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Indian telcos want OTTs to contribute to network costsIndian telcos want OTTs to contribute to network costs

Conflict between the service providers and OTT players has intensified with the telcos asking the regulator to bring OTT companies under unified licensing regime.

Gagandeep Kaur

September 8, 2023

4 Min Read
Indian telcos want OTTs to contribute to network costs

The conflict between Indian private service providers and over-the-top (OTT) companies is again in the news with the telcos asking the Telecom Regulatory Authority of India (TRAI) to ensure that OTTs contribute towards the costs of network deployment, management and maintenance.

The three private telcos – Reliance Jio, Bharti Airtel and Vodafone Idea – are for once on the same page in asking TRAI to implement the principles of "Same Service Same Rules" and to regulate the OTT communications providers on par with the traditional telecom service providers (TSPs). The comments were in response to a consultation paper on the regulatory mechanism for OTT communication services and selective banning of OTT services, issued by TRAI earlier this year.

"Presently only telecom operators are bearing the cost of the necessary investments in infrastructure, in an increasing unsustainable market, while the other side of the market, the large traffic generators (LTGs) or content providers, are benefiting from the network, without contributing for the service received," says Airtel's response to the consultation paper.

Figure 1:

Indian telcos are asking for OTTs to be subject to same rules as them.<br/><br/> (Source: Per Bengston/Alamy Stock Photo)<br/><br/>

Indian telcos are asking for OTTs to be subject to same rules as them.

(Source: Per Bengston/Alamy Stock Photo)

"As a result, many TSPs now have returns on investment below their cost of capital. And due to bargaining asymmetry and market power, TSPs cannot get large traffic originators to pay for the service. Under these conditions, the telecom sector faces increasing challenges in maintaining the pace of investment and the sustainability of the digital ecosystem," it adds.

The service providers argue that OTT services offering the same voice and data services as TSPs should be brought under the purview of the Unified License (UL), which is used to govern them. "Such services [OTT companies offering the same services as telcos] should be governed by the same set of rules irrespective of whether provided by an operator on its own network or through the internet," says Jio's response.

Jio also suggests that "contribution of OTTs to network costs should be mutually negotiated and can be based on assessable criteria like volume of traffic, turnover threshold, number of users and other criteria."

The GSMA says data consumption in India has continued to rise exponentially in the last few years and the service providers are having to invest to grow the network capacity and to build a 5G network. In the meantime, large traffic generators are able to grow their revenue without investing in the network.

Of course, this isn't an exclusively Indian issue; telcos in other countries including Deutsche Telekom in Germany, Telefonica in Spain and UK-based Vodafone Group, have raised similar concerns in the past.

The other side of the story

On the other hand, Broadband India Forum (BIF), which has several OTT players as members says, "TSPs provide these services through a license granted by the Government which confers to them an exclusive right to acquire and exploit scarce natural resources like telecommunication spectrum, the right to obtain telecom numbering resources, the right to interconnect with PSTN, and the right of way to set up infrastructure, among others.

"However, OTT players neither have these privileges listed above, nor own the network or control the access to telecom infrastructure. Therefore, the question of maintaining a 'level playing' field simply does not arise," adds BIF. Several OTT players, including Netflix, Meta, Amazon and Google are members of BIF.

While telcos have argued that OTTs should be regulated according to the same rules as they are, the OTT players say that they are regulated under the IT Act and therefore don't require any additional regulation.

Medianama, an online portal on technology policy, meanwhile argues service providers "conveniently ignore" that the "Internet is a network of networks and every user pays for Internet access, whether they are a business or not."

Clearly, both sides argue their case passionately and the debate between the OTTs and the telcos is unlikely to be resolved any time soon.

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— Gagandeep Kaur, Contributing Editor, special to Light Reading

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About the Author(s)

Gagandeep Kaur

Contributing Editor

With more than a decade of experience, Gagandeep Kaur Sodhi has worked for the most prominent Indian communications industry publications including Dataquest, Business Standard, The Times of India, and Voice&Data, as well as for Light Reading. Delhi-based Kaur, who has knowledge of and covers a broad range of telecom industry developments, regularly interacts with the senior management of companies in India's telecom sector and has been directly responsible for delegate and speaker acquisition for prominent events such as Mobile Broadband Summit, 4G World India, and Next Generation Packet Transport Network.

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