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Indian Telecos Want Compensation from OTT Players!

The Indian Cellular operators association argued strongly on Tuesday for a license and light-touch regulatory framework for OTT (over-the-top) communication services and for the services to directly reimburse telcos for the traffic they are pouring onto the networks.

Photo by Robert Eklund / Unsplash

The Indian Cellular operators association argued strongly on Tuesday for a license and light-touch regulatory framework for OTT (over-the-top) communication services and for the services to directly reimburse telcos for the traffic they are pouring onto the networks. (1)

Director General of COAI SP Kochhar has stated that the COAI has provided input on the draft telecom bill on the definition of over-the-top (OTT) communication services to eliminate any possible confusion.

Kochhar told reporters at a conference that the government would be informed of other details, such as the precise financial model for OTT players to compensate telecom service providers, as and when the nuances of the framework for light-touch regulation are negotiated.

What is OTT Services?

Apps like WhatsApp, Signal, Google Meet, and Telegram are examples of over-the-top (OTT) communication services.

He also noted that the same notion of income sharing based on data consumption might be applied to other OTTs (of any type) in the future. Since the proposed legislation only addresses communication apps, for the time being, COAI's recommendations are limited to this sector.

For both traditional telephone companies and over-the-top (OTT) providers, COAI insisted, Know Your Customer (KYC) procedures are necessary.

During public consultation on the draft telecom bill, the Confederation of Indian Industry (COAI) and the Broadband India Forum (BIF) engaged in a heated debate about how to handle OTTs in the industry.

Under the auspices of COAI, the telecom industry has been lobbying for the regulation of over-the-top (OTT) communication services. COAI has been pushing the idea of "same service, same rules" to level the playing field between OTT telecommunications firms and traditional telcos.

They have an Opposition Though

However, the Digital Think Tank BIF has warned that regulating OTT businesses might impede the socioeconomic environment and damage innovation. BIF's core members include technology giants such as TCS, Cisco, Amazon, Google, Microsoft, and Meta, which owns Facebook.

The Cellular Operators of India (COAI) recently submitted a note outlining their thoughts on the proposed telecom bill, in which they argued that

"the OTTs providing telecom services similar to telcos such as voice/video calling and messaging within the meaning of telecom Bill... be defined clearly, and the same regulatory and security obligations to be met by them as done by TSPs for providing similar services."
Alternately, it suggested that OTT comms providers pay telcos directly "in a fair and equitable manner by way of a comparable interconnect price (say network access charge) for the real traffic carried by these OTTs on TSPs network, which can be easily monitored."

There are quantifiable metrics to evaluate OTTs' impact on network expenses, including traffic volume, revenue threshold, and user count.

According to research by COAI, major OTTs account for around 56% of all worldwide data traffic on telcos' networks. The group also estimated that if a fee were implemented, OTT companies would pay close to Rs 800 crore into the government coffers.

According to the COAI,

"since the telecom service providers will be receiving the revenue from OTTs as part of their telecom services rendered, they would automatically be paying a license fee to the Government (as part of TSP's Adjusted Gross Revenue) on an incremental basis to the extent of the payments by OTTs to the TSPs."

Reducing the licensing cost from 3% to 1% is another important recommendation by COAI, which include Telecos like Jio, Airtel, and VI, which the group claims will ensure that more funds are accessible to players for the rollout of networks. COAI has submitted a pre-Budget wishlist to the government, which includes a recommendation to reduce levies.

COAI added that disruptions to the internet impact telecoms' ARPU and their customer base.

Telecommunications companies must also incur expenses by establishing non-profit infrastructure in this area. COAI has requested that the government "give serious consideration" to covering the costs of such initiatives. Standard operating procedures should be outlined for such acts, and authorities who initiate or supervise such operations should be held accountable for their consequences.

It also suggested that

"contributions from entities that produce the traffic, that is, OTTs — streaming, gaming, and social media corporations," in addition to budgetary allocation and proceeds from spectrum auctions, should be used to fund the Telecom Development Fund.

Concerning user safety, the

"Bill may include a provision to align the authority of the Telecom Department on this issue with TRAI and may be expanded to cover cyber or financial fraud or unsolicited commercial communications. COAI argues that a unified regulatory agency is necessary.”

To be subject to telecom regulation, the law recommends that all internet phone and messaging apps adhere to the Know Your Customer (KYC) regulations.

If a telecom or internet provider gives up its license, the telecom department has considered offering a return of money paid.