Since 2015, telcos have been arguing that over-the-top (OTT) services, especially apps like WhatsApp, Telegram, etc, must be regulated, citing ‘same service, same rules’. They also want to be allowed to charge OTTs for riding on their infrastructure. OTTs say their services are not comparable. Jatin Grover takes a look at the debate
OTT regulation
In September last year, the Centre announced the draft Indian Telecommunications Bill, 2022, to replace the Indian Telegraph Act, 1885, the Wireless Telegraphy Act, 1933, and the Telegraph Wires (Unlawful Possession) Act, 1950. A key highlight of the Bill was the inclusion of OTTs in the definition of telecom services — the Centre proposed to regulate OTT communication apps through the Bill. The Centre has clarified that these would be light-touch regulations so that they don’t hamper innovation and introduce a big regulatory burden on OTTs.
The telecom department (DoT) had sought recommendations from the Telecom Regulatory Authority of India (Trai) on a regulatory framework for OTTs, and Trai is expected to come out with a consultation paper soon.
What the telcos are saying
Telcos say that OTT apps provide services similar to theirs, without being subject to the rules on licensing, consumer protection, rollout obligations, inter-connection, quality, etc. According to the Cellular Operators Association of India (COAI), telcos only want a light-touch regulation for OTT communication apps, which includes compensation, and compliance with law/security enforcement.
COAI said that telcos create the network and pay for it, internet service providers buy bandwidth from that network and provide services to the consumers, who pay for the services. OTTs ride on this network for free, give services to users and profit off the existing infrastructure. Besides compensation to telcos, COAI also wants OTTs, gaming, and social media firms to also contribute to the Telecommunication Development Fund and invest in creation of digital infrastructure.
What OTTs say
OTT communication apps say they are different from telcos and are no substitutes for them. Telecom networks and OTT apps operate in different layers, OTTs are dependent on telcos and help them enhance their revenue through increase in data consumption, through innovative features compared with traditional voice and calls, and therefore can not be treated at par with telcos.
Why are OTTs concerned
Through their representatives, OTTs have urged the Centre to keep them out of the ambit of the draft Bill. According to the Broadband India Forum, OTT regulation will give the government a lot of leverage on deciding on the way these apps are built/developed, and how they operate.
The Internet & Mobile Association of India also said that licensing provisions will present an existential threat to OTT startups through compliance costs even in the pre-revenue stage.
What is the way forward? How does India compare with other nations?
Currently, Trai is working on the consultation process and carrying out comparative studies on how OTTs are regulated in other countries. One of the models being discussed is a revenue-sharing mechanism between OTTs (including both communication and entertainment apps) and telcos, according to sources. Video consumption comprises 70% of the overall traffic flow on telecom networks, and this would grow further with 5G services. Similarly, telcos would have to increase their spends on carriage capacity and backhaul networks, which entails investments.
While OTT communication services have been governed under the telecom laws in many countries, in some, they are not subject to the same rules as telcos and are only subject to light-touch regulations. In countries such as the US, the UK, Brazil, and South Africa, OTTs are not licensed and are not subject to any regulation. Only in Singapore and the European Union, OTT apps have been brought under regulations, and that too, only light-touch regulations and minimum ‘quality of service’ rules, according to a report by the Esya Centre, a New Delhi-based policy think tank.