DoT may bring digital apps under licensing purview in draft telecom bill

The companies will convey their fears during the consultation process

Digital app companies fear that the draft Communications Bill might lead to a ‘regulatory overreach’ with the Department of Telecommunications (DoT) incorporating powers from other ministries such as the Electronics and IT Ministry and the Information & Broadcasting Ministry.

The companies say that the DoT’s initial consultation paper in July on the need for a legal framework for governing telecom services made no mention of any desire to bring services like OTT communications services and electronic mail under its licensing ambit by incorporating it as 'communication services' on a par with telecom services. The DoT had asked stakeholders to submit their opinions. 

However, the DoT has noted that the expansion in the list of services under ‘communication services’ is merely a matter of interpretation which emanates from the archaic India Telegraph Act and that the draft bill merely makes explicit what was already in the Act.

Telcos have pushed for their licensing as they say the digital apps provide the same services - messaging and video and audio calling - but are not licensed and pay no licence fee.    

However, a digital app company that provides a range of services which include email, messaging, and video OTT apps, points out that the notion that such companies are not regulated at all and need to be licensed is not based on reality.

“We are regulated by the IT Act as well as the intermediary rules and soon will be through the new Digital India Bill to regulate intermediaries. Even various provisions of the CRPC code of the Ministry of Home Affairs are followed by us,” said an OTT communications service company executive.  

Digital app companies are detailing out their concerns and will convey them to the DoT through their industry associations as part of the consultative process.

Analysts tracking the sector say that the DoT regulates telecom networks because they use spectrum, which is a public good. The apps represent a different layer as they build innovative products over the telecom network but do not buy spectrum or any public good - consumers pay for bandwidth which goes to telcos.

“This goes against the spirit of ease of doing business because, if one is regulated by the Ministry of Electronics and IT, there will now be an additional ministry issuing licences for the same business. This is not ease of doing business,” said another executive involved in the digital app business.

There are also concerns that the draft Communications Bill, by including a bevy of applications under a broader definition of ‘communication services’, could force them to pay licence fees, just like mobile service players.

If that happens, such companies would be forced to charge their consumers (messaging services companies could ask consumers to pay) as they currently offer their services free.

“If the act licences OTT communication services, clearly they will be asked to pay licence fees or contribute to the USO fund,” said an analyst dealing with the bill and the policy. “But their customers don’t pay so they don’t have revenues from them. Now, if the government comes in with detailed enabling provisions defining which communication services app has to pay a licence fee or not, that is bad in law.”       

What’s more, digital companies say that a large part of the app economy would be impacted by the new definition of ‘communications services’ by bringing it under the licensing ambit.

After all, as they point out, even e- commerce apps incorporate messaging between the buyer and the company for customer services. Gaming companies also do the same between players. Even bank apps interact with their customers.

So, in theory all of them could come under licensing.

Straight talk

• Digital companies say that a large part of the app economy would be impacted by the new definition of ‘communications services’, if brought within the licensing ambit 
• E-commerce, gaming and banking apps too incorporate messaging, they say 
• So, in theory, all of them could need a licence