OTT services should not have an unfair edge over Indian telcos
5 min read . Updated: 16 Nov 2022, 11:43 PM IST
PremiumOver-the-top platforms offer similar services but don’t share infrastructure responsibility and bear almost no state obligations
The proposed regulation of over-the-top (OTT) communication services in India’s Draft Telecom Bill has stirred up an intense debate. The fundamental objective of the proposed measure was to simply provide an appropriate regulatory framework for the operational aspects of OTT communication services (also called OTTs). Unfortunately, apparent misinterpretations of this reasonable suggestion from the government have led to unfounded apprehensions and resistance. We can do without skewed references, with reports and papers being quoted out of context and selectively, which may mislead the public.
The fact is that all digital technology-enabled voice communication today requires applications of data and therefore works in the application layer, whether the service is provided by telecom service providers (TSPs) or OTTs. The external environment and associated risks are same for both. So, they need to be governed by statutory agencies/bodies which oversee security aspects, as they have for the last 25 years. If the government feels that such security risks are unwarranted, then both TSPs and OTTs should be kept out of its ambit. But at no stage should national security be jeopardized.
To dispel any doubt regarding the similarity of the services offered by TSPs and OTTs, the Telecom Regulatory Authority of India’s consultation paper on ‘Regulatory Framework for Over-the-Top (OTT) Services’ of 27 March 2015 clearly notes: “The technological differences between OTTs and TSPs have led to a situation where both TSPs and OTT service providers become capable of providing similar services to customers. The communication OTT players are actually competing with traditional TSPs. The TSPs bear the costs for the infrastructure, spectrum management and also pay licence fees for use of spectrum." In 2015, a Department of Telecom committee also stated: “In case of [Voice over Internet Protocol] OTT communication services, there exists regulatory arbitrage wherein such services also bypass the existing licensing and regulatory regime creating a non-level playing field between TSPs and OTT providers both competing for the same service provision. Public policy response requires that regulatory arbitrage does not dictate winners and losers in a competitive market for service provision."
One misinformed view is that TSPs want an access fee to be paid by OTT services. Our simple ask is that any entity (Indian or foreign) using Indian digital infrastructure to provide services to Indian consumers should participate equitably in the creation, maintenance and upgradation of the same. Whether OTT players pass on the cost to their consumers would depend on their business sense and earnings (chiefly made through ad revenues, the use of cumulative data of Indian subscribers or enterprise businesses). Incidentally, TSPs are not allowed to monetize the data of their subscribers as per Indian laws, while OTT services do so at will.
One much-voiced concern is that regulating OTT communication services will affect innovation and the spirit of entrepreneurship. But while startups are flag-bearers of innovation and entrepreneurship, are they all OTTs? How do they get impacted then? And even if that is the case hypothetically, it would make all the more sense to define OTT communication services clearly and conclusively under the Telecom Bill, 2022, to ensure that—within India’s norms of security—innovators and entrepreneurs are not impacted adversely.
Comparing the networks of TSPs to pipelines while suggesting that OTT services depict water, as some critics have done, is a ludicrous analogy. One component cannot be claimed to be more important than the other. Each has its own value and should be looked at through similar lenses. They must contribute similarly too. If on one hand telecom companies continue to invest heavily in infrastructure for high-tech networks that serve Indian citizens, it would only be a fair ask that anybody making direct/indirect profits off these networks chips in towards its development.
It has also been argued that TSPs have exclusive rights of spectrum, interconnection, right of way, unique numbering resources, etc, which OTT services don’t. While the rules of business of TSPs and OTT services may have different requirements of these mentioned rights, it should not become an excuse for OTT services to shy away from being similarly regulated and licensed as TSPs. They will and can have different or similar imperatives. These rights come at a cost. Besides acquiring high-priced spectrum and incurring huge operational expenses to comply with various regulatory norms, TSPs also pay exorbitant levies and taxes (of above 30% of their revenues). TSPs further contribute to India’s Universal Service Obligation Fund (USOF), used for providing connectivity in rural and far-flung areas. However, OTT services, despite their growing revenues, pay nothing to the government.
Telecom tariffs have been compared with the free/minimal charges of OTT services. Tariffs are market and competition driven, and also depend on the business plans of companies. If OTT players see their earnings giving them adequate scope to keep providing zero or minimal tariff services, they may do so, as there is no government regulation on tariffs. It is noteworthy that the average revenue per user of TSPs are abysmally low, even as they must make large capital investments in spectrum and infrastructure and also pay taxes/levies, while OTT profits usually go abroad and they have no such commitments.
The important question, then, is: Should OTT services operating in India, many of which are majority controlled by foreign players and Big Tech corporations, be allowed to avoid the obligations that TSPs bear whilst providing the same services to Indian citizens and earning huge benefits from this?
We must also ask this: Are Indian TSPs, whose data resides in India and revenues are derived from serving the Indian population, being regulated fairly for providing the same services?
It is time for India to introspect and decide.
S.P. Kochhar is director general, Cellular Operators Association of India (COAI).
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