The licensing provisions for over-the-top (OTT) service providers in the draft telecom Bill will present an existential threat to the startup ecosystem in the country, according to the Internet & Mobile Association of India (IAMAI).
The industry association, which represents startups and other technology companies, said regulation of OTTs will create an entry barrier for startups in the sector. Further, proposal for a revenue-sharing mechanism between OTTs and telcos would also leave the startup ecosystem vulnerable to compliance costs even when they may be pre-revenue, IAMAI said.
“Not only would this mean that aspiring Indian startups which are still evolving and developing their business and monetisation models will risk massive compliance costs in their infancy, but also would mean that foreign investors bullish on Indian startups may experience a chilling effect owing to the drastic policy uncertainty,” IAMAI said in a letter to the department of telecommunications.
According to the association, the recently concluded consultation on the draft telecom Bill betrays either a “wilful misinterpretation or a fundamental lack of understanding” of how the digital economy works.
The comments from IAMAI come after the Cellular Operators Association of India (COAI) proposed a framework for OTT communication apps such as WhatsApp, Signal, and Telegram to compensate telcos for using their network to provide services. “Contribution of OTTs to network costs can be based on assessable criteria like volume of traffic, turnover threshold, number of users, etc,” COAI had said in its comments on the draft telecom Bill.
In contrast, IAMAI has urged the government to review the scope of telecommunication services and limit it to companies which control telecom spectrum. “The time-tested distinction between telecom spectrum-controlling entities and spectrum-using companies should be maintained as it has been the basis that has allowed innovation and deeper penetration of the internet in India,” IAMAI said.
“Certain policy experts continue to propagate fantasies about equitable contributions from stakeholders within the OTT layer, which would only seem to strengthen the gatekeeping abilities of the owners of the infrastructural layer on which OTT services operate,” the association said.
Earlier, the Broadband India Forum (BIF) that represents big tech companies had also proposed taking OTT players out of the ambit of telecommunication services. According to the forum, regulation of OTT apps would give the government exclusive rights and privileges to decide, build, develop, and operate the apps.
“Such a situation would be grossly ambiguous and highly impractical and lead to a collapse of the entire app ecosystem and thereby impacting innovation and growth of the economy,” BIF had said in its comments on the draft Bill.