India’s rapid digitalisation is a double-edged sword for the Narendra Modi government.On the one hand, the proliferation of technology has democratised access to information, streamlined government service delivery and opened new markets for Indian businesses. On the other, the rise of the digital realm has brought with it a surge of cyber malfeasance and concerns about user privacy. As such, regulators are moving to address these issues through the induction of new regulatory frameworks and the revision of existing ones.Technically, in India, the regulation of the digital realm should be the responsibility of the Ministry of Electronics and Information Technology (MEITY). However, the government seems to be moving towards a sectoral model of regulating the online space, presumably due to the overwhelming nature of the problems posed by the internet and the inability of one authority (MEITY in this case) to check them. Illustratively, the Telecom Regulatory Authority of India (TRAI) released a consultation paper discussing the possible regulation of over-the-top (OTT) communications platforms like WhatsApp. On the face of it, a sector-specific approach for regulating digital entities seems logical, as domain regulators are well-aware of the peculiar pain points of the industries under their charge. However, sectoral regulators more often than not try to fit new digital business models into the mould of existing regulatory frameworks. Four problematic implications, for India and the rest of the developing world, emerge from this. First, digital services generally entail the convergence of several regulatory concerns that fall well beyond the purview of a single, sectoral regulation. Take OTT platforms as an example. Along with communications policy concerns, these businesses present issues in the areas of competition, consumer interest and information technology. Given the narrow focus of sectoral regulation, there is a good chance that these broader policy concerns may not be adequately addressed by it. Second, sectoral regulators often conflate service innovation with regulatory arbitrage. The premise here is that if a digital service resembles a regulated offering, the regulator assumes that the former has necessarily been devised to evade regulation or take advantage of the absence of regulation. For instance, TRAI declares that a case of regulatory arbitrage exists with Voice Over Internet Protocol OTT applications as they compete “for the same service provision” as telecom service providers but “bypass the existing licensing and regulatory regime.” Sectoral regulation also tends to evolve at a much slower pace than the industry it oversees. Domain regulators must, then, endeavour to keep pace with the technological evolution of their particular industry, rather than subject newer business models to outmoded regulation. The telecommunications sector, for instance, is still governed by the Indian Telegraph Act which was first introduced in 1885. As such, TRAI must evaluate how the Telegraph Act should be upgraded, or whether it may be repealed and replaced altogether, as the principles that informed its passage are based on a temporal context that is over 100 years old.Also read: India’s Information Technology Act Is Set to be Changed – What Should be Reworked?Third, the ensuing regulatory efforts generally centre around safeguarding the interests of industry incumbents from digital disruption. One of TRAI’s express purposes to regulate OTT platforms is to create a “level playing field” between the latter and telecom service providers. If sectoral regulators are concerned about the well-being of industry incumbents, as TRAI claims to be in its OTT consultation paper, they must consider how existing regulation may be adversely affecting these entities. For example, Indian telecom service providers pay much higher levies than their counterparts in countries like China and the US.Fourth, sectoral regulators have a habit of deploying abductive reasoning to inform determinations for regulating a particular digital business. The grounds given by TRAI to regulate OTT platforms are that the latter provides the same services as telecom service providers, namely voice telephony and messaging. The regulator’s argument for regulating OTTs seems to be based on observable, apparent similarities that are not an accurate depiction of reality. It is well-established that the communications services provided by OTT platforms differ quite significantly from those offered by telecom service providers, both from a functional as well as a technological standpoint. In its response to a consultation paper issued by the European communications regulator on the regulation of OTT platforms, the European Consumer Organisation indicated that even to the lay European individual, OTT calling and texting and traditional voice telephony and messaging were fundamentally dissimilar. If sectoral regulators in India seek to regulate digital businesses in a meaningful way they must re-calibrate their current approach. They currently focus narrowly on how they may bring digital businesses under the regulatory regime for legacy industrial players, as TRAI is attempting to do by bringing communications OTTs under the existing telecom regulation and licensing norms.What they must instead concentrate on are the broader policy problems presented by digital businesses, and consider how their regulatory experience and capacity equips them to solve for these specific issues.Two important interventions TRAI may immediately consider are consumer grievance redressal guidelines for communications OTTs and how to ensure that the net neutrality guidelines are being followed, as these are both policy areas where the regulator has a breadth of experience. Such an approach would serve the dual purpose of addressing the specific problems posed by digital businesses while allowing these entities to operate effectively. Meghna Bal is a lawyer and a technology policy expert. The views expressed are personal.