A department of telecommunications-appointed committee on net neutrality has recommended that apps of over-the-top (OTT) players like Skype, WhatsApp and Viber can continue to be used for making international calls or for messaging, but they will have to be licensed when they are used for making either local or national long distance (NLD) calls. What is not clear is how this partial segregation is to be done. The report was submitted to telecom minister Ravi Shankar Prasad last month.
Telcos make about 8% of their revenues from international calls and around 18% and 56% from NLD and local calls, respectively.
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If this comes as partial relief to leading telcos that are facing the possibility of OTTs cutting into their lucrative voice revenues — while 1 minute of voice calls gives telcos 40-50 paise of revenue, a 1-minute VoIP call results in just 4 paise revenue — they have been hit when it comes to data packages such as Airtel Zero or Internet.org since the committee has said this violates the principle of net neutrality.
The report, however, is purely recommendatory. A final decision will have to wait for a Telecom Regulatory Authority of India recommendation, after which the government will debate the matter.
The issue had, however, become contentious since Trai had come out with a consultation paper in March asking, among other things, whether OTTs needed to be brought under the ambit of licensing conditions. A viral social media campaign also ensured Bharti Airtel withdrew a package charging differential rates — three times the normal rate for regular data packages — for VoIP services. While the telco has not withdrawn its Airtel Zero package, a high-pitched campaign saw the country’s largest e-commerce player Flipkart desisting from joining it.
“Specific OTT communication services dealing with messaging should not be interfered with through regulatory instruments,” the report has said, while maintaining that status quo should be maintained in this regard.
On VoIP-based communication services, the report says, “In case of domestic calls (local and national), communication services by TSPs (telecom service providers) and OTT communication services may be treated similarly from a regulatory angle for the present. The nature of regulatory similarity, the calibration of regulatory response and its phasing can be appropriately determined after public consultations and Trai’s recommendations to this effect.”
“In contrast to OTT communication services, there’s no case for prescribing regulatory structure for OTT application services,” the committee has concluded.
The committee has argued its case for treating messaging application services and communication services differently. “In case of VoIP OTT communication services, there exists a 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 by service provision,” the report noted.
Taking a hard stance against allowing any sponsored data like the one offered by Bharti Airtel, the committee has said, “Collaboration between TSPs and content providers that enable gatekeeping role to be played by any entity should be actively discouraged.”
Proponents of OTT operations argue that if operators lose out on voice revenue, they still earn data revenue through services like WhatsApp or Viber. However, the realisation for a mobile operator is not similar from voice calls and data services. For instance, a minute of voice usage on mobile phone makes an operator realise around 50 paise. In the case of a similar duration of VoIP call there’s a realisation of only 4 paise.
Mobile operators maintain that if they are not offered a level playing field with OTTs, their businesses would be viable only by raising data prices by up to six times. Such high rates, they say, would become unaffordable for a large number of people, denying them access to the internet. They have been urging for applying the principle of same service, same rules to bring voice calls and VoIP under the same regulatory regime.
On average, revenues earned through data by mobile operators is around 25 paise per MB of data and the average size of a one-minute VoIP call is around 150 KB. The average holding time in call is of two minutes whereas in the case of VoIP calls it is around 12 minutes. It is this difference between prices of voice calls and VoIP calls that has prompted the proliferation and success of communication OTT apps. The low cost of usage incentivises the user to have longer conversations in VoIP calls compared with traditional telecom calls, which further congests networks.