India Telecoms and Media Law Update 2015

Volume 2 • Issue 4

Telecoms & Media

Global interview panel covering key economies led by Laurent Garzaniti

EU’s Digital Single Market edges closer

Regulatory developments • Major cases • Business models • 2015 trends Europe • North America • Asia-Pacific • Latin America Publisher: Gideon Roberton Senior business development manager: Adam Sargent [email protected]

Product manager: Rachel Nurse Marketing assistant: Sophie Pallier [email protected]

Head of production: Adam Myers Editorial coordinator: Eve Ryle-Hodges Subeditor: Janina Godowska Welcome to GTDT: Market Intelligence. Designer: Nathan Clark This issue focuses on global telecoms markets. Cover: Songglod/iStock/Thinkstock Getting the Deal Through invites leading practitioners to reflect on evolving legal and No photocopying. CLA and other agency regulatory landscapes. Through engaging and analytical interviews, featuring a uniform licensing systems do not apply. For an set of questions to aid in jurisdictional comparison, Market Intelligence offers readers a authorised copy contact Adam Sargent, highly accessible take on the crucial issues of the day and an opportunity to discover tel: +44 20 3780 4104 more about the people behind the most interesting cases and deals.

This publication is intended to provide Market Intelligence is available in print and online at general information on law and policy. The www.gettingthedealthrough.com/intelligence information and opinions which it contains are not intended to provide legal advice, and should not be treated as a substitute for specific Getting the Deal Through advice concerning particular situations (where London appropriate, from local advisers). August 2015

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Anoop Narayanan

TELECOMS & MEDIA IN INDIA

Ranked as a leading Indian lawyer in advice in these areas. He has worked corporate law, intellectual property with some of the nation’s highest law, and information technology law profile companies as well as global by Chambers and Partners and other corporates in the manufacturing publications on a regular basis, Anoop industry, banking and finance Narayanan has more than 21 years sectors, and telecommunications and of experience. He focuses on a broad technology companies. He has spoken range of intellectual property, IT, at several Indian and international outsourcing, employment, technology, forums on his areas of practice and data protection, telecommunications has also published many articles and entertainment law matters, and his touching upon several areas of practice encompasses both litigation Indian law. and commercial or transactional

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“The current Indian government has proposed to take strong initiatives for a digital India.” Photo:Surachet1/iStock/Thinkstock

GTDT: What were the key developments in development and aims to make every Indian communications and media regulation in your household digitally literate by 2019. jurisdiction last year? GTDT: Does sector-specific regulation – as Anoop Narayanan: There have been no recent opposed to the general – play a significant significant changes to the communications and role in your jurisdiction? Is this expected media regulations in India. to change? However, in a recent landmark judgment, India’s Supreme Court had strengthened citizens’ AN: There is a certain confusion between the fundamental right to freedom of speech and sector-specific regulations and the general expression and had upheld the Indian citizens’ competition regime. The telecommunications online right to freedom of expression (Shreya sector and all aspects of the industry have Singhal v Union of India, Writ Petition (Criminal) been historically regulated by sector-specific No. 167 of 2012). India’s Information Technology regulations. The Telecom Regulatory Authority Act, 2000 (IT Act) prescribes the punishment for of India (TRAI) regulates the telecoms sector. any person who sends or posts ostensibly offensive A primary purpose of TRAI is to facilitate information through computer resources (section competition and promote efficiency in the 66A of the IT Act and similar other provisions). operation of telecommunication services so as to There have been numerous instances where facilitate growth in such services. Prior to India’s the government had abused these provisions Competition Act, 2002, and the establishment of to protect political and religious interests. The the Competition Commission of India (CCI), TRAI Supreme Court has finally held section 66A of the was alone in handling the competition aspects in IT Act as unconstitutional, which was welcomed the telecoms industry. However, subsequent to the by many as a positive step to reinforce the strength setting-up of the CCI, and considering that both of Indian democracy. the TRAI and CCI had similar powers in respect Further, the current Indian government has of competition aspects, it gave rise to significant proposed to take strong initiatives for a digital confusion in choosing the appropriate forum. India. For instance, the Department of Telecom Similarly, there has been confusion with respect (DoT) proposes to launch highly advanced to tariff disputes. As regards the dominant market products to enable internet accessibility in the position and mergers and acquisitions (M&A), remotest part of India, such as solar-powered Wi- although TRAI has prescribed certain thresholds, Fi set-up, a long-distance Wi-Fi system, C-DOT the CCI approaches the dominant position Next Generation Network (NGN) and a 100Gbps issues on different parameters. Currently, from a OFC link. The government has its focus on digital practical standpoint, there have not been many

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cases directed to both the authorities, creating economy and security issues. The telecom service conflict between the regulators. As regards the providers (TSPs) fall under a regulatory regime, future, just as market forces currently decide while OTT players are simply bypassing such a the dynamics of the telecoms industry in India, regime. Also, the regulator is concerned whether the regulators will also evolve, identifying and the growth of OTT is affecting the traditional TSP restricting their respective roles, considering that revenue stream, and if so, whether the increase the ultimate goal for all the regulators is to ensure in data revenues of the TSPs will be sufficient to fair play in the market and protect the interests of compensate for this impact. both the consumers as well as industry. The next- In India, the network infrastructure is still at generation network and subsystem are new to an early stage of development, which is a major India, and the regulatory regime and approaches challenge for OTT service providers. are still evolving. Therefore, with the increasing debates between the OTT service providers and the GTDT: What is the attitude to net neutrality in telecom service providers, the TRAI prepared your jurisdiction? a consultation paper in March 2015 to invite public and industry comments on the proposed AN: Currently, there is no specific law governing regulatory framework for OTT services in India. net neutrality in India. Although the TRAI The feedback provided by people and the industry guidelines for the Unified Access Service licence is not available publicly, and therefore, one has promote net neutrality, they do not enforce it. to wait for TRAI’s decision on regulating OTT in In March 2015, TRAI released a consultation India, and at what stage. paper on net neutrality for public feedback. It Notwithstanding, it is abundantly clear that the appears that the government is in complete government is concerned that crucial consumer favour of net neutrality, implying equitable access data as well as national security information may without any obstruction or prioritisation. be compromised by the fast-paced proliferation There has been a recent debate on net of applications on mobile phones. The DoT has neutrality in India, and the idea of free and equal recommended steps to regulate and monitor internet for all has gathered wide attention across content on mobile applications, including location the country. This was pursuant to the Indian of data servers in India. Further, the DoT has telecom provider Airtel’s proposed zero-rating proposed putting in place interim provisions plan with e-commerce portal Flipkart, charging enforceable through licensing conditions, until an preferential rates from the Flipkart users. This appropriate legal framework is enacted. resulted in a nationwide resistance to Airtel and although there was no formal regulatory order GTDT: Has there been any recent granting of against it, Airtel had to withdraw its proposal. The spectrum? Are any significant grants planned in government announced that a committee will be the near future? formed to study the net neutrality issue. It was of the view that blocking and deliberate slowing AN: Yes, a recent spectrum grant in India took down or speeding up of lawful content on the place in 2015, through an auction which lasted for internet should not be permitted. almost 20 days with 115 rounds of bidding. There The CCI had also agreed to review any practice were eight telecom firms that participated in the that may affect net neutrality, subject to the final bidding process across four bands: 800MHz, regulations from TRAI. 900MHz, 1,800MHz and 2,100MHz and 22 Therefore, it appears that the regulator is circles. The eight telecom firms were Bharti Airtel, inclined towards, and in the process of providing Idea, Vodafone, Reliance Communications, guidelines, regulating net neutrality. Reliance Jio, Tata Teleservices, Aircel and Uninor. The list of provisional winners declared by GTDT: What is the regulator’s approach to the Department of Telecom (DoT) include Bharti over-the-top services? Airtel, Vodafone, Idea, Reliance Communications and Reliance Jio Infocomm, out of which Bharti AN: Currently, there is no specific law to regulate Airtel, Vodafone and Idea successfully defended over-the-top (OTT) services in India. Considering their share, although at a significantly high cost. that internet penetration is still evolving in India, Around the same time of the spectrum grant, access speeds are generally low and there is various telecom companies including Vodafone limited coverage of high-speed broadband in the and Bharti Airtel had filed petitions in the country, TRAI is contemplating whether the OTT Supreme Court of India and had sought extension services should be regulated or brought under the of their 20-year-old allotted spectrum licences licensing regime at this stage. by another 10 years, and had also challenged the According to TRAI, there are also certain government’s decision to auction the spectrum public policy issues associated with OTT services, surrendered by these telecom companies. In May such as regulatory imbalances, impact on the 2015, The Supreme Court had rejected the telecom

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companies’ petitions seeking to extend their disclosure of information and the rights of the data licences and restrain the auction. subject. These Rules are in harmony with the EU There are no significant spectrum grants data privacy regime. announced or planned by the government in the near future. GTDT: What about media plurality? How have policymakers and regulators GTDT: How has the debate about ‘big data’ addressed this issue? played out in your jurisdiction? What has the debate focused on? AN: Although the Indian regulator favours media plurality, currently, there is no specific AN: There is a lot of debate on the ethical limits of law to ensure media plurality in India. In August the use of big data. India does not have a specific 2014, TRAI published a set of recommendations law governing big data issues. However, Indian on issues relating to media ownership. The business entities and even political parties make recommendations aimed to establish a regulatory use of the data for a variety of purposes. In the framework to preserve external plurality (diversity absence of a specific regulatory environment, of ownership) and internal plurality (diversity of the legal aspects applicable to big data in India content) in the media sector. TRAI has primarily are similar to those in other countries, such as taken into account the TV and print media, owing copyright law issues, database breaches, data to their pervasive reach and influence. protection and privacy issues. TRAI has recommended imposing cross- India’s IT Act provides a legal framework media ownership restrictions on companies, to address the issues relating to hacking and and using the Herfindahl-Hirschman Index security breaches of information technology (HHI) to ascertain the concentration of media infrastructure, including sensitive personal within specific Indian states to ensure that there data. The IT Act prescribes penalties for a body is adequate compensation. These cross-media corporate for negligently handling sensitive ownership rules restrict ownership within a personal data and not maintaining reasonable relevant market (ie, between the newspaper security practices and procedures. The Data and television outlets), and not across different Protection Rules prescribe rules for data relevant markets. controllers and data subjects for collection and The TRAI has further recommended that retention of personal information, transfer and M&A in the media sector will be permitted only

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THE INSIDE TRACK What are the most important skills and What are the key things for the parties and qualities needed by an adviser in this area? their advisers to get right when dealing with a case in this area? As this is a continuously evolving sector, the government policies, laws, regulations and · U nderstand the cultural aspects of the practices also keep changing on a regular basis. country; Therefore, an adviser should at every point in • up dated knowledge and understanding of the time be updated about the developments in government policies; the media and telecoms sector as well as the • futuristic approach; changes in the applicable policies, laws and the • c ompliance with competition law and other practices. Further, an adviser should also be able applicable law; and to understand the trends in the market and any • str ong and clear contractual provisions with potential regulatory developments anticipated, the vendors and service providers. while advising on a project. This is because there can be a significant time lapse between What were the most interesting or challenging conceptualisation and the actual roll-out of cases you have dealt with in the past year? various projects, which may then be affected by unexpected regulatory changes, unless The past year witnessed a lot of companies the adviser had the ability to anticipate the seeking opinions on their new generation possible future trends and structure the projects products including online and mobile accordingly. The adviser should be practical application-based products and services, import and should have an in-depth understanding of telecom equipment, intricate issues on about the business and have the ability to transborder data protection and privacy of provide advice keeping in mind the clients’ personal and sensitive data, data leakage commercial interests. handling, e-commerce issues, etc.

Anoop Narayanan ANA Law Group Mumbai www.anaassociates.com

to the extent that the rule based on the HHI is not GTDT: Is the global trend for consolidation in breached. There are stringent annual disclosure or the sector also visible in your jurisdiction? If so, reporting norms for the media companies under what were the most prominent deals in the past the TRAI recommendations. year or so? TRAI has also provided suggestions on vertical integration between direct-to-home AN: Yes, there is a trend for consolidation in providers and broadcasters. Further, political and India as well. A major recent development in religious bodies and central and state government the television sector is Reliance’s acquisition of ministries must be barred from entering into Network18 and TV18. broadcasting and TV channel distribution sectors. Reliance Industries Limited (RIL), India’s Editorial independence in the media must be largest private sector company, through its trust, ensured. Independent Media Trust, acquired control of TRAI is of the view that the government should Network18 Media & Investments Ltd and its not regulate the media, and an independent single subsidiary TV 18 Broadcast Ltd. The Network18 regulatory authority must be appointed for TV and Group comprises several prestigious media print media. and entertainment companies with interests In view of the foregoing, the regulator is in television, internet, films, e-commerce, making efforts to preserve media plurality by magazines, mobile content and allied businesses. regulating media ownership in the relevant The transaction is likely to enable RIL’s Jio markets. However, considering the present Infocomm to get access to broadcast, digital situation where certain large media houses control and e-commerce content for its 4G mobile data a major share of the market in TV as well as print, services platform. the regulator, including the CCI, will have to From a competition law standpoint, the CCI take strong measures to enforce ethical media had analysed in detail the various segments in practices. which the Reliance Group and the Network18

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Group co-existed, including in television channels, event management services, broadband internet services and access to content through such services. The CCI concluded that it was “TRAI is of the view unlikely that the proposed combination would have any adverse effect on competition in India. that the government Accordingly, the CCI did not raise any objections to the proposed acquisition. In the radio sector, many operators propose should not regulate to enter the market through M&A rather than the auction process. This trend of consolidation commenced with the acquisition of a radio the media.” channel, Radio City, by the Dainik Jagran Group, a leading media and communications group specifically in print media. music content on its radio channels. The CCI Therefore, it is expected that the consolidation had directed investigations against T-Series, trend will continue across the sector as larger firms and held that T-Series had contravened the merge with smaller firms to tighten their grip on anti-competition law provisions. The CCI had the market. also imposed a heavy penalty of 8 per cent of the T-Series’ average turnover for the three preceding GTDT: Have there been any major antitrust financial years. cases in the communications and media sectors in your jurisdiction recently? GTDT: What is your outlook for regulation in the communications and media sectors in AN: Google Case (Case Nos. 07 & 30 of 2012) the next two to three years? Are any major The CCI’s investigation arm has recently changes expected in your jurisdiction? submitted its final report on alleged unfair If so, what do you predict will be the impact business practices in India by internet major on business? player Google. In 2011, a complaint was filed against Google AN: We do not anticipate any major regulatory before the CCI alleging that Google had created changes in the next two to three years. However, an uneven playing field in the market by favouring considering the issues related to spectrum its own services and those of its vertical partners allocation and the NGNs, the government by manipulating the search algorithms. During the may come up with regulations to ensure more investigation, Google did not submit the complete transparency and level playing fields. Further, in information as required by the DG, and the CCI the context of big data, the growth of e-commerce imposed a penalty of approximately US$160,000 and m-commerce businesses in India in the past on Google. couple of years, and the increasing mobile banking After a detailed investigation, the CCI recently platforms, the country will face the need for received the DG’s report. The parties concerned significant regulations on data security, privacy, will now be given an opportunity to present their quality of networks, etc. Additionally, with the case before the CCI. new generation handheld devices replacing the traditional computing platforms, the technology HT Case (Case No. 40 of 2011, Order dated sector has been significantly aligned towards 10 October 2014) servicing the telecommunication industry, both in HT Media Limited, a leading Indian media respect of hardware and software. This will give company, filed a complaint against a large Indian rise to more regulations for monitoring the import music company, T-Series. HT alleged that of telecommunication equipment, as well as T-Series, which is the largest private publisher of software applications, to ensure that they are safe Indian music and owns or controls over 70 per and free of bugs, etc. From a practical standpoint, cent of the latest music, was abusing its dominant we feel that new regulations will be introduced as position by levying excessive charges as licence necessary with the market’s growth. fees for grant of rights for the broadcast of HT’s

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