment in infrastructure.
- Investments in 5G start-ups have shrunk from $639 million in 2022 to $134.1 million in 2023.
- Opening up the market to new players and improving competition can attract more investments and consequently innovation in the industry.
Technology Neutrality
- While the Act provides for technology neutrality in spectrum use, it doesn't extend the same principle to the delivery of communication services.
- Non-discriminatory and non-exclusive access to infrastructure for new players is needed, promoting fair competition.
Infrastructure Unbundling
- The principles of infrastructure unbundling, evident in the right-of-way section for facilities providers, must be reflected in the authorizations section of the new Act.
- The aim should be to facilitate
- Equivalence of inputs (products and processes offered to competitors at the same terms as to the operator’s own retail arm)
- Equivalence of outputs (products and services offered by the operator to its own retail business and to other operators, are functionally comparable)
- A return to the concept of functional separation, explored in the Communications Convergence Bill of 2001 is needed.
Functional Separation
- Many countries, such as Sweden, the UK, Australia, Ireland, and Poland, have employed functional separation as a regulatory measure to address market concentration.
- However, disproportionate remedies can result in counterproductive outcomes, including reduced investments and innovation.
- Voluntary transitions, as demonstrated by Italy, tend to be more effective for infrastructure industries dominated by incumbents.
Encouraging Wireline Architecture
- To advance towards high-quality digital applications, it is crucial to shift from a wireless-centric to a wireline-led architecture.
- The emphasis on Right of Way in the provisions of the new Act, acknowledges this need as well.
- Resource generation for the development of fibre infrastructure in both urban and rural areas is also crucial.
- The government, facilitated by the Universal Service Obligation Fund (USOF), should play a role in promoting explicit targets for infrastructure development in both rural and non-rural areas.
- Simultaneously, it should foster a competitive environment to encourage private sector investments.
Unified Vision
- There is a pressing need for regulatory convergence between telecommunications and the internet, highlighting the blurring lines between telcos and over-the-top services.
- A unified vision of the government of India should bring synergies in licensing, standards, skilling and governance across different departments.