Price wars: Startups, smaller OTTs may be exempted from fair share charge

Telecom operators said they were willing to accommodate rising data traffic generated by all Indian startups, micro, small, and medium enterprises (MSMEs), and smaller over-the-top (OTT) service providers, but want the large traffic generators to pay up the proposed fair share charge.

However, the Cellular Operators Association of India (COAI) has said in its latest submissions to the government that four-five large traffic generators (LTGs) can’t be exempt from the charge.

While these players haven’t been named, it is widely understood that global streaming services like Netflix and Amazon are among the LTGs.

The charge is a key ask from the telecom players who say burgeoning data traffic generated by OTTs are resulting in large capital investments needing to be made to maintain telecom networks, and that OTTs should share their revenues. With the Telecom Regulatory Authority of India (Trai) yet to give its recommendations on the matter, debate on the issue is on.

“We will accommodate whatever traffic was generated by MSMEs, startups and OTTs up to 2018. This includes Indian e-commerce sites. Except for the four big ones, we will accommodate everybody,” COAI Director General S P Kochhar said. “We have taken the baseline of 2019 since data traffic originating from LTGs skyrocketed since then.”

Representing the three private-sector telecom firms, the COAI has said the fair share charge is necessary for the development and upkeep of telecom networks, as colossal traffic is being loaded on the networks by OTTs with steady growth in demand for data. In a new white paper, the COAI has shown the infrastructure required for only baseline operator traffic, remains to be much lower compared to what is required to service aggregated traffic generators.

“Thus, the additional cost of rollout of infrastructure to carry this aggregated data causes a burden on infrastructure provision, but without the return on investment,” according to the white paper, seen by Business Standard.

Telecom operators say they are hemmed in by the dual pressure of having to undertake massive investments for the rollout of 5G networks, and the slow growth in monthly average revenue per user (ARPU), which stood at just Rs 145.6 in the first quarter of FY24.

OTT fears
But the OTTs have argued that telcos would effectively be charging twice for the same service — as they already charge consumers for data. “In any case, surging data traffic is merely data consumed by consumers that they have already purchased from telecom companies.

Therefore, the strain on infrastructure of telecom firms occurs when they sell data to consumers beyond their infrastructural capacity — a fact that has been conveniently ignored,” the Internet and Mobile Association of India (IAMAI) has said in its submission to Trai.

The IAMAI represents over 500 Indian and multinational corporations including Google, Amazon, Meta, and Apple.

OTTs have also come out against the fair share charge over fears it would demolish net neutrality in India. Net neutrality is the principle that internet service providers should enable access to all content and applications regardless of the source, and without favouring or blocking particular products or websites.

But the COAI has said any tariff increases will be the same for everyone. “The Indian telecom firms are bound by their licence conditions to ensure net neutrality, and will continue to do so. The content and services for consumers would remain fully accessible with no traffic management/differentiation. The price for the traffic paid by end users will not change depending on whether the traffic generator is subject to fair share payments or not,” it has told Trai.

PRICE WARS
Telecom companies say few large traffic generators (LTGs) contribute to disproportionate data traffic on networks Fair share charge would allow LTGs to better optimise data usage, according to telcos Similar agreement between telcos and Netflix was signed in South Korea in 2023 EU also mulling policy to ensure Big Tech players contribute to telecom capex