Can OTTs stay away from telcos’ stride?

The Telecommunications Act, 2023 received the Centre’s official green light in December last year, heralding new regulations that will govern the industry for years to come. While the law was necessary to repeal archaic legal frameworks such as the Indian Telegraph Act, of 1888, one modern-era point remains contentious—whether Internet-based services should be governed under the same rules as traditional telecom operators.

Before proceeding, it is important to set the context for this conversation. In today’s world, many of our communications services are powered by Internet-based services, such as Meta’s WhatsApp for direct messaging and calls and Microsoft Teams and Google Meet platforms for enterprise-grade conferencing calls. These apps have collectively been bracketed under over-the-top (OTT) services, which rely on the Internet to deliver their functionality.

Over the years, OTT services have grown exponentially. According to industry estimates, WhatsApp alone has over 480 million users in India, against a backdrop of a 1.45 billion population base and as compared to over 1.07 billion telephone subscribers. This means WhatsApp serves around 33% of the country’s population and 45% of all mobile and telephony users.

WhatsApp has over 480 million users in India, serving nearly 33% of the country’s population and 45% of all mobile and telephony users.

Despite WhatsApp’s popularity, users incur no additional cost to use the service. Instead, they use data provided by telecom operators, who bundle it into their subscription plans; telcos seldom sell subscription plans without bundled data. Without any additional cost per message or call, users have been massively empowered in terms of their communications.

This has left telecom companies displeased.

What is Upsetting the Telcos?

Over the past two years, telecom operators have repeatedly approached the Ministry of Communications, arguing that OTT services enjoy an unfair competitive advantage. The rationale is that OTT applications offer services similar to what telcos offer their customers without paying the infrastructure and compliance costs that telecom operators bear.

These claims have brought to the fore a rising debate around whether online services should be allowed to follow a different subset of regulations or be clubbed into the telcos’ wings—which many stakeholders believe should happen to instate a “level playing field” for all communications services providers in India.

OTT Vs. Telcos: A Complex Issue

This debate, however, is not easy to solve. OTT communication players argue that their apps run on data, and thus, they are insulated from the need to bear infrastructure and related costs that telcos have to bear. This includes setting up cell towers and sites, which are investment-heavy and require consistent maintenance and upgrades.

On this note, telcos have urged the Centre to consider pricing they can levy to companies such as Meta and Microsoft. The Centre, however, has counter-argued that telcos should find better business avenues to look at and grow their value-added services for better revenue. So far, the government’s response has been a firm “no” to introducing differential data pricing for different apps and services, supporting net neutrality despite heavy lobbying from telcos.

OTT communication players argue that their apps run on data, and thus, they are insulated from the need to bear infrastructure and related costs that telcos have to bear.

In August this year, Reliance Jio wrote to the Telecom Regulatory Authority of India, urging them to include OTT services under the access services authorisation list. In the telco’s presentation, Ravi Gandhi, President and Chief Public Policy and Regulatory Officer at Reliance Jio, said: “Is the voice on OTT and voice on normal telecom different? We are using it interchangeably. At the service level, these are the same services for consumers. So, why should these services not be treated similarly, as far as quality of service is concerned?”

The Debate Goes On

Industry stakeholders, however, are not entirely convinced of the argument that telecom operators have provided so far. TV Ramachandran, President of Broadband India Forum (BIF), opposed Jio’s idea.

“We completely support TRAI’s decision and think it was historic to keep OTTs out of the regulation regime since OTTs are used by telcos’ consumers and account for 70-80% of data traffic and revenues. In fact, OTTs should be entitled to a fair revenue share from the telcos,” Ramachandran told Voice&Data. The industry body BIF counts companies like Google and Meta, among others, as its members.

“If the multitude of OTTs had not performed heroic roles in keeping healthcare, education, employment, logistics, and social interaction alive and well throughout the pandemic, our country would have collapsed. The telcos seem to have overlooked that their subscribers generated data traffic from OTTs, for which they have also paid the applicable fixed costs to the relevant operators. Customers might not have chosen to stay on their cell networks if the OTT platforms had not been offered to them,” he said.

On the other hand, telcos maintain that while OTT platforms help increase data usage, they should also bear some of the infrastructure costs. Lt Gen (retd) Dr SP Kochhar, Director-General of Cellular Operators Association of India (COAI), said in a statement, “The fact that OTT communication services were excluded under the new authorisation is a matter of great concern, as this omission perpetuates an uneven competitive landscape—and telcos continue to bear the weight of extensive compliance and security requirements.”

He further highlighted that despite their growing role as alternatives to conventional telecommunications services, OTT services are not subject to regulatory oversight on critical issues like spam prevention. “These issues raise questions about market fairness and regulatory consistency in the rapidly evolving digital communications sector and about national security and customer privacy,” he added.

“Is the voice on OTT and voice on normal telecom different? Why should these services not be treated similarly, as far as quality of service is concerned?”- RAVI GANDHI, President and Chief Public Policy & Regulatory Officer, Reliance Jio

Refuting this stance, BIF’s Ramachandran said it is “completely unrealistic to assume that the OTTs have gatecrashed into the network and are using the data flow. Many fundamental rights, including those related to spectrum, interconnection, and unique identification numbers, are only provided to the telcos, not OTTs.”

At the moment, though, OTT regulations are likely to be left out of telecommunications regulations, and issues such as those raised by COAI’s Kochhar will likely be brought up in a future draft of the recently controversial Broadcasting Services (Regulation) Bill.

By Vernika Awal

feedbackvnd@cybermedia.co.in