All OTTs using telco data should pay fair share charge, says COAI

COAI had earlier suggested levying a licensing fee of 8 per cent on OTTs on a recurring basis

The Cellular Operators Association of India (COAI) on Thursday called for over-the-top (OTT) service providers who use telco data to share their revenues with the telecom service providers. It has pointed to government legislation in South Korea mandating the same. This fair share charge would not violate the principles of net neutrality, it argued.

COAI, which includes all three private telecom service providers (TSPs) — Reliance Jio, Bharti Airtel, and Vodafone Idea — as its members, had earlier suggested levying a licensing fee of 8 per cent on OTTs on a recurring basis.

"While telcos have been carrying the massive investment burden for deploying networks and delivering connectivity across the country entirely by themselves, OTT players have emerged offering bandwidth-heavy services and generating disproportionately high traffic. This compels further upgrades and capacity enhancement of the networks but contributes nothing to the network expenses," COAI Director General SP Kochhar said at a press briefing here.

 

Referring to the broadcasting sector, he said content producers earn from subscription as well as advertising but also share a part of their subscription revenues as port charges with network service providers.

"Going by this example, when high bandwidth OTT applications carry heavy traffic with high quality of service requirements, such as HD video streaming, downloading, and sharing, a fair and proportionate charge needs to be paid to the Network Provider for facilitating their business. For low bandwidth applications which do not generate much traffic, the general data tariffs may suffice," he said.

Kochhar's comments follow media reports that the Telecom Regulatory Authority of India (TRAI) may float a consultation paper on regulatory issues pertaining to OTT video platforms like Netflix, Prime Video, Disney+ Hotstar, and JioCinema.

"With the 5G rollout, the capital expenditure (capex) of the industry has gone up while the return on investment (ROI) is quite low. Telecom players create the network while OTTs just ride on this network for free," Kochhar stressed.

He also countered the argument by OTTs that invest in digital infrastructure. "OTTs have not invested in the national core, transport and access networks. Investments made by OTTs do not compensate for the recurring need to upgrade carriage and backhaul capacity," he said.

South Korean Precedent

Kochhar also pointed to South Korea's Telecommunications Business Act as a global precedent for the same. The Service Stabilisation Act, enshrined in Article 22-7 of the Act, requires that the largest content providers engage with broadband providers for cost recovery.

Compensation is determined by the parties and is private. The government does not set price levels nor mandate fees.

However, the law is only applicable to the five largest content providers: Google, Netflix, Meta, Naver, and Kakao, a group which together comprised more than 41 per cent of all South Korean traffic.