TRAI move to regulate OTTs is mistimed

The Telecom Regulatory Authority of India’s move to regulate over-the-top communication platforms such as WhatsApp, Signal, and Telegram is ill-timed, according to experts.

The telecom regulator’s proposal has come when several other legislative efforts such as the Digital India Act and the Digital Data Protection Bill are expected to most likely cover these platforms as well.

TRAI, through its proposals, intends to regulate OTT platforms engaged in services traditionally provided by a telecom service provider, such as voice calling and messaging.

According to the regulator, there is no parity in the existing regulations for OTT platforms and TSPs. While TSPs have to pay humongous fees for licences, OTT platforms get away without paying any such fees despite providing similar services, as TRAI has highlighted.

Currently, these platforms are regulated by the Information Technology Act, 2000.

It’s not the first time that TRAI has floated a proposal to regulate OTTs. The idea was first put forward in 2015 when the regulator issued its first consultation paper, inviting comments on OTT regulation. The process was, however, inconclusive. Then, in 2018, a similar consultation process took place. After two years, the regulator concluded that it wasn’t the most opportune moment to come up with a regulation for OTT services.

But just three years later, TRAI has taken a U-turn approach. Highlighting the growth of OTT platforms in the recent past, the regulator has now said there is a need to holistically look into the various aspects of these services, including regulatory, economic, security, privacy, and safety aspects. The regulator has also flagged off concerns of traditional network operators whose revenue and profit have been impacted by the OTT landscape.

These recommendations, which initially seem to reflect the lack of parity in the existing system, are actually a concern for users of these OTT platforms. According to experts, the recommendations have a potential impact on cost, privacy, and innovation in the telecom sector.

Impact On Consumers
Bringing OTT under the regulatory purview of TRAI may significantly affect the accessibility and affordability of these services. By bringing OTTs under the regime, the platforms would be subject to a licencing mechanism that telecom operators are subject to. This comes with a cost that would ultimately be passed on to consumers, Nikhil Narendran, partner at Trilegal, told BQ Prime.

If the regulator intends to bring OTT platforms under the existing telco licencing regime, the present data-driven model of OTT calling and messaging apps would substantially change. OTT platforms would be compelled to pay licencing fees, meaning that the users would have to pay for utilising these services, which are free at the moment. Nikhil Narendran, Partner, Trilegal

Experts also said that the regulation has the potential to impact competition in the market.

Telecom operators, who have already established their share in the market, may now venture into OTTs. According to Shreya Suri, partner at IndusLaw, the recommendations, if implemented, would stifle healthy competition in the market.

Any licencing regime could not only act as a further entry barrier to new entrants in the market but also lend an unfair advantage to existing traditional telecom service providers and help them retain their dominance. Shreya Suri, Partner, IndusLaw

The overall consequences will ultimately, as always, be borne by the consumer.

Parallel Legislative Efforts
This proposal for OTT regulation comes at a time when the Union government is deliberating on the Digital Data Protection Bill. One of the concerns that the regulator is seeking to address is the lack of sufficient privacy obligations under the existing framework.

The IT Act, which regulates OTTs, follows a consent-based system, where the onus is put on the user to make decisions as to the sharing of information. Any information shared by the internet intermediary without a user’s consent is a violation of the IT Act.

However, if OTTs end up being regulated by TRAI, they will be required to abide by the provisions of both the IT Act and the Indian Telegraph Act, 1885.

Subjecting OTTs to telecom regulations means they will have to follow telecom interception rules. This could mean the government can intercept OTT communication at any time in the interest of national security, Narendran said.

Suri, on the other hand, said that subjecting OTTs to telecom laws for this reason is unnecessary.

There are already provisions in the IT Act as well as under the Telegraph Act that allow government access (either directly or through TSPs and ISPs) to OTT communication for the purpose of ensuring national security or aiding any investigations. Any incremental concerns (in line with what has been put out for consultation in this paper) will likely end up being addressed in the upcoming legislation (Digital Personal Data Protection Bill) in any event. Shreya Suri, Partner, IndusLaw

And then there’s the proposed Digital India Act, which seeks to harmonise laws relating to emerging technologies.

Experts said that with these frameworks, TRAI’s proposal to additionally regulate this space on similar aspects is not practical.

TRAI’s recommendations, Suri said, are antithetical to the vision of Digital India—a campaign intended to improve internet infrastructure and connectivity around the country. “Bringing in yet another regulation on the cusp of 5G moving into 6G would, at the very least, have some adverse impact on innovation and impede R&D efforts in this space.”

The prudent step, according to Narendran, would be to regulate messaging and calling functions similar to telecom activities rather than the broad range of OTT activities. It will also be prudent to limit it to a light-touch registration-based system for national security and accountability rather than bring it under the current telecom licencing regime, he said. Bloobmerg