Net neutrality: Reliance Jio against the rest

Most Indian telecom service providers (TSPs) have come together to recommend a regulatory regime for internet-based voice services, which will give them a level playing field to operate commercially. Reliance Jio, the telecom arm of the Mukesh Ambani-led Reliance Industries Ltd, however, differs with rivals such as Bharti Airtel, Vodafone and Idea on this front.

Jio, which is preparing to launch its operations in the country soon, said in its feedback to the Telecom Regulatory Authority of India that it wasn’t proposing “any kind of commercial charges on the OTT (over the top such as WhatsApp or Skype) communication services”, as it believed “market forces will take care of any revenue imbalances”. The organisation has, on the other hand, argued for regulations for OTTs on the pretext of national security. It has suggested OTTs be subject to the same “security requirements” that a traditional TSP has to adhere to, by setting up servers in India. This, it said, would help the government intercept and monitor unlawful activities over such networks.

Other TSPs such as Airtel are in sync with Jio on this front. On the main issue, however, Jio stands out of the pack, arguing competition, new revenue streams and evolving market dynamics will take care of the revenue imbalances stemming out of OTTs offering voice services. Earlier this month, the company launched Jio Chat, an instant messaging app, a few months before it commercially rolls out its much-touted 4G services. Reports suggest as part of its launch strategy, the company is planning to bundle content with data. This might explain its different stand on the matter.

Jio has said internet-based messaging through applications such as WhatsApp might have hit the SMS-based revenues of telcos but this has led to significant growth in data revenue for them. “If and when OTT communication services start cannibalising the voice revenue of TSPs in a significant manner, the market forces might react in the form of correction in data tariffs or other revenue streams may start,” Jio has said.

Airtel, on the other hand, has substantiated its arguments with a dollop of statistics, vociferously seeking communication-based OTTs be brought under the licensing regime.

At current realisations, every one per cent of TSP voice-minute that is substituted by OTT VoIP (voice over internet protocol) would lead to Rs 1,200 crore of revenue loss to the sector, Airtel has said. This could lead to either data prices rising significantly or an equally severe blow to industry revenue and its contribution to the government’s development agenda. “In short, OTT communication service providers should be governed by the same set of rules as applied to TSPs.”

Airtel also suggested TSPs levy a network usage charge on voice-based OTTs, as a vast majority of the infrastructure investment being utilised by the latter was being built and maintained by the former.

In its response, Vodafone said it expected the trend of app-to-app calling or messaging to become more prevalent with the increased adoption of smartphones, wider 3G network coverage leading to greater adoption of 3G services and the imminent introduction of 4G services by various TSPs. “Voice revenues, which account for 80 per cent of TSPs’ revenues, are under severe threat,” it added.

Idea has supported Airtel and Vodafone, saying there was a need to maintain parity between current rates for voice services and VOIP services by allowing telecom operators to charge differential rates for data traffic for VOIP applications. “If a decision is made to have the same data tariff for VOIP and other data applications, it will result in current data tariffs increasing six-10 times from current levels — a detriment to the growth of non-VOIP data applications and the vision of a Digital India.”