India may regulate OTT platforms

India's telecom regulator is likely to come up with recommendations next month about the regulation of web companies such as WhatsApp, Facebook and Skype.

The new rules will probably be aimed mainly at voice and video calling services that compete directly with traditional offerings from communication service providers. If the web platforms are regulated, their providers would have to acquire a telecom license from Indian officials -- just like telecom service providers -- to offer services.

The take-up of web services in India has been rocketing. With more than 300 million subscribers, WhatsApp easily has the largest subscriber base in the country. But Facebook Messenger and Skype are also growing fast. The customer base looks set to get even bigger as telcos expand mobile data networks in remote parts of the country that have previously lacked Internet access.

Revenues from web services in India are forecast to hit $5 billion in 2023, according to Boston Consulting Group (BCG), as more people make use of mobile Internet services.

But regulation has become a sore point for India's telcos. While mobile operators must pay license fees, spectrum usage charges, service taxes and other fees, an unlicensed Internet company can provide similar services without paying anything.

The growing use of these services is hurting the telcos, they say, while grumbling about the uneven regulatory environment. Last year, regulatory authorities issued a consultation paper on whether Internet companies should be regulated or not. One argument in favor of more regulation is that Internet platforms can be used by unlawful and terrorist elements to circumvent the normal communications network.

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While there is little doubt that web services affect the telcos' bottom line, they have also fueled interest in mobile data subscriptions. The issue for telcos is that data charges in India are among the lowest in the world. At the same time, operators are under pressure to invest in network upgrades and make improvements to quality of service.

But any initiative to curb the use of web services in India would probably meet with protests. Any such rules could hinder innovation in a sector that has given birth to several Indian startups. Moreover, if web companies are forced to pay charges to the government, they might pass costs on to subscribers.

India is not the only country to come up with regulations to control and monitor web players. The European Union last year recommended that tech giants like Google and Facebook face a new tax of 3% of their turnover (generated in the region). In Germany, there were moves to regulate Google just like a telco, with a German court previously ruling that Google's email service should be treated just like a telecom company.

— Gagandeep Kaur, contributing editor, special to Light Reading