MPA, BIF and streaming companies oppose CDN licensing at TRAI OHD

A registration or licensing mandate on content delivery networks (CDN) could delay service rollouts, hinder technological advancements, and compromise content delivery speed and quality, Uday Singh, Managing Director of the Motion Pictures Association (MPA), said during the Telecom Regulatory Authority of India (TRAI) open house discussion on network authorisations under the Telecommunication Act, 2023.

CDNs are geographically distributed networks of servers that cache content closer to users. By caching content closer to their customers, companies like Netflix ensure that their content reaches the customers faster. Singh’s organisation, MPA, represents Amazon Studios, Netflix, Paramount, Sony Pictures, Universal Studios, Walt Disney, and Warner Brothers.

This discussion followed TRAI’s consultation paper on the same subject which asked stakeholders about their perspectives on satellite earth station gateway (SESG),CDNs, and internet exchange point (IXP) authorisations. With respect to IXPs and CDNs, TRAI recommended licensing for the IXPs and registration for CDN services back in 2022. The Department of Telecommunications (DoT) is yet to accept TRAI’s 2022 recommendations and implement the same. Besides the network authorisation consultation, TRAI has continued to push for CDN and IXP authorisations via stakeholder consultations, like the current one and also the one it put out in July on the terms and conditions for service authorisation under the Telecom Act.

“The competitive and dynamic CDN market in India has seen price reductions and technological advancements with no evidence of market failure,” Singh mentioned during the discussion. He added that free market-driven interconnections between CDNs and internet service providers (ISPs) are necessary for sustaining the innovation in the CDN segment. Considering this, other countries like Australia and South Korea have kept CDNs out of the regulatory scope. “Conditioning interconnection on licensing would also contradict the globally accepted principle of unregulated peering,” Singh said. For context, peering is the process by which ISPs exchange internet traffic.

CDNs are not telecom services:
“Content Delivery Networks are not telecommunication networks. CDN service providers cannot use the CDN system to provide telecom services,” Debashish Bhattacharya, Senior Dy. Director General of Broadband India Forum (BIF), mentioned during the discussion. He emphasised that CDNs only cache and deliver content rather than providing end-to-end communication. Further, unlike telcos, CDNs require computing, storage and connectivity appliances. “Depending on whether they build their own connectivity or not, CDNs are either a customer of the telecom service providers for access to the internet or a private network interconnecting with telecom service providers through transit and peering,” Bhattacharya mentioned.

Based on the fact that CDNs do not provide connectivity services, Bhattacharya argued that CDNs neither fall under the definition of telecom networks in the Telecom Act, 2023, nor come under TRAI’s regulatory scope. He used the same argument to establish that TRAI’s 2022 recommendations on telecom services are not applicable in the current context. Similarly, DoT’s 2024 reference to TRAI suggesting the need for CDN authorisation under the Telecom Act is also not applicable, he said.

“The issues of CDN licensing and authorizations, it is very unfortunate, are being debated for years together, causing unnecessary confusion when the legal framework under the Telecom Act and the Act that it replaces the Telegraph Act [of 1885], does not encompass CDNs,” Bhattacharya said.

CDNs operate on the application layer:
Munish Gaur, General Manager at Tata Telecommunications, mentioned that CDN services operate on the application layer as opposed to the network layer. In this sense, they are similar to over-the-top (OTT) services and TRAI should treat them in a similar manner, he said. While pushing against regulation, Gaur mentioned that if TRAI were to propose licensing for these services, it should limit it to a simple registration as it did in 2022.

No need for regulatory intervention for CDN expansion:
In response to the consultation on network authorisation, Airtel had suggested that TRAI should mandate that CDNs set up infrastructure in tier 2 and tier 3 cities. Responding to such suggestions, Varun Ramdas, a manager at Koan Advisory, said that certain CDN players already operate in these regions. “As demand grows, I think automatically, organically, CDN will expand to cover this region,” he explained.

Further, Ramdas also responded to another Airtel suggestion that the government should issue content blocking orders to CDNs, instead of issuing them to telcos. “We feel that these are questions that come under the IT Act [2000] and MeitY’s [Ministry of Electronics and Information Technology] domains. So I think they should definitely be in the room if there is any discussion on regulating them under the IT Act,” he said.

Interestingly, neither Airtel nor fellow pro-CDN authorisation telco Vodafone Idea (Vi) elaborated on any of their comments regarding the subject during the open house.

Don’t require disclosure of CDN and ISP agreements:
During the discussion, Aarti Singh, Program Associate at Deepstrat, mentioned that the regulator should ensure that the agreements between CDNs and ISPs remain confidential. These service providers enter into agreements to deliver traffic to the end customer. These agreements usually have proprietary terms, Singh said. She added that if the regulator wants to disclose the details of a specific agreement, it should use licensing as the means to do so.

“Mandated paid peering leads to reduced speed of content, and is contrary to net neutrality,” Singh added. On a similar note, Pahwa mentioned that in 2016, South Korea tried to bring in a paid interconnection regime. “Specifically at that point in time, where one [interconnection agreement] was attempted between SK Telecom and Facebook. And Facebook decided not to participate in that agreement, and they started serving South Korea out of Hong Kong,” he mentioned. This caused Facebook content delivery to South Korea to become less efficient. “My point is, let’s not mess with interconnection agreements,” Pahwa emphasised.

“I run a website, I run an online business and work with CDNs. I don’t want my costs to go up or my latency to increase because TRAI is trying to regulate something that should not be regulated and where there is no market failure,” he argued. Medianama