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The Technology, Media and Telecommunications Review Law Business Research Fourth Edition Editor John P Janka
The Technology, Media and
Telecommunications Review
Law Business Research
Fourth Edition
Editor
John P Janka
The Technology, Media and Telecommunications Review
Reproduced with permission from Law Business Research Ltd.
This article was first published in The Technology, Media and Telecommunications Review, 4th edition
(published in October 2013 – editor John P Janka).
For further information please [email protected]
The Technology, Media and
Telecommunications
Review
Fourth Edition
EditorJohn P Janka
Law Business Research Ltd
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Acknowledgements
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Editor’s Preface ..................................................................................................viiJohn P Janka
List of Abbreviations .................................................................................................ix
Chapter 1 coMPETiTion Law ovERviEw ........................................1Abbott B Lipsky, Jr with John D Colahan
Chapter 2 ausTRaLia .............................................................................15Anthony Lloyd, Paul Kallenbach and Paul Schoff
Chapter 3 BRaZiL ....................................................................................34André Gomes de Oliveira, Renato Parreira Stetner and Tiago Franco da Silva Gomes
Chapter 4 canada .................................................................................46Hank Intven and Grant Buchanan
Chapter 5 china .....................................................................................61Jihong Chen
Chapter 6 EgyPT .....................................................................................73Aly El Shalakany and Omar Sherif
Chapter 7 EuRoPEan union ..............................................................85Maurits J F M Dolmans, Francesco Maria Salerno and Federico Marini-Balestra
Chapter 8 FinLand ..............................................................................120Mikko Manner, Anna Haapanen and Suvi Laes
conTenTs
iv
Contents
Chapter 9 FRancE ................................................................................132Myria Saarinen and Jean-Luc Juhan
Chapter 10 gERMany ............................................................................151Laura Johanna Reinlein and Gabriele Wunsch
Chapter 11 hong kong ......................................................................167Simon Berry and Viola Jing
Chapter 12 india ....................................................................................184Atul Dua, Salman Waris and Arjun Uppal
Chapter 13 iTaLy .....................................................................................197Stefano Macchi di Cellere
Chapter 14 JaPan ....................................................................................211Hiroki Kobayashi, Richard Fleming, Saori Kawakami and Chiyo Toda
Chapter 15 koREa ...................................................................................225Wonil Kim and Kwang-Wook Lee
Chapter 16 LEBanon .............................................................................237Souraya Machnouk, Rania Khoury and Ziad Maatouk
Chapter 17 LuxEMBouRg ....................................................................249Linda Funck
Chapter 18 MExico ................................................................................269Jaime Deschamps and Andoni Zurita
Chapter 19 noRway ...............................................................................279Olav Torvund, Jon Wessel-Aas and Magnus Ødegaard
Chapter 20 PoRTugaL ...........................................................................287Joana Torres Ereio, Joana Mota and Raquel Maurício
v
Contents
Chapter 21 RoMania .............................................................................303Cosmina Simion and Laura Leancă
Chapter 22 singaPoRE .........................................................................317Ken Chia and Koh See Khiang
Chapter 23 souTh aFRica ...................................................................340Zaid Gardner
Chapter 24 sPain .....................................................................................351Pablo González-Espejo and Leticia López-Lapuente
Chapter 25 swEdEn ...............................................................................367Erik Ficks and Björn Johansson Heigis
Chapter 26 swiTZERLand ...................................................................377Michael Isler
Chapter 27 Taiwan ................................................................................392Arthur Shay and David Yeh
Chapter 28 TuRkEy ................................................................................405Serra Başoğlu Gürkaynak, Begüm Yavuzdoğan and M Onur Sumer
Chapter 29 uniTEd aRaB EMiRaTEs .................................................420Joby Beretta
Chapter 30 uniTEd kingdoM ...........................................................434Omar Shah and Gail Crawford
Chapter 31 uniTEd sTaTEs .................................................................454John P Janka and Jarrett S Taubman
Appendix 1 aBouT ThE auThoRs .....................................................473
Appendix 2 conTRiBuTing Law FiRMs’ conTacT dETaiLs ...497
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ediToR’s PReface
The pervasive influence of internet and wireless-based communications continues to challenge existing laws and policies in the TMT sector. old business models fall by the wayside as new approaches more nimbly adapt to the shifting marketplace and consumer demand. The lines between telecommunications and media continue to blur. content providers and network operators vertically integrate. Many existing telecommunications and media networks are now antiquated – not designed for today’s world and unable to keep up with the insatiable demand for data-intensive, two-way, applications. The demand for faster and higher-capacity mobile broadband strains even the most sophisticated networks deployed in the recent past. Long-standing radio spectrum allocations have not kept up with advances in technology or the flexible ways that new technologies allow many different services to co-exist in the same segment of spectrum. The geographic borders between nations cannot contain or control the timing, content and flow of information as they once could. Fleeting moments and comments are now memorialised for anyone to find – perhaps forever.
in response, lawmakers and regulators also struggle to keep up – seeking to maintain a ‘light touch’ in many cases, but also seeking to provide some stability for the incumbent services on which many consumers rely, while also addressing the opportunities for mischief that arise when market forces work unchecked.
The disruptive effect of these new ways of communicating creates similar challenges around the world: the need to facilitate the deployment of state-of-the-art communications infrastructure to all citizens; the reality that access to the global capital market is essential to finance that infrastructure; the need to use the limited radio spectrum more efficiently than before; the delicate balance between allowing network operators to obtain a fair return on their assets and ensuring that those networks do not become bottlenecks that stifle innovation or consumer choice; and the growing influence of the ‘new media’ conglomerates that result from increasing consolidation and convergence.
These realities are reflected in a number of recent developments around the world that are described in the following chapters. To name a few, these include liberalisation
Editor’s Preface
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of foreign ownership restrictions; national and regional broadband infrastructure initiatives; efforts to ensure consumer privacy; measures to ensure national security and facilitate law enforcement; and attempts to address ‘network neutrality’ concerns. of course, none of these issues can be addressed in a vacuum and many tensions exist among these policy goals. Moreover, although the global TMT marketplace creates a common set of issues, cultural and political considerations drive different responses to many issues at the national and regional levels.
This fourth edition of The Technology, Media and Telecommunications Review provides an overview of the evolving legal constructs that govern these types of issues in 30 jurisdictions around the world. in the space allotted, the authors simply cannot address the numerous nuances and tensions that surround the many issues in this sector. nevertheless, we hope that the following chapters provide a useful framework for beginning to examine how law and policy continues to respond to this rapidly changing sector.
John P JankaLatham & watkins LLPwashington, dcoctober 2013
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LisT of abbReviaTions
3g Third-generation (technology)4g Fourth-generation (technology)adsL asymmetric digital subscriber lineaMPs advanced mobile phone systemaRPu average revenue per userBiaP Broadband internet access providerBwa Broadband wireless accesscaTv cable TvcdMa code division multiple accesscMTs cellular mobile telephone systemdaB digital audio broadcastingdEcT digital enhanced cordless telecommunicationsddos distributed denial-of-servicedos denial-of-servicedsL digital subscriber linedTh direct-to-homedTTv digital terrestrial TvdvB digital video broadcastdvB-h digital video broadcast – handhelddvB-T digital video broadcast – terrestrialEcn Electronic communications networkEcs Electronic communications serviceEdgE Enhanced data rates for gsM evolutionFac Full allocated historical costFBo Facilities-based operatorFcL Fixed carrier licenceFTns Fixed telecommunications network servicesFTTc Fibre to the curb
List of Abbreviations
iv
FTTh Fibre to the homeFTTn Fibre to the nodeFTTx Fibre to the xFwa Fixed wireless accessgb/s gigabits per secondgB/s gigabytes per secondgsM global system for mobile communicationshdTv high-definition TvhiTs headend in the skyhsPa high-speed packet accessiaas infrastructure as a serviceiac internet access providericP internet content providericT information and communications technologyiPTv internet protocol TviPv6 internet protocol version 6isP internet service providerkb/s kilobits per secondkB/s kilobytes per secondLan Local area networkLRic Long-run incremental costLTE Long Term Evolution (a next-generation 3g and 4g
technology for both gsM and cdMa cellular carriers)Mb/s Megabits per secondMB/s Megabytes per secondMMds Multichannel multipoint distribution serviceMMs Multimedia messaging serviceMno Mobile network operatorMso Multi-system operatorsMvno Mobile virtual network operatorMwa Mobile wireless accessnFc near field communicationnga next-generation accessnic network information centrenRa national regulatory authorityoTT over-the-top (providers)Paas Platform as a servicePnETs Public non-exclusive telecommunications servicePsTn Public switched telephone networkRF Radio frequency saas software as a servicesBo services-based operatorsMs short message servicesTd–Pcos subscriber trunk dialling–public call offices uas unified access servicesuasL unified access services licence
List of Abbreviations
v
ucL unified carrier licenceuhF ultra-high frequencyuMTs universal mobile telecommunications service uso universal service obligationuwB ultra-widebandvdsL very high speed digital subscriber linevhF very high frequencyvod video on demandvoB voice over broadbandvoiP voice over internet protocolw-cdMa wideband code division multiple accesswiMax worldwide interoperability for microwave access
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Chapter 12
IndIa
Atul Dua, Salman Waris and Arjun Uppal1
I OVERVIEW
India experienced its first telecoms revolution in 1980s with an increase in the telephone density by introduction of STD–PCOs. Moreover, the second phase of reform introduced private value-added services in 1992, followed by cellular and basic services in local areas being opened up to private competition. Then, in 1994 the Indian government announced the much-needed New Telecoms Policy (NTP 1994). The Telecoms Regulatory Authority of India (TRAI) was established in 1997 as an independent regulator in this sector, and the Tariff Regulatory Regime of 1997, the amended New Telecoms Policy of 1999 (NTP 1999), and the introduction of Unified Access Services (UAS) licences (2003), brought some sweeping changes in the telecoms sector in the next decade, along with a controversy-laden dual-technology regime. The Broadband Policy (2004) followed, as did an increase in foreign investment limits from 49 per cent to 74 per cent (2005), which has recently been further increased to 100 per cent (2013); the proposal and implementation of mobile number portability (MNP) (2005 to 2010); issuance of renewed 2G licences (2007); and access to 3G/BWA services (2011) have all proved to be current game changers for the telecommunications sector. 3G and BWA services hold compelling potential for the internet and a host of other applications and making them accessible to the population in India.
The combined effect of these regulatory policy regimes led to a sudden spurt in the growth rate in the sector and falling tariffs. Lately, however, growth in this sector has been threatened by limited availability of spectrum, declining rates of return and deterioration in quality of service. In January 2011, the Department of Telecommunications of the Ministry of Communications and Information Technology, Government of India (DoT)
1 Atul Dua is a senior partner, Salman Waris is a partner and Arjun Uppal is an associate at Seth Dua & Associates.
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announced formation of a committee to revisit NTP 1999 and draft New Telecoms Policy 2011.
DoT announced the NTP 2011 in October 2011, which was approved by the Union Cabinet with a few amendments as the National Telecoms Policy 2012 (NTP 2012) in May 2012, finally replacing the NTP 1999. The NTP 2012 focuses on the availability of affordable and effective communications for the citizens apart from stress on convergence of network, services and devices. In terms of the NTP 2012, subsequent to the approval from the Union Cabinet the DoT with the approval of Minister of Communications and Information Technology. has announced the implementation of the Unified Licensing Regime with effect from August 2013. According to a press release by the Government of India (GoI), the NTP 2012 seeks to provide a stable policy regime for about 10 years.
The auction of the 2G spectrum and the licences awarded in 2008 were quashed by the Supreme Court of India on the grounds of unconstitutionality; however, a part of these quashed licences have been re-auctioned. Separately, the auction of 3G spectrum was held in 2010 and licences were issued.
With the emergence and implementation of new technologies, existing and new service operators choose their modes of investment in order to offer their customers a competitive edge in the access industry.
To see the true state of the technology, media and telecoms sector in India, the multiple issues that plague the telecoms industry and growth in the country must be recognised. While the constant decrease in average revenue per user worries industry stakeholders, consumers are frustrated by increased network congestion and the attendant quality of service issues. Most players in the sector in India have devised unusual and exceptional means of surviving the tough situation they have faced for quite some time now. The uncertainty in the Indian TMT market may be due to its transition from an adolescent to a maturity phase of the industry lifecycle. The recent changes in technology and regulatory policies such as 3G and NTP 2012, along with the discussions on the Communication Convergence Bill 2001, have the effect of bringing about changes in the working of the industry to the benefit of the end users and also the structure of the industry players.
II REGULATION
i The principal regulations
The telecommunication and broadcasting sectors are governed by various policies, statutes, rules and regulations, which include (but may not be limited to):a the Telegraph Act 1885;b the Prasar Bharti (Broadcasting Corporation of India) Act 1990;c the Cable TV Networks (Regulation) Act 1995;d the TRAI Act 1997;e the NTP 2012, which has replaced the NTP 1999; f the Broadband Policy 2004; g the Foreign Investment Restrictions; and
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h the Information Technology Act 2000 (IT Act) as amended by the Information Technology (Amendment) Act 2008 (along with the Rules thereunder).
The Telegraph Act 1885 empowers the GoI to operate and maintain working telegraph services in India. The DoT is entrusted with the task of granting licences to Indian companies for the provision of various telecoms services. The Ministry of Information and Broadcasting (the MIB), along with the Prasar Bharti, is the nodal agency for controlling and issuing guidelines, policies and licences for the broadcasting sector and the electronic media. The Broadcasting Services Regulation Bill 2009 (the Broadcasting Bill) proposes forming a broadcasting authority to regulate issues relating to cross-ownership, content regulation, etc., for television channels. TRAI acts as a regulatory body for both the telecoms and broadcasting sector and has the power to recommend policy regulations to the government. Disputes between various licensees and licensors are adjudicated by the Telecoms Disputes Settlement and Appellate Tribunal (TDSAT) under the TRAI Act. India is a signatory to the WTO Basic Telecommunication Agreement and has duly met the terms of its agreed obligations, including the opening up of basic voice, cellular mobile and data services, private leased lines and the waiver of customs duties on the telecoms sector, etc.
The IT Act and its Rules provide legal recognition for transactions carried out by means of electronic data interchange and other means of electronic communication.
ii Regulated activities
In terms of the Telegraph Act 1885, the DoT may grant a licence to any Indian company to operate a telegraph on suitable conditions and in consideration for an appropriate payment.
A telegraph licence enables a licensee to offer licensed communications services by establishing, maintaining, or operating telegraph devices such as exchanges, routers, switches and transmitters. Licensed activities include transmission of any kind of voice and data over the telecommunications network. Telegraph licences in India are generally classified by the type of services offered. This service-based classification is derived from the government’s NTP 1999, which listed various classes of telecoms services for which licences would be awarded. The following are the types of service for which licences are issued in India under the NTP 1999 regime:a access services (CMTS and UAS) (for fixed and mobile services);2
b internet services;c national long-distance services;d international long-distance services;e radio-paging;f very small aperture terminal and satellite communication; andg resale of international private leased circuits (IPLC).
2 The licences of service providers who were granted the right to use 3G spectrum for provision of telecoms access services were amended in September 2010.
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It may be noted that for some categories like other service providers (including BPOs) no licences are issued by the DoT; there is only a requirement for registration.
The DoT also endeavours to bring about and update the licensing and regulatory regime notifying various changes to the laid down arrangement. One such significant development came about in October 2012, where DoT has issued a notification in furtherance to the objectives of NTP 2012, having the effect of granting preference to the domestic procurement of telecommunications equipment for their own use, when being produced by government departments and agencies and extensively listing out the mode and level of such preference. This leads the Department of Information Technology’s notification of February 2012 providing preference to domestically manufactured electronic products as a part of procurement process for the electronic products that have security implications.
The various services regulated or licensed under the broadcasting sector include:a DTH services;b FM radio services;c uplinking and downlinking of TV channels; andd HITS.
In order to offer most types of broadcasting service, a broadcasting company must obtain two types of licence:a grant of permission to offer broadcast services issued by the MIB; andb wireless operating licence from the WPC (Wireless Planning and Coordination
Authority) wing of the DoT.
The telecoms and media services can be provided after obtaining licences from the DoT and MIB respectively. Some licences are granted after inviting bids from the eligible companies and the highest bidders (upon successfully clearing technical evaluation) are granted the licence. In case of foreign investment, the applicant company is also required to obtain the requisite approvals or clarification from the Foreign Investment Promotion Board. Further, the appointment of foreign nationals to key positions in such companies may require clearance from the Ministry of Home Affairs (MHA).
The licensing authorities generally take between four and eight months from the date of submission of a completed application to grant a licence, depending on the nature of the services to be provided under the sought-after licence.
iii Ownership and market access restrictions
The provision of telecommunication services in India is subject to certain restrictions on foreign ownership imposed by the GoI. Foreign investment in most telecommunication services is limited to 74 per cent at present (including both direct and indirect), which is subject to various further conditions. However, the limit was revised to 100 per cent by the Union Cabinet in August 2013. This seems likely to boost foreign participation in the telecoms companies in India. The revised FDI cap would be applicable to basic; cellular; united access services; unified licence; national and international long distance; commercial VSAT; public mobile radio trunked services; global mobile personal communications services; ISP licences of all types; voicemail, audiotex and unified
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messaging service; resale of IPLC; and mobile number portability services. Foreign investment up to 49 per cent is automatically approved and beyond that, it is subject to specific government approval.
Further, foreign investment of up to 100 per cent is presently allowed for activities such as infrastructure providers providing dark fibre, right of way, duct space tower (IP category I), e-mail and voicemail; however, this is subject to the condition that such investors or companies will divest 26 per cent of their equity in favour of the Indian population in five years if these companies are listed in other parts of the world.
Further, the investment is subject to licensing and security requirements as notified by the DoT and as laid down in FDI policy.
iv Licensing regime
Presently, telecommunication service providers are required to obtain separate licences from the DoT for provision of each of the different types of telecommunication services. Inkeeping with the provisions of the NTP 2012, the implementation of the Unified Licensing Regime with effect from August 2013 has also been announced by the DoT. The said Regime would allow the telecoms operators to offer all telecoms services under one licence, subject to separate authorisation for provision of the different telecoms services under the Unified Licence. The new regime also frees up the spectrum from the licence, however it bars ‘cross-holding’ between different telecommunication companies. The DoT is expected to issue an official notification notifying the implementation of the Unified Licensing Regime and also issue separate guidelines for the Unified Licence.
v Transfers of control and assignments
In the terms and conditions of the respective licences, TRAI and the DoT have taken measures to devise ownership licences that bar a single company or a group from controlling more than one licence within a service area. The MIB and the DoT also forbid certain entities from controlling more than one broadcasting service in the same market.
TRAI, the DoT and the MIB may impose certain rules to prevent concentration of economic power and anti-competitive behaviour. The telecoms licence holder is required to approach the DoT to obtain prior approval for any merger or acquisition. Mergers and acquisitions are permitted provided they are within the scope of regulations of the licence. Under certain licences, the DoT has proposed a restriction on the merger or acquisition of licensee companies within the first three years of their granting. This is also covered under amended licence conditions of UAS licensees.
All anti-competitive activity is regulated by the Competition Commission of India (the CCI) (formed under the Competition Act 2002, amended in 2009) (the Competition Act); no special legislation has been created to control anti-competitive activity within the telecoms and broadcasting sector. Mergers and acquisitions breaching the thresholds stated under the Competition Act require a prior notice to be filed with the CCI within 30 days of board approval or execution of a binding agreement, whichever is earlier. The CCI scrutinises such combinations and forms a prima facie opinion within 30 days of the notice on whether the proposed combination will have an appreciable adverse effect on competition in India. Where the prima facie opinion
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is affirmative, the CCI would then order a detailed enquiry into the combination. The approval period has been kept at 210 days, but the CCI has set a recommended time limit of 180 days for passing its order. After the enquiry the CCI issues its final decision on the combination, which could either be to approve the combination, reject it or order certain modifications. Modifications, if acceptable to the parties, would be carried out under the scrutiny of independent agencies, after which a compliance report is submitted to the CCI.
Further, it may be noted that the proposed Broadcasting Bill aims to impose certain cross-ownership regulations on media companies in addition to imposing restrictions on the accumulation of interests to provide for competition and plurality of views. While waiting for statutory recognition of the Broadcasting Bill, there are still some guidelines for certain licences that forbid entities from controlling more than one broadcasting service in the same market. For example, the guidelines for DTH licences state that:
[…b]roadcasting companies and /or cable network companies shall not be eligible to collectively own more than 20 per cent of the total equity of applicant company at any time during the licence period. Similarly, the applicant company not to have more than 20 per cent equity share in a broadcasting and/or cable network company.
Further, it may be pertinent to mention that some telegraph licences also specifically mention ownership rules that bar a single company or a group from controlling more than one licence within a service area. For example, the UAS Licence guidelines prohibit a promoter or a corporate group from owning more than 10 per cent of the equity in more than one service provider within the same service area.
Despite transfer and assignment of licences being forbidden under previous licences, after much lobbying from licensees and financial institutions, the GoI relented and agreed to allow specific assignment and transfer conditions in licences. Therefore, under the present circumstances, most telegraph licences can be transferred or assigned after satisfying specific conditions. One significant condition is that the transfer or assignment should not reduce the level of competition in the service area. Also, the proposed transferee or assignee must be eligible to offer the licensed services in accordance with the licence terms and conditions, including past and future roll-out obligations. It is pertinent to note that by acquiring a telegraph licence, a transferee cannot circumvent the foreign investment restrictions on equity in licences.
III TELECOMMUNICATIONS AND INTERNET ACCESS
i Internet and internet protocol regulation
The internet and internet-based services are now an integral part of the telecommunications sector.
The internet was first introduced to India in 1990, through the Education and Research Network (ERNET) Project funded by the United Nations Development Programme. It was implemented by the Department of Electronics in partnership with various research and technical institutions. However, in the mid-1990s, the external
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funding of the ERNET ceased, after which the government proposed the NTP 1994. The policy mainly focused on improving conventional telephony by augmenting the existing framework and introducing cellular services in the metropolitan areas, and later across the states.
Pursuant to the NTP 1999, the DoT announced guidelines allowing only Internet Service Providers (at first) to process and carry voice signals. Further, with the introduction of new ISP licences in 2008, ISP licence holders were allowed to provide various IP-based services including IPTV. Also, there are no specific separate guidelines for IP-based services, except that IPTV services are also required to follow MIB guidelines.
ii Universal service
The DoT has created a USO fund to be used exclusively for meeting the universal service obligation by providing access to telegraph services (which may cover internet, VoIP and other new technology services) to people in rural and remote areas at affordable and reasonable prices. Presently, many VoIP service providers are providing VoIP services in India without obtaining the requisite licence. However, the DoT is in the process of tightening its grip over VoIP service providers by ensuring the compliance with the licensing requirements by such service providers. The framework for broadband policy was notified by the DoT in 2004, with a view to promoting increased internet use in India.
The USO fund was primarily established to provide access to only ‘basic’ telegraphic services, but subsequently in the Indian Telegraph (Amendment) Act 2006, provision was made to include all types of telegraphic service. The Telegraph Rules 1951 were subsequently amended in order to enable support for mobile services and broadband connectivity in rural and remote areas of the country. The Telegraph Rules also provide subsidy support to eligible operators for operational sustainability of rural wireline household direct exchange lines. In furtherance of the foregoing, in 2009, the BSNL also launched a new scheme to promote broadband in rural areas.
iii Restrictions on the provision of service
TRAI is empowered to monitor and regulate charges (including interconnection usage charges, termination charges, etc.) and other terms of service. As and when appropriate, TRAI issues directives or notifications to regulate charges and terms of service.
TRAI has mandated open access to all the network operators and any disputes therein may be addressed before the TDSAT. Further, the delivery of online content through IPTV is required to conform to the Programme and Advertisement Code.
Furthermore, telecoms licensees providing TV channels are required to broadcast such channels in exactly the form as are registered with or otherwise allowed by the MIB. However, in such cases, the responsibility of ensuring that content is in accordance with the laws, rules and regulations, etc., will be with the broadcaster, and the telecoms licensee will not be held responsible. Carrying any broadcast satellite TV channels that are prohibited either permanently or temporarily or are not registered with the MIB is also not permitted.
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Network operators are only required to monitor and block transmission of content that may be objectionable, obscene or unauthorised, as is required to be blocked under licensing terms, the IT Act and other applicable regulations.
iv Security
Any voice, data and images transmitted through telecommunication, broadcasting and cable services are subject to restrictions under several central and state laws, rules and regulations. The Indian Constitution empowers the GoI to impose reasonable restrictions on free speech and expression in the interests of India’s sovereignty and integrity, state security, friendly relations with foreign states, public order, decency, morality, contempt of court, defamation and incitement to an offence. The Indian Penal Code (IPC) applies, inter alia, to all types of expressive media, whether written, spoken or in the form of images.
Further, under the provisions of the Cable TV Networks Act, cable operators are prohibited from transmitting programmes that do not comply with the cable programme code, and the cable programme code (under the Cable Networks Rules) lists various programmes that ought not be broadcast on a cable network for national security and public order reasons.
Finally, the government may impose restrictions on the grounds of national security on internet content and websites under the IT Act and under applicable ISP licences. Some recent examples of this are the DoT directing ISPs to block a specific list of websites, and issuing security guidelines with respect to telecoms equipment (due to security concerns owing to certain equipment that lacked international mobile equipment identification).
The IT Act provides for the protection of personal data and contains penal provisions if such data is misused by or due to negligence of the service provider, operator or company. Further, any unauthorised access to customer data or information and any misuse of it is strictly dealt with under the IT Act and the IPC. Telecoms operators are required to maintain call records for their subscribers for a particular period and are prohibited from sharing customer details with any third party for any purposes other than billing.
The IT Act provides for punishment for publication or transmission of material depicting child pornography or children in sexually explicit acts, etc.
Besides the foregoing, it may be noted that in light of some controversial Supreme Court hearings on the issue of interception and public distribution of certain data, most telecoms companies in India have realised the need to appoint a data security officer to deal with consumer complaints relating to illegal phone tapping and interceptions, and ensuring that interception requests from government agencies are not only genuine but do not result in either unauthorised interception or intercepted data and tapes landing in the wrong hands.
Apart from the appointment of a data security officer, the GoI is also in discussion with industry stakeholders for the need to appoint a data security ombudsman, who will be an independent authority with oversight and dispute settlement powers where issues of unauthorised interception arising between subscribers and operators may be judiciously decided. Additionally there was proposal to set up a controller of data security
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within the DoT, and industry players have been directed to submit detailed comments on these issues to the GoI.
Some time back, the GoI notified four distinct sets of rules including the Information Technology (Electronic Service Delivery) Rules 2011, the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules 2011, the Information Technology (Intermediaries Guidelines) Rules 2011 and the Information Technology (Guidelines for Cyber Cafe) Rules 2011. These Rules provide various parameters of compliance for relevant stakeholders.
The Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Information) Rules, 2011 (the New Security Rules) further tightens the data protection regime in India. These New Security Rules provide that a ‘body corporate’ would be liable to pay damages by way of compensation for any wrongful loss or wrongful gain caused due to negligence in implementing and maintaining ‘reasonable security practices and procedures’ in relation to any ‘sensitive personal data or information’ (SPDI) that it possesses, deals or handles in a computer resource
The definition of SPDI seems to be an exhaustive one and it excludes all information freely available in the public domain or information obtainable under the Right to Information Act 2005. It requires adherence to traditional fair information practices related to notice, choice and access, as well as from requiring that organisations implement reasonable security practices and procedures and that they document a security programme that includes managerial, technical, operational and physical security measures that are appropriate to the nature of the information.
In addition to the foregoing, the GoI exercises its discretion to block websites if found in violation of the IT Act and Rules, as well as public policy, national security, public peace and sentiments.
IV SPECTRUM POLICY
i Development
The laws on spectrum policy are the Telegraph Act and the Indian Wireless Telegraphy Act 1933, combined with various rules and regulations. These statutes empower the government or the DoT to grant licences to service providers for carrying out public telephony services under certain terms and conditions. The WPC is the national radio regulatory authority responsible for frequency management, including licensing, and caters to the needs of all wireless users in the country. It exercises statutory governmental functions and issues licences to establish, maintain and operate wireless stations. The WPC is divided into the following major sections: Licensing and Regulation, the New Technology Group and the Standing Advisory Committee on Radio Frequency Allocation. The WPC is responsible for formulating and maintaining the national frequency allocation plan.
In terms of the existing policy, spectrum allocation is linked with the granting of a licence by the DoT. However, as previously mentioned, TRAI has recommended the delinking of spectrum with access service licences, doing away with subscriber-based criteria for spectrum allocation, and linking rural roll-out with fresh spectrum allocation.
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It is expected that a thorough review of the latest recommendations will provide a further boost to the telecoms and media sector in India.
In line with TRAI recommendations, the NTP 2012, inter alia, has de-linked spectrum allocation and licences, and mandates regular audit of spectrum usage (by various agencies), and amends merger and acquisition guidelines.
Further, in a recent judgment the Supreme Court of India has stated that all natural resources should be auctioned, which includes the auction of spectrum as well. Supreme Court had also in a case challenging the auction of the 2G spectrum has quashed the allotment and some of such licences have been re-auctioned recently. The auction of the 3G spectrum had been held in the year 2010 and has continued thereafter providing 3G services in India. The GoI is in the process of initiating measures to get the defence, space and broadcasting agencies to vacate spectrum that could be deployed for providing various mobile services.
ii Flexible spectrum use
The WPC was responsible for allocation and assignment of spectrum in India and satellite spectrum is allocated by a joint committee made up of officials from the Department of Space and the WPC. However, as previously mentioned, TRAI mooted the idea of delinking spectrum allocation from the licence, and this has now been announced as policy under the NTP 2012; this will bring a considerable change to the spectrum-allocation methodology. Further, the government has initiated the process of taking back unused and excess spectrum from various government departments including the Ministry of Defence.
iii Broadband and next-generation mobile spectrum use
Trading and resale of spectrum is not allowed in India. The DoT may ask for the return or surrender of unutilised spectrum or shift to another spectrum after surrendering the previously allocated spectrum. Due to rapid and continuous growth, low spectrum allocation and interconnection problems, Indian cellular networks are facing traffic congestion problems, especially in the metropolitan areas. The DoT has proposed an enhancement of spectrum availability by releasing large chunks of spectrum previously reserved for defence and security purposes. The proposal envisages the allocation of funds to the Ministry of Defence to enable the armed forces to upgrade their communication systems, thereby optimally using the spectrum, and releasing the unused spectrum to telecoms operators. In 2009, the DoT proposed ‘refarming’ (reassigning) the 900MHz spectrum used by GSM providers such as Bharti Airtel and Vodafone, so as to use this vacated or surrendered spectrum for providing 3G services.
iv Spectrum auctions
The DoT has brought about some reforms in the policies for granting 3G licences in India. The DoT has allocated spectrum for 3G and BWA licences through an auction process. The licensees were required to initially pay a non-refundable entry fee and henceforth would be required to a recurring annual fee, that generally varies between 6 and 10 per cent of the adjusted gross revenue, and is payable during the term of the licence. As previously mentioned, the NTP 2012 has been approved by the GoI and the
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DoT has been asked to draft detailed policy on the basis of guidelines provided under NTP 2012.
V MEDIA
i Restrictions on the provision of service
The network operators are licensed by the DoT and regulated under the Telegraph Act; whereas the content providers are required to follow guidelines issues by the MIB.
Operators are obligated to transmit channels operated by or on behalf of Parliament in the manner and name as may be notified by the GoI and at least two Doordarshan terrestrial channels and one regional language channel of a state in the prime band, in satellite mode on frequencies other than those carrying terrestrial frequencies.
The guidelines for downlinking of television channels issued by the MIB regulate the broadcasting of foreign channels in India. The guidelines do not specify requirements of local content but the MIB prescribes the must-carry obligations for the broadcaster. Further, the company permitted to downlink registered channels must comply with the Programme and Advertising Code prescribed under the Cable Television Networks (Regulation) Act 1995 and is required to adhere to any other code, standards, guidelines or restrictions, which may be prescribed by the MIB for regulation of content on TV channels from time to time. Content restrictions are also imposed through licensing terms and conditions.
Content that offends against morality, decency, promotes superstition, is defamatory, denigrates India’s sovereignty and integrity, affects national security and is in contempt of court, etc., is restricted from being broadcast through any service.
Furthermore, no news and current affairs channel shall be permitted to be downlinked if it:a does not carry any advertisements aimed at Indian viewers;b is not designed specifically for Indian audiences; c is a standard international channel; and d has been permitted to be telecast in the country of its uplinking by the regulatory
authority of that country.
These restrictions are applicable to all programmes irrespective of their being produced by Indian or foreign producers. Further, the above-stated guidelines will also apply to delivery of content via all media including online or mobile (or both).
Advertisements on cable and radio are regulated under the Cable Advertisement Code and All India Radio’s Advertising Code (under Phase II FM Policy) respectively. The Cable Advertisement Code is part of the cable network rules and contains a detailed list of restrictions on advertisements featured on cable networks. As per the code, advertising must not offend morality, decency and religious sentiments.
ii Digital switchover
India’s expanding middle class and its steady advances in broadcasting technology are laying the foundation for the introduction of digital cable television, which will deliver a new freedom of choice for viewers in terms of television channels and content; an
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enforced truce among broadcasters, MSOs and cable operators; and reduced fees for subscribers. It is expected that digital transmission will increase competition in the market and may allow accessibility to more channels.
The GoI had in 2011 mandated the digitisation of TV signals by the cable operators and the removal of the analogue broadcasting. However, the implementation of the policy was to take place in phases across various cities of the country. The deadline for the first phase comprising the four metro cities was fixed at 1 November 2012 and for the second phase constituting 38 cities across 15 states at 31 March 2013. The digitisation process for the country is proposed to be accomplished by March 2015, in terms of the notification for complete shift from analogue system to the digital system.
iii Internet-delivered video content
The economics of video distribution have changed drastically with the use of the internet for video distribution. The move from broadcasting video distribution has affected the broadcasting industry and MIB has brought new guidelines to regulate this.
The MIB has issued Guidelines for Provision of IPTV Services. According to these guidelines, cable operators, while providing IPTV services, will continue to be governed by the provisions of the Cable Television Networks (Regulation) Act 1995 (Cable Act), the TRAI Act 1997 and any other laws as applicable, and as such will be able to provide such content on their IPTV service as is permissible under the Cable Act, and which is in conformity with the Programme and Advertisements Code prescribed thereunder. Further, it provides that if the telecoms licensee provides a television channel through IPTV, the channels should be transmitted in the same form as are registered with or permitted by the MIB and it shall be the responsibility of the broadcaster to ensure that the content is in accordance with the extant laws, rules and regulations. Carrying any broadcast satellite television channels that are prohibited either permanently or temporarily or not registered with the MIB is not permitted.
iv Mobile services
There has been no change in policy as a result of growing demand for mobile media services. With respect to broadcasting through mobile devices, the guidelines issued for the provision of IPTV services are applicable. Further, the regulations relating to traditional broadcasting activities, which are presently dealt with separately under the Cable Act, are also applicable.
VI THE YEAR IN REVIEW
After much deliberation and debate, the NTP 2012 is finally in the process of implementation, with some suggested policy measures already being implemented. In keeping with the objectives of the NTP 2012, the DoT has recently announced the implementation of the Unified Licensing Regime that would bring various telecommunication services under the ambit of a single licence, presently provided pursuant to different licences.
The DoT mandated that preference be given to domestically manufactured telecoms products in a procurement process. The Supreme Court of India had cancelled
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a large number of 2G mobile licences in various circles, although some of such licenses have been re-auctioned pursuant to the orders of the Supreme Court. The year has also seen a revision of the 74 per cent FDI restriction, which has now been increased to 100 per cent, albeit subject to terms and conditions that have yet to be made public.
The GoI has discontinued the 160-year old telegraph services in India from 15 July 2013. This decision comes pursuant to the evaluation of the necessity of the service in consultation with the DoT.
VII CONCLUSIONS AND OUTLOOK
India is in the process of implementation of various provisions of NTP 2012 such as ‘broadband for all’ with a minimum download speed of 2Mb/s; convergence of network, services and devices; simplification of licensing by the implementation of the Unified Licensing Regime; consumer-oriented schemes of the nature of full mobile number portability and free national roaming; VoIP; and cloud computing and next generation network etc. The policy with its diverse provisions is intended to benefit consumers as well as the industry players providing the telecommunications services.
The implementation of the Unified Licensing Regime aims at simplification of the licensing procedure for the telecommunications services, for which presently different licenses have to be obtained. The regime is expected to ensure fair competition in the telecommunications sector.
The DoT has raised serious concerns with regard to the operations of certain VoIP services providers operating in India without the requisite licenses. This comes in the wake of similar developments in other jurisdictions across the globe. The GoI is also contemplating blocking such providers in case the licensing compliances are not fulfilled.
It is noteworthy that, as mentioned above, although the FDI limit in the telcommunications sector has been raised to 100 per cent; investment beyond 49 per cent would still require the approval of the Foreign Investment Promotion Board. This move enables foreign telecommunications service providers to have full ownership and exercise complete control over their Indian entities apart from leveraging funds into the telecoms sector.
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Appendix 1
about the authors
Atul DuASeth Dua & AssociatesAtul Dua is the founder and senior partner of Seth Dua & Associates. Mr Dua’s professional experience spans more than 24 years with leading law firms and multinational accounting and consulting firms. Before joining Seth Dua as a partner in 1998, he has headed the New Delhi tax and legal practice of KPMG and thereafter of Coopers & Lybrand (now PricewaterhouseCoopers). Mr Dua’s forte is international trade and taxation, antitrust and competition law and transaction structuring. During his professional career, he has gained extensive experience in advising multinational and Indian corporates in cross border trade and structuring their investments in India. Mr Dua specialises in tax and legal aspects of financial and technical joint ventures and M&A transactions. He has extensive experience in structuring various income streams in and out of India.
In the TMT space, Mr Dua has assisted leading TMT companies in setting-up operations in India; seeking foreign investment approvals from the government, processing licence applications with the Ministry of Communications etc. He has also assisted companies in routing investments and technology from jurisdictions that confer maximum tax benefits. He has assisted strategic investors in investing in TMT companies in India, in conducting legal and tax due diligence on the investee companies and also assisted in drafting of various commercial documents for such investments. Atul has been rated as the leading lawyer in the TMT space for many years by Legal 500, Chambers and Asialaw and Practice. SDA has similarly been rated as the top-most firm in this area. It has also received the Best TMT Firm award from India Business Law Journal.
SAlmAn WAriSSeth Dua & AssociatesMr Salman Waris is a partner with the firm’s TMT and IP practice groups. He regularly advises clients on issues concerning telecommunications, next generation networks, data protection and privacy, outsourcing (IT or business processes), technology and
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e-commerce. Mr Waris has been recommended for his work by International Financial Law Review’s Leading Lawyers (TMT), AsiaLaw’s Leading Lawyers Guide, AsiaLegal500, The Expert Guide to the World’s Leading Information Technology Lawyers, The International Who’s Who of Internet & e-Commerce Lawyers and The Guide to the World’s Leading Emerging Markets Practitioners. He has also received the International Law Office Client Choice Awards for 2011–2013.
He is currently the vice-chair of the International Technology Law Association, Data Protection Committee and a member of the Task Force on Internet and Cyber Security at the Institute for Defence Studies and Analysis, besides being part of the Data Security Council of India – Thought Leadership Development Program. He is also involved with pro bono work as a mentor to several technology stratups at The Hatch – a virtual incubator setup by Angel Investors Consortium.
Recently, in its ‘40 under 45’ report, Indian Lawyer 250 recognised Mr Waris among the top 40 Indian lawyers under age 45. Mr Waris has also been shortlisted for the Lawyer Monthly Legal Awards 2013 – e-Commerce Lawyer of the Year – India.
Arjun uppAlSeth Dua & AssociatesArjun Uppal is a law graduate holding an LLB from ILS Law College, Pune. He is enrolled as an advocate with the Bar Council of Delhi.
Mr Uppal has good understanding of the legal issues in the technology and telecoms sector and has been involved in various technology and telecommunications transactions. He advises on regulatory aspects regarding the provision of various licensed and non-licensed telecoms services in India. Also, he assists clients in obtaining the necessary licences and approvals for various technology and telecommunications services.
Additionally, he has been a part of certain corporate advisory transactions, including carrying out due diligence of companies and other legal entities. Apart from the TMT laws, Mr Uppal advises clients on issues relating to general corporate and commercial laws, project financing, intellectual property laws, etc.
Seth DuA & ASSociAteSDSO 601, 6th floorDLF South Court, SaketNew Delhi 110017IndiaTel: +91 11 416 444 00Fax: +91 11 416 445 [email protected]@[email protected]
