TRAI looking at regulating OTTs

The Department of Telecommunications (DoT) is working on a proposal to bring communication-based apps such as WhatsApp, Telegram, Skype, Facetime, etc. under some form of regulation, where they pay an interconnect usage charge (IUC) to telecom operators for using their networks. A token, one-time licence/registration fee may also be levied on such operators. However, it’s not clear at this stage whether such apps would need to pay a licence fee on a recurring basis as a percentage of their adjusted gross revenue (AGR).

Official sources said that the proposal is in early stages and discussions are still ongoing. The Telecom Regulatory Authority of India (Trai) is also working in this regard simultaneously and will shortly come out with a consultation paper.

It is quite likely that the final version of the telecom Bill, which will be tabled in the monsoon session of Parliament, may announce the intent towards some form of regulation, and the detailed rules in this regard may come later. “While Trai is looking at the methods and consultations to regulate OTTs, some kind of provisions will be mentioned in the telecom Bill to make communication-based OTT apps liable to pay to an extent they use the telecom network,” a government official said, adding that Trai will recommend the way forward on the regulations.

“A lot of regulatory changes are happening in the entire world where there is a kind of new thinking in the OTT space…whatever we do (around OTT regulation) will be in sync with the global trends,” communications minister Ashwini Vaishnaw said on Tuesday.

The concept of carriage charge is currently applicable in the telecom sector as part interconnection charges (IUC). Termination charge, a levy paid by the originating network to the operator on whose network the call terminates, was discontinued only from January 2021, when the traffic between the three operators more or less became even. Now, this levy has moved to the bill-and-keep principle. But another component of interconnection – carriage charge – still applies. Here, operators pay a charge to the national long-distance carrier for carrying calls from one circle to another.

Similarly, operators pay each other for points of interconnect, which connects calls between two operators. As subscriber/call traffic increases operators need more points of interconnect from each other or else there would be high incidence of call drops.

Sources said the interconnect charge regime for telecom operators is well designed, and the same can be tweaked and made applicable for traffic between OTTs and telcos. “The issue will be discussed when the Trai comes out with the consultation paper,” one of the sources said.

They further said that if an interconnect regime is fixed, it’s quite possible that OTTs and telcos come around to some form of revenue-sharing mechanism in lieu of paying the charge. If this happens, it would be very similar to the bill and keep regime of termination charge.

The Cellular Operators Association of India (COAI) strongly holds the view that OTTs should be brought under regulation. It believes there should be one service-one rule — why should telcos be made to pay licence fee to the government and be saddled with a host of regulations while the apps are free to ride on their networks without paying any licence fee and be free from any kind of regulations.

In a letter to the government in November, COAI had pushed for the need to define ‘usage charge’ for OTT players in the telecom Bill. According to it, the charges can be calculated based on the actual traffic carried by the OTT players on telcos’ network, which can be mutually decided between the telecom operator and OTT.

“Any person (OTTs) using telecommunication services/infrastructure/ network setup/provided by an authorised entity (TSPs) must pay reasonable usage charges to such provider,” SP Kochhar, director-general of COAI, said in the letter. In case, the charges are not mutually agreed upon, the government may be mandated to prescribe that through an appropriate licensing and regulatory framework, Kochhar added.

On the contrary, industry associations such as Broadband India Forum (BIF) and Internet & Mobile Association of India (IAMAI) have argued against any form of regulation or licensing of OTT players. They maintain that the services provided by the OTTs are not similar to that of telcos.

According to BIF, OTTs are not free riders on telecom infrastructure and are actually responsible for more than 70% of the traffic flowing on telecom networks. The telcos owe their infrastructure utilisation to the OTTs and should indeed be grateful to them, it said, adding that in the absence of OTT players, their networks would have remained idle. The regulation of OTT would lead to a collapse of the entire app ecosystem, thereby impacting innovation and growth of the economy, BIF said.

According to IAMAI, the proposal for a revenue-sharing mechanism between OTTs and telcos would leave the startup ecosystem vulnerable to compliance costs even when they may not be even earning revenues.

Globally, in countries such as the US, the UK, Brazil, and South Africa, OTTs are not licensed or subject to any regulation. Only in Singapore and the European Union, OTT apps have been brought under light-touch regulations and have to comply with quality of service standards. Financial Express