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News: With 5G technologies on the horizon, new dynamics are emerging wherein there is a growth of an integrated sphere of cooperation as well as competition between telcos and Internet companies.
This has fueled the need for regulatory parity between them.
What is the new integrated sphere of competition and cooperation b/w telcos and internet companies?
This new architecture, that has been talked about in the article, involves elements of both competition and cooperation b/w telcos and internet firms.
| Note: Telcos here refers to telecom companies like Airtel, Jio etc., while internet companies here refers to companies like Amazon, Google etc |
Competition in substitute services:
– OTT messaging services: The growth in over-the-top (OTT) messaging services by Internet firms has been accompanied by significant reductions in the revenues of text messaging services provided by telcos. For instance, the quarterly SMS volume in the U.K. has declined by half to 10 billion by 2021 in the past five years.
– VoIP services: Similarly, the growth of Voice over Internet Protocol (VoIP) services offered by OTT service providers is also a threat to telcos.
| Voice over Internet Protocol (VoIP), is a technology that allows one to make voice calls over a broadband Internet connection. |
Cooperation in complementary value networks: Under this, network operators, handset manufacturers, platform vendors, and content providers are offering a bouquet of services. These are termed as Complementary value networks or ‘Walled Gardens’.
| Must Read: What is a complementary value network? |
Despite the fact that services can be substituted and despite increasing competitive pressures within walled gardens, there is an asymmetric regulatory stance with respect to telcos and Internet companies.
What is an example of asymmetric regulation wrt telcos and internet companies?
Net Neutrality: One example of the prevailing asymmetric regulation are wrt net neutrality provisions. These provisions prohibit discriminatory treatment of Internet companies by the telcos, but impose no such regulatory limitations on internet companies.
| The net neutrality principles prohibit service providers from discriminating against Internet content and services by blocking, throttling or according preferential higher speeds. |
Over the past decade, the Internet has evolved to a point where many Internet companies also provide an essential service and enjoy significant market power. For instance: Web search, is a market dominated by Google, an internet company. Without search neutrality, search results may be manipulated to favor certain firms.
What is the way forward?
– Net neutrality principles need to be applied to Internet companies as well.
– Interconnection regulation: It is mandatory for telcos to provide “equal access” for interconnecting with other telcos’ networks. Similarly, social media networks, instant messengers, and indeed any Internet service that exhibits critical mass dynamics needs to be governed by interconnection regulation.
– Presently in India, while the sector regulator makes rules for telcos, the competition regulator oversees the behavior of the Internet firms. It is time for a unified regulatory framework, like in the case of European Union.
Source: This post is based on the articles:
‘The growth and inclusion potential of India’s telecom space‘ published in The Indian Express on 25th Nov 2021.
‘A unified regulatory framework‘ published in The Hindu on 25th Nov 2021.
