Trai consultation paper triggers a face-off between telcos, OTT players

The Telecom Regulatory Authority of India’s (Trai’s) consultation paper on Monday — asking whether OTT (over the top) communication services like WhatsApp, Skype, Hike, Facebook, and Google should be regulated — has triggered a face-off between telcos supporting the move and OTT and broadband players questioning its relevance in changing times.

The Cellular Operators Association of India (COAI) will demand a level playing field with OTT communication services players, which, it says, have eaten into their revenues by offering international and domestic calls and messenger services, among others, free of cost. 

COAI Secretary General Rajan Matthew said: “We believe that OTT and telecom service providers (TSPs) should be subjected to the same regulation — same service, same rule has always been our principle. We have also espoused light touch regulation and this should be another principle which should be considered. Trai has itself highlighted the divergence between how TSP and OTT players are treated and has asked for responses as to how these should be addressed. The members will respond to the paper shortly.”

According to COAI estimates, they lose about 15 per cent revenue, which is taken away by OTT players even after voice was made free. And this loss will only increase with the increased usage of OTT video players and shift of entertainment viewing from TV to OTT channels. 

However, the Broadband India Forum, which has representation from OTT players as its members, has pointed out disruptive technology has made regulating OTT obsolete and imposing it would only hamper its economic benefits. Says T V Ramachandran, president of the Forum: “With disruptive technologies, regulation is of no relevance. Earlier telcos feared that OTT would impact their voice revenues and there was demand for a level playing field, but with new IP-based network technology, operators are offering voice free. Telcos that have not invested in new technologies are making such demands. The huge impact of these OTT players on consumer lives will slow down if there is regulation. What needs to be done is softening up of regulations on telecom services, not imposing regulation on OTTs.” Ramachandran pointed out the level playing field argument, which telcos espouse, was not relevant because they had acquired exclusive rights on spectrum, numbering plans and interconnection by paying the licence fee, but OTTs had no such rights.

Trai, in its consultation paper, has pointed out unlike TSPs there is no regulation of OTT players like licensing or interconnection agreements, regulatory obligations to address consumer concerns such as quality of service or issues on security of data, legal interception, and exit and entry regulations. 

Currently many of these issues are addressed through self-regulation or market-driven forces. For instance, currently OTT players take periodic customer feedback on the quality of voice calls, but there is no objective way to measure the quality of service or mandatory redress system in place.

The regulator also has raised the fact that OTT players can generate sources of revenue that are prohibited for TSPs like video advertising. It has also pointed out globally many OTT players have become very big, leading to concentration of market power, especially in the US, which could lead to abuse of their dominance.