COAI releases statement on misleading views in media on OTTs

Communication OTTs do not contribute to the exchequer in the form of taxes, levies, license fee, etc. as they are not presently regulated by the Ministry of Communications, although their services are similar to that provided by the telcos. Hence, the definition of OTT Communication services need to be clearly incorporated in the Telecommunication Act itself, added COAI in its statement.

There are misleading views being propagated in the media by Big Tech advocates basis the legitimate demand of the TSPs seeking a ‘usage charge’ from OTTs that ride on their networks to provide competitive services like voice/video calling and messaging to the same consumers, according to Cellular Operations Association of India (COAI).

The statement further read that, it is being said that the revenues earned by the infrastructure provider should also be shared with the entity using it in the same proportion. This is as ludicrous a suggestion as can be imagined. By a very simple analogy, telecom networks are akin to roadways whereon the services for public consumption – such as public transport vehicles like buses operate, similar to the OTT service providers. The passengers or users of the service pay for ride tickets on roads or similarly for data packs to avail digital services. Notably, the vehicles pay toll/road taxes for using the roadways which contributes towards its maintenance and upkeeping. The outrageous suggestion of roads paying to the vehicles for getting passengers on their network is unheard of. OTTs though, are not paying anything to the TSPs presently for their network costs.

Besides cannibalizing the services of the telecom operators, OTTs consume humongous bandwidth, which stresses the telcos’ networks and necessitates their continuous and speedy up-gradation and development. This is in addition to the fact that TSPs’ networks are already overstretched due to the growing volume of mobile and fixed broadband traffic, and also need to be expanded continuously to cover the connectivity requirements across the country and cope up with the exponential usage growth. Needless to mention, this expansion also involves deployment of latest technologies for better customer experience. In fact, the quality of service cannot be downgraded by the TSPs as the same is regulated by TRAI to ensure good services to the customers unlike OTTs, who may upgrade/downgrade their services since they have no QoS obligations.

OTT players are ‘free riding’ on the TSPs’ Networks while using the TSPs’ consumer base for monetizing their services and earning massive profits/benefits. TSPs have contributed an amount of approx. Rs. 17,627 Cr. towards License Fee and Rs. 7,073 Cr. towards SUC for the FY 2021-22 alone. This is besides the mammoth amounts invested towards spectrum acquisition and network infrastructure. OTTs on the other hand, have nil or very minuscule contributions to the Government despite their robust revenues. Communication OTTs do not contribute to the exchequer in the form of taxes, levies, license fee, etc. as they are not presently regulated by the Ministry of Communications, although their services are similar to that provided by the telcos. Hence, the definition of OTT Communication services need to be clearly incorporated in the Telecommunication Act itself, added COAI in its statement.

It is also being argued that OTTs invest substantially on data centers, undersea cables, content hosting centers, content delivery networks, etc., which is greater than the TSPs’ network costs and investments. This is another flawed comparison, and it is misdirecting to suggest that TSPs do not invest to the same extent. In fact, apart from the telecom network (on land), Indian TSPs too have invested heavily in laying of Undersea Cables for setting up their international network connectivity.

A dated report from the European Telecom Regulator BEREC is being quoted selectively, expressing concern that direct compensation from content and applications like OTTs could endanger the principle of net neutrality. In actuality, TSPs can neither provide bandwidth boost to OTTs, nor throttle/block their services by choice to save bandwidth, owing to the conditions inscribed in their license. The telcos demand for usage charge is proposed to be uniformly applied based on actual usage of the network by the OTTs.

Keeping in mind the need to nurture startups and MSMEs in the OTT ecosystem, COAI has also suggested that such players with low usage need not be required to pay the usage charge, so as to aid their growth. So, innovation and entrepreneurship would not get affected.

The COAI proposal will meet the objectives of adequate funding for creating robust telecom infrastructure, increased revenue for the exchequer and continued innovation as only large OTTs generating high traffic would be required to contribute via usage charge, without impacting small OTTs and retail users.

The fact that economies across the world are advocating the need for OTTs (majorly owned by Global Tech giants) to contribute towards digital infrastructure development cannot be undermined. India has set global precedents in taking forward-looking and prudent decisions keeping in mind the well-being of both consumers and the industry in the long-term. As rapid technological evolution may pose similar policy challenges going forward, appropriate provisions must be made to ensure that the policy, regulatory and security mandates of the nation do not get compromised or become discriminatory in any manner.