Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Industry / Infotech/  Net Neutrality debate :To licence OTTs or not?
BackBack

Net Neutrality debate :To licence OTTs or not?

Here is a selection of counter comments on licencing OTT services put up on the Trai site on Tuesday

Net neutrality principles rule that Internet service providers (ISPs) should not discriminate on online data by user, content, site, platform, application, type of attached equipment or mode of communication. Photo: AFPPremium
Net neutrality principles rule that Internet service providers (ISPs) should not discriminate on online data by user, content, site, platform, application, type of attached equipment or mode of communication. Photo: AFP

Mumbai: Thousands of Internet users and activists in India took them to task online in early April to protest the violation of Net neutrality principles. They were reacting to Bharti Airtel Ltd’s Zero plan and the 20 questions raised by the Telecom Regulatory Authority of India’s (Trai) in its 27 March consultation paper on a regulatory framework for so-called over-the-top (OTT) services.

The questions included whether OTT services providers (such as WhatsApp, WeChat, Line and Hike) should be brought under the licensing regime; on payment for use of the telcos’ networks over and above the data charges paid by consumers; and whether telcos should be allowed to implement non-price based discrimination of services.

Net neutrality principles, however, rule that Internet service providers (ISPs) should not discriminate on online data by user, content, site, platform, application, type of attached equipment or mode of communication. And the zero-rating plan, if designed to favour an ISP’s own or its partner’s app or company, can place competing apps and companies at a disadvantage, be anti-competitive and violate Net neutrality principles.

The protests even prompted minister of communications and information technology Ravi Shankar Prasad (@rsprasad) to tweet on 7 April: “...#Internet…belongs to entire humanity and not to a few. #NetNeutrality"—a tweet that assumes significance, given the country is yet to devise a law specific to Net neutrality.

Bowing to pressure from the uproar on Twitter and Facebook, India’s largest online retailer Flipkart Ltd on 14 March ended talks with Bharti Airtel to participate in the Airtel Zero plan. Airtel, too, issued a statement that very day, saying it “fully supports the concept of Net neutrality", and adding that it did not “block" or “throttle" or provide “any form of preferential access".

On 15 April, travel portal Cleartrip.com and media companies Times Group and NDTV followed suit and logged out of Facebook’s Internet.org initiative, even as Mark Zuckerberg, founder and chief executive of the world’s largest social networking site, attempted to defend his position in sections of the media.

Critics argued that zero-rating plans and Trai’s questions (in its 117-page document) have the potential to kill technology innovation by regulation and splitting the Internet into two halves, with a segment of the online population being cajoled to access the Internet only through specific zero-rating plans of telcos and social networking sites with a scheme such as Internet.org.

A little over a million of India’s 300 million Internet users are estimated to have emailed their responses to Trai as on 24 April. The last date for counter comments was 8 May. Here is a selection of counter comments from those that were put up on the Trai site on Tuesday.

MTNL Ltd

MTNL has suggested a revenue-share model with OTT service providers to compensate for infrastructure cost, spectrum fee, license fee and other corporate taxes borne by TSP (telecom service providers). MTNL has also suggested that such revenue share in the form of infrastructure cost to TSPs should be with OTT applications which are in demand and exceeds certain threshold limit in terms of data usage volume (limit to be decided by regulator). However, the terms/quantum for such revenue sharing arrangement should be decided by the regulator and should not be left to negotiations between TSPs and OTT service providers.

Reliance Communications Ltd

The need is for providing level-playing field to similar services—at least for those fulfilling important responsibilities towards national security—and revenue sharing with the government for the betterment of citizens. It is unfathomable how voice service can be a different category of service if it is provided over the traditional circuit switched network (voice call) or the packet switched network (VoIP). The difference is only in the technological mechanism of delivery of the voice service, but the contention that the two categories of services are different is factually incorrect and is unacceptable.

Vodafone India Pvt Ltd

We believe that any absolute argument saying there is no need for any regulatory framework for OTT and only TSPs (telecom services providers) should be licensed would not be correct. There can be absolutely no argument that OTT communication services are increasingly used by consumers as substitutes for traditional telecommunication services such as voice telephony, etc. In view of the substitutability of these two services in the eyes of the consumers, we believe that the technological and qualitative differentiations sought to be argued by the stakeholders are irrelevant.

It is also a fact that the rules that govern TSPs are not applicable to the OTT Communication players, thus creating a non-level playing field. The various regulatory imbalances between OTT Communication services and the TSPs have been extensively brought out in our submissions to the Authority and the same have also been noted by the Authority in its consultation paper; these are not being repeated here for the sake of brevity. In view of the above, there is an urgent and pressing need to ensure regulatory parity/neutrality between OTT communication services and TSPs.

We do not agree with the view of some of the stakeholders that growth of OTT communication services is not affecting the telecom operators’ revenues. Globally, the evidence is there of OTT communication services cannibalizing the revenues of the TSPs. Messaging revenues have already declined from 7-10% to 3%. Further, VOIP services like Skype, Viber, etc have already begun to erode the voice telephony revenues. This decline is at present far more evident in the international calling segment. The introduction of Whatsapp calling and increasing proliferation of smartphones, is going to further drive this erosion, and will soon start materially affecting the domestic voice revenues that are the mainstay of the telecom operators and which in fact, support and facilitate the rollout and expansion of broadband services. It may also not be out of place to point out that this will also result in erosion of revenues for the exchequer.

While there has been an increase in the data revenues of the TSPs, this increase is not sufficient to counter the decline in the traditional revenue streams. Trai as also noted in the consultation paper that the revenue earned by the telecom operators for one minute of use in traditional voice is Re. 0.50 per minute on an average, as compared to data revenue for one minute of VOIP usage which is around Re.0.04, which is 12.5 times lesser than traditional voice. This clearly indicates that the substitution of data with voice is bound to adversely impact the revenues of the telecom operators and consequently impact both their infrastructure related spends and the prices consumers pay. It has not been appreciated that the continued growth of OTT is highly dependent on the further rollout and expansion and upgradation of telecom infrastructure by the TSPs.

Cellular Operators Association of India

We welcome the entry of OTT players and believe that they play an important role and offer new services. However, it is pertinent to note that some of the services such as messaging/instant message and VoIP telephony are perfect substitutes of the services offered by telcos under UASL (Unified Access Service License)/UL (Unified License).

The Internet and Mobile Association of India (Iamai)

The submissions by most telecom operators with respect to their purported financial losses are mere bald statements not supported by any facts or financial data. They are contradictory to their otherwise public claims of increase in revenue and net profits. IAMAI strongly opposes licensing of Internet platforms and services and/or their registration as OSPs (Open services platform), and revenue sharing in the model of termination charges, or any other model mandating Internet platforms and services to make payment to telecom operators. The present arguments are in the form of rent seeking where an incumbent shows perpetual loss in order to influence regulatory intervention. The argument that OTT communication (VOIP and Chat) have impacted the traditional revenue of the telecom companies is inaccurate. A Google-A.T. Kearney study concludes that the relationship between Internet communication services and telcos can generate additional cumulative revenues of $8 billion.

Nasscom

There is no doubt that viability of telecom services have to be maintained. However, allowing TSPs to limit Internet Platforms and Services (OTT services as per TRAI paper), by constraining them through price or non-price based discrimination, through regulation is not the right way forward. In fact, if implemented, it would be counterproductive. Over time, as the consumption pattern sees a change, revenue models of TSPs will need realignment. This realignment will be primarily influenced by the Telecom Industry dynamics itself. It is unfair to drag entities offering Internet Platforms and Services (OTT services as per TRAI paper) in this.

Pranesh Prakash, Policy Director, Centre for Internet and Society (CIS)

* Payment is being made by OTTs to content ISPs, which eventually gets settled vis-à-vis eyeball ISPs through transit and peering agreements. Thus, there is no free-riding by OTTs as in fact all of them necessarily pay for bandwidth consumption by their users. The only situation where payment is not being made to content ISPs, is when the OTT itself rolls out network (and hence becomes similar to a content ISP)

* There is no evidence of overall reduction in revenue or profitability. Research from the Software Freedom Law Centre (SFLC) has shown that in fact, decrease in SMS and voice telephony has not led to a decrease in revenue of TSPs

* It may not be useful to ban zero-priced zero-rating of services as long as they aren’t exclusive, or otherwise anti-competitive

* It is strongly urged that OTT-SPs (OTT services providers) should be regulated by instruments other than licensing. Preferably, OTT-SPs should be regulated through instruments such as the IT Act and its Rules thereunder. This is an imperative requirement for innovation on the Internet to continue to prosper. * However, “communications" OTT-SPs should be encouraged to voluntarily adopt the Unified License (UL) through regulatory and economic incentives. This can possibly encouraged by introducing a trimmed down version of the Unified License with low regulatory compliance costs and zero revenue sharing. Such a voluntary license would authorise OTT-SPs to terminate calls on the PSTN.

Rajeev Chandrasekhar, member of Parliament

* It is neither the responsibility of the Indian consumer nor regulations to ensure viability of a telco in face of disruptions and innovations that are normal for the telecom and Internet space.

* These bland assertions of viability and claims of ‘stretched financially’ are inconsistent with public data and market capitalizations of these telcos. Regardless it is for these Telcos to provide justifications and data transparently to the government and seek any tax/or other reliefs if justified.

* The Indian consumer cannot be expected to and will not underwrite the investor returns or ROCE (return on capital employed) expectations of a company.

* The Telcos are Telecom networks that also operate access networks to the Internet, while OTTs are apps like millions of apps and data that are on the Internet. Apples and Oranges! There is no level field argument that can be made across sectors and spaces as is being asked for here.

MediaNama, web-based portal for news and analysis of digital media in India

* VoIP and IP based messaging are integrated into many apps, licensing them will break them

* Security requirements imposed on telecom operators are already applicable to their data services, which consumers use to access the web.

* VoIP service companies have absolutely no control over the bandwidth available to consumers, since data access is provided by telecom operators and ISPs.

* Telecom operators can terminate VoIP services on circuit switched networks. They have had the licence to launch VoIP services for many years, with a distinct competitive advantage of being able to terminate VoIP services on mobile and landline networks. They have chosen not to launch these services, depriving customers.

* Now that IP-to-IP calling and video calling have gained users because of superior products, telecom operators wish to throttle these services, or create a licensing regime for VoIP services in order to get a competitive advantage. Therefore, it is a NON-level playing field, because these are two distinct services with different characteristics and different bearers, which are imperfect substitutes.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 12 May 2015, 08:22 PM IST
Next Story footLogo
Recommended For You
Infotech Stocks
₹1,547.25-0.26%
₹1,484.10.99%
₹4,928.750.15%
₹3,837.51.2%
₹472.21.66%
Switch to the Mint app for fast and personalized news - Get App