Have OTT players pay telecom firms usage charges, COAI writes to DoT

The Cellular Operators Association of India (COAI) - the apex body for telecommunication (telecom) companies - has demanded that over-the-top (OTT) communication platforms pay telecom companies (telcos) ‘usage charges’, based on the actual traffic carried by them on their networks.

The move has been seen by platforms as a way to violate the principles of net neutrality by bringing in differential pricing for different sets of consumers.

In a letter to the Department of Telecommunications (DoT), it has requested the government to incorporate a mechanism into the draft telecom Bill by defining ‘usage charges’ and clearly define what constitutes an OTT communications platform.

Detailing the mechanism, it says the charges should be arrived at mutually between the OTT platforms and the telcos. In case of disagreement, the appropriate licensing and regulatory framework that govern the contribution of OTT players towards creation of a network infrastructure must be put in place.

Justifying their stance, telcos say OTT players also need to contribute towards the creation of a network infrastructure in India. Based on global estimates, 56 per cent of a telco bandwidth is used by OTT communication platforms, they say. In India, it is even higher due to a 400-million-plus user base.

They argue that anyone who creates infrastructure by investing money is entitled to take usage charges (rent/lease charges) from users who run commercial services on it.

But OTT communication players have strongly opposed any such move. They say the matter was settled by the Telecom Regulatory Authority of India many years ago as it would have led to differential pricing for different sets of consumers and dilute net neutrality norms. Even then, telcos had made a similar plea.

OTT communication platforms argue that their applications (apps) represent a different layer as they build innovative products over the telecom network, obviating the need to buy spectrum or have direct access to subscribers. What consumers pay for the bandwidth goes to telcos.

“Without the functions an app provides, telcos would have not seen such huge growth in data from customers, the revenue from which goes only to them. Are they sharing that revenue with us? No,” says a senior executive of a leading OTT communication platform.

Not only do the bulk of users not pay any subscription and get the services gratis, there is also no question of sharing revenue. But telcos say OTTs are already charging their business account subscribers.

COAI in a separate communiqué to DoT has also offered three possible alternative definitions of a ‘communications OTT’, one of which may be incorporated into the draft communication Bill.

One, OTT platform means internet protocol (IP)-enabled communication services carried over underlying telecom or broadband network infrastructure, like IP-based instant messages or voice-over video calls.

Two, it could be defined as services providing real-time person-to-person communication services using the network of telcos and competing with them.

Three, define it as real-time communication services similar to services offered by licensed telcos, but which are provided to users as apps carried over the network using the network infrastructure.

COAI also brings into sharp focus the fact that a DoT report on net neutrality in 2015 had observed OTT communication services compete with the services of telecom service providers (TSPs) riding on the infrastructure created by them.

But telcos want to restrict usage charges only to OTT communications services, unlike Europe where the demand is across the board on platforms like Netflix and other broadcasting OTT platforms.

Says COAI Director-General S P Kochhar: “The bandwidth used by broadcasting OTTs is very limited and mostly a one-way communication. In the case of OTT communication platforms, the bandwidth used is far higher and therefore, two-way.”

Asked whether the same logic could be extended to other OTT platforms, like e-commerce for instance, Kochhar says the communication there is between the individual and the platform.

Kochhar also points out that one way to determine usage charge would be to have a threshold based on bandwidth use. Anyone with a high usage, for instance, will have to pay, while smaller OTT players will be exempt.

The move for TSPs to make Big Tech pay is not new.

France, Italy, and Spain have been exerting pressure on the European Commission to roll out a legislation that makes it mandatory for Big Tech to partly finance the telecom infrastructure.

The Global System for Mobile communications Association, or GSMA, is also coordinating with the European Union (EU) on a proposal for a ‘fair share’ contribution from Big Tech, which accounts for 50 per cent of traffic. The EU is looking at formalising legislation to ensure this happens.