Govt Determined To Regulate Cloud Companies In India; Nasscom, COAI Oppose

On October 23, 2019, the regulatory body Telecom Regulatory Authority of India recommended the Govt body Department of Telecommunications (DOT) to set up an industry body for regulating cloud service providers or CSPs.

About 2 months back in September, TRAI recommended DoT to initiate this process so that CSPs could start to be regulated.

However, IT and telecom industry bodies have written to the DoT, asking them to consider their views as they are raising concerns regarding a regulatory body and not very welcoming to it too.

They have asked the DoT to consider their views and concerns before implementing any such regulatory body for CSPs.

Some of the major CSPs in India are Amazon Web Services, Microsoft Azure, VMware, Google compute engine, Netmagic, Red Hat, Salesforce and Zoho, among others.

Industry Associations Including Nasscom Write to TRAI

The TRAI has recommended DoT to set up a regulatory industry led body for regulating CSPs.

However, industry bodies are unwelcoming of it and we will tell you why.

For starters, IT and telecom associations have highlighted that CSPs don’t fall under the telecom sector and speaking of regulations, the ministry of electronics and IT (Meity) has already framed essential criteria for CSPs, for government purposes.

About 7 industry associations, like Nasscom, COAI, ITI and BSA have sent a letter to DoT asking it to consider their concerns and views before implementing any policy for CSP regulations initiated by TRAI.

These association bodies are confident that if such an action is conducted, a negative impact would fall on the attraction of investment in the telecom sector.

Associations Argue TRAI’s Move to be Anti ‘Self-Regulatory’

The industry believes that by setting up an industry-led regulatory body for CSPs, the whole idea of ‘self-regulation’ is sabotaged.

They believe that the proposed industry framework is far away from the idea of a ‘light touch regulation’.

An excerpt from the letter looks like this,

“…the most ambivalent and thereby problematic argument given in the recommendations under reference is how a registered industry body strikes the potentially appropriate balance between the extremes of having a statutory regulation and a completely free market driven mechanism.”

Some Features of the Framework

To highlight the strict regulatory framework introduced by TRAI on CSPs, the industry highlighted some of the features of the framework.

They include:

• mandatory membership requirement, which will be enforced by preventing telecom service providers from providing any infrastructure or platform to non-members.
• appointing government officials as members of the ad-hoc body, which will frame code of conduct to be followed by CSPs.

In the letter, the association bodies also mentioned some existing laws which apply on CSPs, like

• The Information Technology Act, 2000,
• The Indian Contract Act 1872, 
• The Consumer Protection Act, 2019, and 
• The proposed Personal Data Protection Bill, (PDPB) 2019.

These laws are already there to establish a stringent regulation on CSPs. Some of them include grievance redressal, portability/interoperability, billing-related issues and quality of service, says the letter.