OTT services bypass the existing licensing and regulatory regime creating a non-level playing field between TSPs and OTT providers
Currently, services like WhatsApp,Viber,etc (OTT Services) in India are not under the ambit of the Telegraph Act . These services are not subjected to any security and monitoring conditions, there is no requirement of any registration or licencing with the telecom authorities, no obligation to provide emergency services, there is no obligation to pay any licence fee as well.
In contrast, licenced operators, even when they provide internet telephony services are subjected to security and monitoring conditions and are required to pay licence fee on their revenues. According to the Cellular Operators Association of India (COAI), voice services provided by OTT players substitute the PSTN/internet telephony services offered by licensed TSPs. In the present regime, internet telephony is a licensed service permitted only under the UAS/ISP or Unified License granted under Section 4 of the Telegraph Act, 1885. Hence, according to COAI, companies offering OTT voice services, without holding a telecom license in India, circumvent Indian telecom licensing provisions and provide services that are otherwise permitted only under a telecom license.
Therefore, what can possibly be concluded is that in the case of VoIP OTT communication services, there exists a regulatory arbitrage wherein such services also bypass the existing licensing and regulatory regime creating a non-level playing field between TSPs and OTT providers both competing for the same service provision.
Unfortunately, our licensor which is the department of telecom (DoT) and the regulator, Telecom Regulatory Authority of India (Trai), are yet to take a final decision whether to bring these services into the ambit of licenced telecom services.
During the regime of Rahul Khullar as chairman of Trai, a detailed consultation paper in March 2015 seeking comments on the issue of regulatory framework for OTT services was issued . This paper inter alia raised an important question, whether OTT players offering communication services (voice, messaging and video call services) through applications (resident either in the country or outside) be brought under the licensing regime?
Unfortunately, the process of consultation could not be completed because his term came to an end. The subsequent leadership has floated several papers like differential data pricing, free data offering, IUC review,etc. but has not taken any concrete action to conclude the issue of coverage of OTT serrvices in the licencing regime. One reason which may be put forward could be that there is no reference from the DoT. However, we must not forget that there is a provision in the Trai Act for suo moto recommendation as well. Seemingly, the consultation paper which was floated by Rahul Khullar was also a suo moto action and not in response to any reference from DoT.
While the department is very active in ensuring strict implementation of security and monitoring guidelines on existing operators, it has not taken steps to make these conditions applicable to the non-licenced OTT service providers. The obvious reason being that they do not fall in the ambit of the licencing regime.
But, there was a PIL filed in the Delhi High Court on the issue of security threat from OTT services and DoT was advised to look into the matter. The court while disposing off that PIL passed the following order “In terms of liberty granted by us in W.P.(C) No.1918/2016, it is stated that the petitioner made a representation dated 31.03.2016 which is filed along with the present petition as Annexure P-4. Since the said representation is yet to be considered, we deem it appropriate to dispose of the writ petition with a direction to the respondent Nos.1 and 2 to consider the petitioner’s representation dated 31.03.2016 and pass an appropriate order regarding the issues raised by the petitioner. Such order be passed within eight weeks from today.” While the order was dated May 23, however, unfortunately, no effective steps seem to have been taken so far .
Moreover, DoT had also appointed a high level committee on net neutrality. This committee in their recommendation had suggested that “ In case of OTT VoIP international calling services, a liberal approach may be adopted. However, in case of domestic calls (local and national), communication services by TSPs and OTT communication services may be treated similarly from a regulatory angle for the present. The nature of regulation may be decided after public consultations and Trai’s recommendations to this effect.” Here again the issue has not moved forward .
Imagine a case where the OTT services were subjected to payment of termination charge for voice calls as well as for messages, as is the case with licensed operators, in that case the termination charge would have been subjected to a licence fee payment in the hands of the recipient operator. Neither the DoT nor the Trai has ever calculated the approximate amount of loss to the exchequer on this account, apart from the security threats which loom large. Perhaps this additional revenue stream would have helped the government to reduce the licence fee on existing operators, who in turn would have passed on the benefit to customers through reduction in tariff.
On the other hand there are arguments which favour no restrictions on OTT services and argue that OTT application services have been traditionally available in the market for some time and such services enhance consumer welfare and increase productivity. Therefore, such services should be actively encouraged and any impediments in expansion and growth of OTT application services should be removed.
There is also an argument that public policy response requires that regulatory arbitrage does not dictate winners and losers in a competitive market for service provision.
It is further argued that the content/ application and carriage services are two separate services in the context of internet, and OTT deals only with one part of these services, they cannot be considered as providing same service.
The arguments both for and against could be endless and whole lot of international practices may be referred to support both sides
India needs to deal with the issue in keeping with the telecom policy objectives, national agenda of Digital India and to take care of the security concerns. Ignoring the issue is not going to solve any problem. DoT and Trai should take steps to come out with a final word on these services to decide for once and all the applicability or non-applicability of the Telegraph Act and regulatory regime on such services. Once that is done we would have treated the disease and not only the symptoms.
The author is founder & CEO,Tathya Consulting