Should mobile VoIP services be charged extra?

While the rising usage of Voice over Internet Protocol services erodes telcos’ revenue from voice services, their popularity means increased revenue from data services

Airtel has hastily retreated from an earlier decision to charge extra for Voice over Internet Protocol (VoIP) calls being made using applications such as Skype, Viber, etc. This is good news for those who rely on these services, especially to make long distance calls, which would otherwise be expensive. It will prevent a rather brazen challenge to network neutrality, which requires that network operators do not discriminate between different types of internet traffic. But the original decision and its hurried withdrawal highlight serious inconsistencies in the telecom licensing provisions that will hurt the growth of data services in India.

A key problem with licensing rules is that service providers pay vastly different fees to provide essentially similar services. Conventional telephony is functionally no different from VoIP. This applies even more now as VoIP can be used on mobile handsets unlike earlier when you needed a PC or a laptop. The point is that mobile operators pay roughly 30% of their revenues as levies and must comply with quite onerous provisions relating service roll-out as well as security, accounting, etc. But VoIP services typically involve little beyond downloading an ‘app’ from the internet and most are de facto free. It is understandable that mobile operators resent VoIP services eating into their revenues and consider them unfair competition. This gives the companies an excuse to impose higher charges on users of VoIP services.

Higher tariffs do not breach Trai rules since it no longer lays down end-user tariffs. There is ample justification for this forbearance since markets are competitive. But its parent legislation gives Trai virtually complete jurisdiction on tariffs. It cannot underplay new VoIP tariffs, as its chairman seemed to be doing, by claiming higher charges for VoIP calls are ‘legal’.

Trai has a responsibility to work with the government to remove such excuses for telecom operators to hike data charges. India lags behind in data services despite being a leader in wireless telephony. Making it more difficult or expensive to enjoy popular and valuable VoIP services hurts the already slow growth of data services.

It is arguably counterproductive and short-sighted of Airtel to have attempted to make VoIP expensive. All mobile operators have an interest in growth of data services since voice revenues, however high they might be currently, cannot be expected to continue rising indefinitely. After all, there is a limit to how much humans can talk! The companies must, therefore, promote the usage of data services, not stifling them. Expanding the usage of VoIP services, despite the possible loss of revenues in the short term, has an upside. For instance, data use, which often starts with ‘functional’ or cost-saving services such as VoIP, mostly expands into internet-based data services, especially entertainment. The latter contributes a large part of data revenues internationally.

Trai and the government cannot ignore that Indian companies are considering unorthodox and retrograde steps to protect revenues. Given the importance of growing data markets, a logical approach is to reduce the burden of fees paid by network operators and bar them from charging higher for specific services. Besides VoIP telephone services, these Over the Top (OTT) services include WhatsApp, Google, Facebook, etc, which users can currently enjoy without paying for them separately or at a higher price.

Reducing the burden of fees on network operators is a logical though not easy decision. It could cost the government thousands of crores of rupees in lost fees and levies. There is urgent need for an alternate approach to charging fees from network operators. Most mature regulatory regimes have abandoned licence fees and charge only for access to and use of scarce resources such as spectrum. Discontinuing licence fees will remove the excuse to charge higher rates for OTT services that are an important catalyst for growth of data services—a key priority for telecom regulation and policy.

By Mahesh Uppal
The author is a telecom consultant

The recent controversy—on the increase in tariff on net neutrality sparked by one of the top telecom service providers charging more for voice calls on Skype, Viber or similar VoIP services—has rightly kicked up a storm as it infringes on one of the rights of the consumer: right to choice.

As consumers, we have been enshrined legally in India under the provisions of the Consumer Protection Act 1986 to be provided with the ‘right to choose’ and cannot be subject to unfair practices by promoting restrictive trade practices and compelling the consumers to opt out of existing services, which are competitive and enable consumers to access quality service at the most affordable price.

Such cases happen only due to the anti-consumer attitude of regulators by not responding promptly to such controversies and delaying in taking a position to resolve the dispute. The most dominating cluster of the industry always tries to prevail over emerging players to ensure market dominance and curb healthy competition.

The National Telecom Policy (NTP) 2012 is designed to ensure that India plays an effective role and transforms the socio-economic scenario through accelerated equitable and inclusive economic growth by laying special emphasis on providing affordable and quality telecommunication services in rural and remote areas. Thrust of this policy is to underscore the imperative that sustained adoption of technology would offer viable options in overcoming developmental challenges in education, health, employment generation, financial inclusion and more.

It goes on to say that telecommunications is no longer limited to voice. The evolution from analogue to digital technology has facilitated the conversion of voice, data and video to the digital form. These are now being rendered through single networks bringing about a convergence in networks, services and also devices. It is imperative to move towards convergence between telecom, broadcast and IT services, networks, platforms, technologies and overcome the existing segregation of licensing, registration and regulatory mechanisms in these areas to enhance affordability, increase access and delivery of multiple services and reduce cost. It will be a key enabler of equitable and inclusive growth.

Our policy-makers were clear about encouraging an investor-friendly environment in the telecom sector. The availability of affordable and effective communications for the citizens is at the core of the vision and goal of NTP. One does not need a licence to provide quality service and to transform the country into an empowered and inclusive knowledge-based society, using telecommunications as a platform.

As the Modi government is going to celebrate Good Governance Day on December 25 every year, it no longer can give excuses on the existing significant digital divide in the country. On one hand, expansion of telecommunications in the rural areas has been slower than in urban areas, with the former accounting for only 34% of the total connections. On the other, the ability of the poorer sections of the society, both in rural and urban areas, to benefit from technology needs to be enhanced. The government must support platform-neutral services in e-governance and m-governance in key social sectors such as health, education and agriculture that are at present limited to a few organisations in isolated pockets. This will expand the footprint of these services and foster an atmosphere of participative democracy delivery model.

Trai cannot be a mute spectator and churn out consultation papers and long-drawn policy interventions, instead it needs to become pro-consumer by encouraging an investor-friendly environment. In a recent statement, the Trai chairman doubted if the government will be able to meet the time-line to implement the Digital India initiative, with broadband penetration target of 175 million customers by 2015 and 600 million broadband customers by 2019. It is most unfortunate that the Indian consumer has to live with such negative attitude from regulators.

By Bejon Misra
The author is founder, Consumer Online Foundation

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express Telegram Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.