The Telecom Regulatory Authority of India (Trai) is trying to work out some form of a revenue-sharing mechanism between intermediaries (social media) like WhatsApp, Facebook, Twitter, plus over-the-top players like Netflix, Prime Video, Disney+Hotstar and the telecom service providers. One of the options being considered is that intermediaries and OTTs pay telcos a carriage charge.
As is known, the department of telecommunications has mandated Trai to explore the possibilities of bringing OTTs under a regulatory regime for a level-playing field between them and the telecom operators. The draft Telecom Bill has also talked about bringing OTTs under regulation.
The exact modalities of the revenue share mechanism will be finalised after telecom regulator comes out with a consultation paper on the subject.
The rationale behind this is that data, particularly video, comprises 70% of the overall traffic flow on telecom networks, and this would grow further with 5G services. It is felt that with such growth of data/video, telcos have to keep on increasing their carriage capacity and backhaul networks, which entails investments. Therefore, they should be compensated for the same.
However, the problem with this line is that if 70% of the traffic flow on the networks of telcos is coming from OTTs, then bulk of the revenue to them is also coming through OTTs, then why should they be asked to pay any form of access charge.
Having heard both the sides, Trai officials feel that for equitable growth of both the sides, some revenue share mechanism should be devised.
The concept of carriage charge is currently applicable in the telecom sector as part interconnection usage charge (IUC). Termination charge, a levy paid by the originating network to the operator on whose network the call terminates, was discontinued only from January 2021, when the traffic between the three operators more or less became even. Now this levy has moved to bill and keep principle. But another component of interconnection – carriage charge – still applies. Here operators pay a charge to the national long-distance carrier for carrying calls from one circle to another.
Similarly, operators pay each other for points of interconnect, which connects calls between two operators. As subscriber/call traffic increases, operators need more points of interconnect from each other or else there would be high incidence of call drops.
Sources said while the interconnect charge regime for telecom operators is well designed, it needs to be seen whether a similar kind of mechanism with some tweaks can be formulated between OTTs and telcos. “Before the Trai comes out with its consultation paper, it will study global trends and come out with a proposed mechanism,” sources said.
Sources said that if an interconnect regime is fixed, it’s quite possible that OTTs and telcos come around some revenue-sharing mechanism in lieu of paying the charge. If this happens it would be very similar to the bill and keep regime of termination charge.