Allow only Indian entities to participate in regulatory sandbox: TRAI

GS Paper II

News Excerpt:

TRAI has recommended that only Indian nationals or entities should be eligible to participate in telecom regulatory sandboxes (RS) that can provide real-time but regulated access to networks and customer resources during product or technology tests.

The recommendations of TRAI:

  • The Telecom Regulatory Authority of India (TRAI) recommended that the Department of Telecom shall put in place an end-to-end digital process to handle RS applications and all related activities, including intimations, approvals, sharing of information, monitoring, reporting requirements etc.
    • It recommended a non-refundable processing fee of Rs 10,000 for the applications.
    • During the testing period, the applicants will need to demonstrate the ways to prioritise the protection of consumer interests and prevent any harm to consumers.
    • Applicants will need to share details of licensing or regulatory relaxations that are sought for testing purposes and submit a clear exit strategy that outlines the process for exiting the testing phase.
  • Only such customers will be allowed to be on boarded who have given specific consent voluntarily.
    • Customer onboarding and private/public data processing should align with the provisions of the Digital Personal Data Protection Act, 2023, and any applicable rules, regulations, or orders issued under the Act.
  • Oversight and governance of the RS shall be done by the National Telecommunications Institute for Policy Research, Innovation, and Training (NTIPRIT).
    • Further, NTIPRIT should rope in representatives from the Telecom Engineering Centre (TEC) and academic institutions, as required.
  • The recommendations were part of "Encouraging Innovative Technologies, Services, Use Cases, and Business Models through Regulatory Sandbox in Digital Communication Sector" of TRAI.
  • The Telecommunications Act, 2023, has introduced the provision of setting up multiple regulatory sandboxes.

What is a Regulatory Sandbox?

  • Regulatory sandbox refers to live testing of new products or services in a controlled regulatory environment. 
  • It acts as a "safe space" for business as the regulators may or may not permit certain relaxations for the limited purpose of testing.
  • The sandbox allows the regulator, the innovators, the service providers and the customers to conduct field tests to collect evidence on the benefits and risks of new innovations, while carefully monitoring and containing their risks.

 Benefits of Regulatory Sandboxes:

  • Regulators obtain first-hand  empirical evidence on the benefits and risks of emerging technologies through regulatory sandboxes.
    • This first-hand evidence allows regulators to take a considered view on the regulatory changes or new regulations that may be needed.
    • The goal is to support useful innovation while also containing the attendant risks.
  • The service providers also improve their understanding of how new technologies might work, which helps them to appropriately integrate such new technologies with their business plans.
  • Innovators and companies can improve their understanding of regulations that govern their offerings and shape their products accordingly.
  • Users of a sandbox can test the product’s viability without the need for a larger and more expensive roll-out. 
    • If the product appears to have the potential to be successful, the product might then be authorised and brought to the broader market more quickly.
  • In India, financial regulators such as the Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority and the International Financial Services Centres Authority run their own sandboxes.

Why are regulatory sandboxes vital for Telecom Sector?

  • Development of 5G/6G use cases and tech, including AI (artificial intelligence) and ML (machine learning) requires inter-sectoral and multi-stakeholder collaborations. 
  • A regulatory sandbox can provide a platform where telecom companies, gear makers, app developers, academics, scientists and regulators can work together, test and develop cutting-edge products that can be commercially successful in the mass market. 
  • Multiple central ministries, states, municipalities, smart city authorities can also participate in such sandboxing to test reliability and commercial viability of 5G/6G use cases, enterprise apps.

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