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At the moment, India does not have a specific regulatory structure for over-the-top (OTT) platforms. OTT services are, nevertheless, subject to a number of laws and regulations in India, such as, The Information Technology (Intermediaries Guidelines) Rules, 2021, must be followed by OTT service providers, some provisions of the Indian Penal Code apply to OTT services, certain provisions of the Criminal Procedure Code apply to OTT services. Sectoral laws also apply to OTT services.
Although OTT applications actively use telecommunications operators' infrastructure to deliver their services, they do not immediately contribute to their revenue. The services do, however, demand a data subscription, thus this is how the money is made.
The danger OTT services pose to their own services worries a lot of telecom carriers. Numerous over-the-top (OTT) applications being created as substitutes for prevalent "classic" communication forms like SMS. Because of this, operators are losing money even while they are making money from the data bundles. This is because fewer people are using their own core services.
Network providers must change to stay in business in order to handle this impact on voice and messaging income.
Core network services don't offer many of the functionalities seen in OTT applications. We may observe the distinct difference in the needs of customers being met, WhatsApp for example offers features different from those of normal operator SMS that are available on contemporary networks.
For network operators, a significant part of responding to the rise of OTT services has become reactive. However, are there longer-term solutions to the problems that service providers are facing? Will they have to give in to customer pressure, or can they regain control?
Communication over-the-top (OTT) applications like Facebook Messenger, Telegram, and WhatsApp have not been included in the Telecom Regulatory Authority of India's (Trai) most recent recommendations for authorization or licensing regimes.
Trai released a set of comprehensive suggestions to revamp the current telecom service licensing system; the recommendations do not include OTTs.
Consumer demand is ultimately what is driving OTT services, and customers are an essential component to this dynamic.
In the end, network service providers' survival in the market will depend on how flexible they are. In order to profit from the exposure that each platform offers, network operators frequently choose to collaborate with OTT providers. The operator can retain the traffic and reclaim a portion of the profits with this tactic. This strategy can guarantee customer uptake and retention, but it denies the network provider any control over the QoS (Quality of Service) of the OTT application, which could backfire and harm their brand and customers.
Lt. Gen. Dr. S.P. Kochhar, Director General, COAI while speaking on the sidelines of the recently concluded India Mobile Congress 2024, spoke on various issues including regulation of OTT Communication Services, Spectrum Issue and Price reduction, Fair share contribution from LSG's among others. He expressed:
Regulation of OTT Communication Services
COAI appreciates the positive approach from the TRAI Chairperson, Anil Kumar Lahoti, wherein he has called for structured regulation of the OTT communication platforms. His acknowledgement of the regulatory issues which are ailing the law enforcement agencies as well as the traditional telecom service providers. We truly appreciate TRAI’s call for regulators globally to maintain a balance between fostering innovation and ensuring a fair and competitive market, given the cross-border nature of OTT services.
This is especially relevant in the context of spam/online scams or Unsolicited Commercial Communications (UCC) rising highly on these OTT platforms, and with the TSPs complying with the latest and stringent guidelines aimed at curbing the same. It is pertinent to note that a significant volume of commercial traffic is shifting to OTT Communication Services, which are not subject to the same regulatory framework as applicable to TSPs, thereby creating an imbalanced situation for regulation and requisite checks. It is evident that the exponential growth of OTT services and unregulated proliferation of communication services is creating a heady mix of security threats while also creating an uneven level playing field from the regulated and law-abiding service providers.
COAI emphasizes that national security is paramount and calls for all communication service providers, including OTT-based communication services, should adhere to the same Regulations as applicable to TSPs, including the TCCCPR, Quality of Service (QoS) and lawful interception rules/regulations.
Fair Share Contribution from LTGs
COAI was encouraged with the discussions that took place during the sessions held on Day 3 and Day 4 of the India Mobile Congress 2024, on “Balancing Digital Demand: Ensuring Level Play for Telecom Networks” and “Spectrum for 1 trillion Digital Economy USD”, wherein constructive and positive discussions took place in the panel along with LTG (Large Traffic Generator) players. It was encouraging to have the Member (F), DoT, Manish Sinha’s supporting views on the issue being faced due to insufficiency in revenues of Telecom Service Providers from the growth of data services.
Representatives from the LTGs also seemingly agreed to explore possibilities in consumer interest, setting alight hopes for a workable solution to come forth in the future towards the resolution of the Fair Share issue. It was heartening to see the LTG’s panellists agreeing to the TSP’s concept of increased network expenses with further advancements of the network, going forward.
COAI firmly pointed out the need to recognize the fact that for the Telecom industry to flourish and roll out networks sufficiently geared up to meet the demands of collaborative players and future modernization, LTG players need to contribute adequately/proportionately, based on a dynamic model. Presently, when we need to roll out 5G and create a robust future network, the deficit between expenditure and earnings needs to be filled in. Since roughly 70-80% of our network traffic today is OTT traffic, we must come to a unanimous decision of sharing a fair share of the infrastructure cost with the LTGs, which can be regularly reviewed and revised. Going forward, as is clearly visible, tariff increases would not be sufficient to cater for the ever-increasing investment requirement. At the same time, COAI also made it abundantly clear that a supportive framework needs to be provided to nurture startups, MSMEs and small enterprises in the OTT ecosystem and therefore, such smaller players with low usage need not be required to pay the usage charge, thus safeguarding innovation and entrepreneurship.
It may be interesting to note that India is not looking at an isolated case in this regard, as across the world, the demand for fair share is a key issue of contention today, with major economies like the USA, EU, South Korea, Brazil and South Africa exploring solutions to tackle the issue.
Spectrum Issues and Price Reduction
The other way is to reduce the base price of Spectrum and COAI has been asking the Government to look into this. Currently, we pay almost 38% of our earnings in tax – making us the highest taxed sector in India. Being an essential sector which is an enabler for other sectors, telecom should be considered more rationally by the Government, especially looking at its emerging important role in the future for enabling other industries to perform more efficiently.
We also appreciate the views of the Principal Advisor (F & EA), TRAI - D. Manoj, whereby he acknowledged the lack of spectrum with the TSPs in India, especially with the humongous number of connections we have compared to USA, as well as the huge debt faced by the TSPs in India today (> Rs. 6,00,000 crores) whereby they do not even get bank interest for their investments. COAI further appreciated his open views regarding the pricing of spectrum and hopes for reconsideration in the same based on the manifold use of 5G applications across all other sectors as well.