INDIA (DOMESTIC FIRMS): An Introduction to Technology, Media, Telecoms (TMT)

TMT in India 

The year 2023 has been a major milestone for the legal and regulatory landscape of India with significant developments in the TMT sector that seek to revamp the current legal framework. Given the rapid digitisation and internet adoption in India (936.16 million internet subscribers by the end of December 2023), these statutory and regulatory changes are expected and, in some cases, long overdue.

Digital Personal Data Protection Act

In August 2023, the Parliament passed the much-awaited Digital Personal Data Protection Act, 2023 (“DPDP Act”), the first dedicated legislation for data protection and privacy in India, replacing the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 under the Information Technology Act, 2000 (“IT Act”). While the DPDP Act has been passed, it is yet to come into force and would likely be enforced in a phased manner. The DPDP Act appears to be a more “business friendly” version of its previous iterations and does not seem to have the strictures of the EU GDPR. However, several obligations under the DPDP Act, such as cross-border transfer, notice requirements, notification of significant data fiduciaries, treatment of children’s data, consent managers, etc., are yet to be operationalised via delegated legislation or ‘rules’. While the DPDP Act by itself does not appear to be onerous, whether it continues to be so or not will be determined once the ‘rules’ are introduced.

Telecommunications Act 

In the telecommunications sector, a much-needed overhaul to the British era legislations, comprising the Telegraph Act, 1885 and the Wireless Telegraphy Act, 1933, was required. Accordingly, the Telecommunications Act, 2023 (“Telecom Act”) has been enacted to keep pace with emerging technologies and to establish a future-ready legal framework for the development of the telecommunication sector. Some provisions of the Telecom Act have recently been brought into effect. These provisions pertain to interception, right of way, consumer protection, telecom standards, etc. Various provisions of the Telecom Act will also be notified in due course and operationalised via delegated legislation or rules. One of the concerns under the Telecom Act is its broad mandate to potentially regulate OTT communication services such as WhatsApp, Telegram, etc. While the Telecom Act does not specifically define or include OTT communication services within its ambit, the broad definitions of other terms included in the Telecom Act such as ‘telecommunication’, and ‘telecommunication services’ offer leeway for extending the application of the provisions of the Telecom Act to OTT communication services providers. This, in essence, will be contrary to the recommendations given by the Telecom Regulatory Authority of India (“TRAI”) in September 2020 to allow market forces to respond to the situation without prescribing any regulatory intervention. Further, the TRAI, in 2023, undertook extensive stakeholder consultations on the regulation of OTT communication services and the banning of OTT services and is expected to come out with its recommendations soon.

IT Rules 

In addition to the passing of new legislations, the Government of India amended the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules”) issued under the IT Act to regulate online gaming and misinformation. This further expanded the regulatory coverage of the IT Rules, which applies to intermediaries and OTT services, to online gaming as well. However, further clarity on these amendments is required. For instance, the definitions of ‘online game’ and ‘online real money game’ are broad and vague and do not provide any clarity on how to distinguish between game of skill (which is allowed under law) and game of chance (which is prohibited under law). Further, the definition of ‘online gaming intermediary’ seeks to regulate online gaming qua intermediaries only and not directly against the actual publishers/developers/owners of such games/apps. Another key feature of the IT Rules is the structure of ‘self-regulatory bodies’ that are required to ‘verify’ an online real money game as a permissible online real money game. These self-regulatory bodies are yet to be notified by the Government. As per news reports, a group of ministers is assessing and developing a comprehensive regulatory framework related to online gaming. The amended IT Rules also seek to establish a fact-check unit to identify any fake, false or misleading information in respect of any business of the Central Government. While the Central Government had notified a fact-check unit under these rules in March 2024, the Supreme Court of India stayed this notification till the Bombay High Court passes a final order regarding various petitions that challenge the validity of the fact-check unit under the IT Rules.

Digital India Act 

Interestingly, the Government has undertaken the task of replacing the IT Act (and the rules made thereunder) with a new legal framework ie the Digital India Act (“DIA”). The intent behind the DIA is to regulate the entire ecosystem of technology and the Big-Tech market through a principles and rules-based framework. These could potentially include diluting safe harbour for social media intermediaries, mandating algorithmic transparency, regulating Artificial intelligence, requiring big technology companies to pay news publishers for monetizing their content, regulating deepfakes, encryption-related policy, etc. The draft of the DIA is yet to be finalised and floated for consultation. In the meantime, as per news reports, the Government is likely to introduce amendments to the IT Rules to address issues such as deepfakes and AI till the DIA is introduced and finalised.

Draft Broadcasting Bill 

Further, in November 2023, the Ministry of Information and Broadcasting invited stakeholder comments on the Draft Broadcasting Services (Regulation) Bill, 2023 (“Draft Broadcasting Bill”) which seeks to consolidate and streamline the regulations for the broadcasting sector by replacing the Cable Television Networks (Regulation) Act, 1995 and introduce a framework for regulating OTT broadcasting services. This proposed Draft Broadcasting Bill conflates OTT broadcasting services and internet transmissions and considers them ‘broadcasting services’ potentially overlooking some fundamental distinctions between the technology, nature, and business practices pertaining to these services. While the Draft Broadcasting Bill is yet to be finalised, in June 2024, the TRAI released its recommendations for the formulation of National Broadcasting Policy 2024 (“NBP”). The general theme of the recommendations goes beyond the scope of ‘broadcasting’ services as the TRAI has provided feedback on policy measures for content-related and ancillary issues such as the growth of animation and VFX, music, films, online gaming, etc. instead of limiting the NBP to a carriage/signal-based policy.

Committee on Digital Competition Law 

The growth of digital markets in India and the report of the Parliamentary Standing Committee of Finance, which identified ten predominant anti-competitive practices by large digital enterprises, prompted the Ministry of Corporate Affairs to constitute a Committee on Digital Competition Law (“DCL Committee”) to review the provisions of the existing Competition Act, 2002 and to assess the need for a digital competition law. The report of the DCL Committee has proposed a draft of the Digital Competition Bill, 2024 (“Draft DCB”) which seeks to prescribe ex-ante regulations for Systemically Significant Digital Enterprises’. As per the DCL Committee, the Draft DCB should apply to pre-identified Core Digital Services (“CDS”) and regulate enterprises that have a significant presence in the CDS. However, the Draft DCB appears to have conflated video-on-demand services (ie single-sided video-sharing platforms) with video-sharing platforms (ie multi-sided services) and accordingly seeks to impose obligations on businesses that do not provide CDS or have any ‘gatekeeper’ characteristics. Further, the Draft DCB has also imposed an irrational restriction on the usage of ‘non-public aggregated data’ of business users by Systemically Significant Digital Enterprises.

Risks and Concerns 

The rapid expansion of digital services in the last seven years has necessitated the requirement for the Government to update requirements and regulate new and upcoming sectors. However, at this stage, some of the legal and regulatory frameworks introduced, and sought to be introduced, by the Government tend to be very wide in their application potentially leading to over-regulation of the concerned sector thereby risking constriction of growth of the TMT sector in India. There are increasing concerns that the policy approach in India tends to conflate different services under the nomenclature of technology-neutral regulations. This can adversely impact sunrise sectors such as OTT services (if they are treated on par with traditional broadcasting) and potentially raise concerns about India’s treaty obligations. Extensive stakeholder consultations and rigorous impact analyses of existing/proposed TMT regulations and laws will be an ideal starting point to understand issues and solve them in a collaborative environment thereby ultimately promoting the growth of the digital economy.