OTT services should not have an unfair edge over Indian telcos

Source: The post is based on the article “OTT services should not have an unfair edge over Indian telcos” published in the Livemint on 17th November.

Syllabus: GS 3 – Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

Relevance: About the Draft Telecom Bill and status of (telecom service providers) TSPs and OTTs (over-the-top).

News: The proposed regulation of over-the-top (OTT) communication services in India’s Draft Telecom Bill has stirred up an intense debate.

About the draft Indian Telecommunication Bill

What are the concerns associated with the draft Indian Telecommunication Bill?

Why TSPs and OTTs should be seen as one entity?

This is because a) All digital technology-enabled voice communication today requires applications of data, b) The external environment and associated risks are the same for both the telecom service providers (TSPs) and OTTs. So, they need to be governed by the same statutory agencies/bodies which oversee security aspects.

Findings of Telecom Regulatory Authority of India (TRAI): TRAI’s consultation paper on ‘Regulatory Framework for Over-the-Top (OTT) Services’ said that a) The technological differences between OTTs and TSPs have led to a situation where both TSPs and OTT service providers become capable of providing similar services to customers, b) The communication OTT players are actually competing with traditional TSPs. But the TSPs bear the costs for the infrastructure, and spectrum management and also pay licence fees for use of spectrum.

Department of Telecom committee view on OTT platforms: [Voice over Internet Protocol] OTT communication services bypass the existing licensing and regulatory regime. Thus creating a non-level playing field between TSPs and OTT providers despite both competing for the same services.

So, Each has its own value and should be looked at through similar lenses. They must contribute similarly too.

Why TSPs are in a disadvantageous position compared to OTTs?

1) OTT players can pass on the cost to their consumers, 2) TSPs are not allowed to monetize the data of their subscribers as per Indian laws, while OTT services do so at will, 3) TSPs continue to invest heavily in infrastructure for high-tech networks that serve Indian citizens. On the other hand, OTTs make direct/indirect profits off these networks and use them towards their development, 4) TSPs have exclusive rights of the spectrum, interconnection, right of way, unique numbering resources, etc, but OTT services don’t, 5) TSPs pay exorbitant levies and taxes (of above 30% of their revenues). TSPs also contribute to India’s Universal Service Obligation Fund (USOF). However, OTT services, despite their growing revenues, pay nothing to the government, and 6) The average revenue per user of TSPs is abysmally low, even as they must make large capital investments in spectrum and infrastructure and also pay taxes/levies, while OTT profits usually go abroad, and they have no such commitments.

So, under the new Draft Telecom Bill, India must introspect and decide.