As many as 129 startup founders including Paytm’s Vijay Shekhar Sharma, Zerodha’s Nithin Kamath, PhonePe’s Sameer Nigam, Razorpay’s Harshil Mathur, Toppr’s Zishaan Hayath, on Tuesday urged the Telecom Regulatory Authority of India (Trai) not to accept any demand by telcos to charge network fees from over-the-top (OTT) operators.
They also opposed any sort of revenue sharing mechanism between OTTs and telecom operators, saying such a move would affect principles of net neutrality outlined by the government in 2016. Further, such a move would also lead to over-regulation of Internet services.
“In the context of the recent demands of the telecom service providers (TSPs) and its implications for the economy, we urge Trai to further strengthen the principles outlined in the 2016 regulations, rather than dilute it,” the startup founders said in a letter to Trai chairman PD Vaghela.
Net neutrality means open, equal internet for everyone, regardless of device, application or platform used and content consumed.
The letter by the startup founders is in response to the demand by telecom operators, Bharti Airtel, Reliance Jio and Vodafone Idea, and their association — Cellular Operators Association of India (COAI) – to charge OTTs a network usage fee based on traffic and number of users. The basis for this demand is that since the services offered by OTTs are similar to those provides by telcos, the principle of same service, same rules should be applicable.
Startups have disputed this argument stating that the services are not similar. They have pointed out that TSPs have the power to tilt the level playing field to favour one website/application/service or another. This will inevitably lead to discrimination, non-level playing field, entry barriers, and increased compliance burden. They have said that the suggested methods of categorising an application or services as large traffic generators and deciding the fair and proportionate share/contribution are arbitrary and lack clarity.
The startups have also argued that the argument by telcos that Internet services are direct substitutes of traditional services and are thus stealing their revenues and profits, is misleading.
Distinguishing between the two, the startup founders have said that Internet services which consumers demand are delivered via a complex network of networks called the Internet, and not value added services which are delivered by telecom operators.
Several consumer organisations have also expressed their concern to Trai over any kind of cost-sharing framework between OTT players and telcos, as the same will lead to the app providers passing on the burden to consumers, which in a way will increase the digital divide.
Among other concerns, the startup founders have said that telecom licensing requirements, if extended to Internet applications and services, may impose onerous obligations on Internet services, including costly legal compliance, which may harm the startup ecosystem.
The startups have said that Trai had in February, 2016, issued the Prohibition of Discriminatory Tariffs for Data Services Regulations, by which it restricted the charging discriminatory prices to consumers based on the content. In the spirit of this order, the regulator must caution against any demand to charge network fees from large traffic generators and prevent TSPs from yet again trying to engage in such rent-seeking behaviour, and not impose telecommunications licensing frameworks on Internet companies.