The Department of Telecom Report on Net Neutrality and OTT Services

As per recent news reports the Department of Telecommunications (“DoT”), in a report on net neutrality, has recommended against the regulation of over-the-top (“OTT”) services. Nevertheless, the DoT’s report favours ‘regulatory oversight’ on the OTT service providers offering local voice calls.

This report has been prepared by an internal committee formed by the DoT, comprising of 6 members, headed by Mr. A K Bhargava, Member (Technology). The report is presently not available in the public domain, however, the Minister for Communications and Information Technology has stated that the report of the DoT committee will be made public soon.

According to the media, the said report states “the committee favours regulatory oversight on the communication service providers. The committee believes that for (other) OTT application services (including those offering messaging and international voice calls), there is no case for prescribing regulatory oversight similar to communication services.” It has also been stated by the committee in the report that the internet telephony providers ‘bypass the existing licensing and regulatory regime’.

It is understood from certain news reports that the committee has observed that applications (such as Viber and WhatsApp) offering local calling services over the internet do not have to follow regulations as the telecom service providers do and this creates a non-level playing field between the said two providers of similar services. Further, as per certain media reports, the committee has also said that internet telephony providers (such as Viber, Skype, WhatsApp and Hike) should be regulated, through exercise of licensing powers available under Section 4 of the Indian Telegraph Act, 1885 and be brought under a licensing regime similar to the telecom operators (such as Airtel, Vodafone or Idea Cellular). Thus, the ambit of the ‘regulatory oversight’ remains to be seen.

The government is expected to take a decision relating to net neutrality after public consultation (our previous post on the consultation process can be accessed here) and recommendations of the Telecom Regulatory Authority of India (“TRAI”). The replies to the issues raised by the TRAI regarding net neutrality had been submitted and can be viewed here.

In a notable move, the committee has suggested and called for a new legislation to replace the Indian Telegraph Act, 1885 incorporating principles regarding net neutrality. As an interim measure, until the legislation is worked out the report proposes that the net neutrality principles could be enforced through addition of suitable conditions in the telecom licenses.

The said committee of the DoT recommended disallowing the controversial zero rating plans of the telecom operators and proposed a ban on throttling, traffic management policies and prioritisation, by any means, of the internet traffic.

The ‘Digital India’ Initiative of the Government

The ‘Digital India’ campaign of the Government was launched on July 1, 2015 by the Prime Minister, Narendra Modi. The INR 1.13 lakh crore is aimed at creating a digitally empowered society and knowledge economy. The project has the potential to bridge the digital divide and benefit billions of people through digital solutions in education, banking, healthcare, irrigation and agriculture sectors.

‘Digital India’ comprises of initiatives targeted to render good and effective governance to the citizens through synchronized and co-ordinated activities of various arms of the Government. This is centered on three broad key areas of – (i) Digital Infrastructure as a utility to every citizen, (ii) Governance and services on demand, and (iii) Digital Empowerment of citizens.

The programme aims to provide broadband highways, universal access to mobile connectivity, public internet access programme, e-governance: reforming government through technology, eKranti – electronic delivery of services, IT for jobs, information for all and electronics manufacturing: target net zero imports.

The ambitious project comes with its set of challenges, some of which are:-

1. Spectrum shortage: This can be said to be the biggest challenge. A visible trend shows that the numbers of wireless subscribers are growing and wireline subscribers are declining. Spectrum being a scarce resource, further mobile push is likely to make the situation worse. In case of the foreseeable happening of rise in the spectrum price, the telcos will not be in a position to provide affordable internet.
2. Duty abnormalities affecting the domestic manufacturing of electronics: Manufacturing has for long been a slow growth sector and the electronics manufacturing has been no different. The government removed 11.5% excise duty concession for manufacturing of electronics. During the recent signing of Memorandum of Understanding between the National Association of Software and Services Companies (Nasscom) and the India Electronics and Semiconductor Association (IESA), the Minister of Communication and Information Technology, Ravi Shankar Prasad admitted that for increasing the electronics manufacturing in India, a correction in the duty structure is vital.

With these, among other, challenges likely to be countered, it would have to be seen how would the Government overcome them and successfully implement the Project.

According to an NDTV report, the Finance Minister, Arun Jaitley, said that this project is a part of a series of programmes intended to give a new direction to the country. He further said while last week saw launch of ‘Smart Cities Mission’, ‘Skill India’ educational initiative would be unveiled next week.

Under ‘Digital India’ the Government endeavours to provide broadband connectivity in all panchayats, Wi-Fi in all schools and universities and public Wi-Fi hotspots in all important cities by 2019.

At the launch event, India Inc committed INR 4.5 lakh crore investments in projects relating to ‘Digital India’ and also promises to create about 18 lakh jobs under the programme.