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Indian Telecos Want Compensation from OTT Players!

by upendra
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The Indian Cellular Operators Association (COAI) has advocated for a licensing and light-touch regulatory framework for over-the-top (OTT) communication services. Additionally, COAI has proposed that OTT services directly compensate telecom service providers for the traffic they generate on telecom networks.

What Are OTT Services?

OTT communication services include apps like WhatsApp, Signal, Google Meet, and Telegram that offer voice calls, video calls, and messaging over the internet.

COAI’s Director General, SP Kochhar, stated that the association has provided input on the draft telecom bill to clarify the definition of OTT communication services. Details regarding the precise financial model for OTT players to compensate telecom service providers will be communicated as discussions on the light-touch regulatory framework progress.

Revenue Sharing and KYC Requirements

COAI has suggested that a revenue-sharing mechanism based on data consumption could be implemented for OTT communication services, with a focus on apps that provide telecom-like services. While these recommendations currently apply to communication apps, COAI has left the possibility open for similar arrangements with other types of OTTs in the future.

COAI also emphasized the importance of Know Your Customer (KYC) procedures for both traditional telecom companies and OTT providers.

Debate on OTT Regulation

The issue of regulating OTTs has sparked a heated debate in India. While COAI has been advocating for a regulatory framework that places OTTs on equal footing with traditional telcos, the Broadband India Forum (BIF) has cautioned against overregulation, fearing it may stifle innovation and harm the socioeconomic environment.

BIF’s core members include tech giants like TCS, Cisco, Amazon, Google, Microsoft, and Meta (formerly Facebook).

Quantifying OTT Impact

COAI has conducted research indicating that major OTTs account for approximately 56% of global data traffic on telecom networks. The association estimates that if fees were imposed, OTT companies could contribute nearly Rs 800 crore to the government’s revenue.

COAI also recommended reducing the licensing cost from 3% to 1% to free up more funds for network expansion. The association has submitted a pre-Budget wishlist to the government, which includes this recommendation to reduce levies.

Additionally, COAI called for the government to cover the costs of non-profit infrastructure initiatives and suggested that contributions from OTTs, along with budgetary allocations and spectrum auction proceeds, could fund the Telecom Development Fund.

In terms of user safety, COAI proposed aligning the authority of the Telecom Department with the Telecom Regulatory Authority of India (TRAI) and expanding it to cover cyber or financial fraud and unsolicited commercial communications. The association argued that a unified regulatory agency is necessary.

Finally, COAI recommended that all internet phone and messaging apps adhere to KYC regulations and suggested offering a refund of fees paid to telecom or internet providers if they relinquish their licenses.

The regulation of OTTs in India remains a topic of discussion, with stakeholders advocating for various approaches to balance innovation, competition, and consumer protection.

Faqs

Q1: What are over-the-top (OTT) communication services?

A1: OTT communication services are apps and platforms that provide voice calls, video calls, and messaging over the internet. Examples include WhatsApp, Signal, Google Meet, and Telegram.

Q2: Why is there a debate about regulating OTT services in India?

A2: The debate centers on whether OTT services should be subject to regulatory oversight similar to traditional telecom services. Telecom operators argue that OTTs benefit from telecom networks but avoid regulatory obligations, creating an uneven playing field. On the other hand, proponents of a light-touch regulatory approach argue that excessive regulation could stifle innovation and harm the digital ecosystem.

Q3: What is COAI’s position on regulating OTT services?

A3: The Cellular Operators Association of India (COAI) has advocated for a light-touch regulatory framework for OTT communication services. COAI suggests that OTT players should compensate telecom service providers for the traffic they generate on telecom networks. Additionally, COAI supports Know Your Customer (KYC) requirements for both telecom companies and OTT providers.

Q4: How does COAI propose compensating telecom operators by OTT services?

A4: COAI recommends implementing a revenue-sharing mechanism based on data consumption for OTT communication services. This mechanism would require OTT providers offering telecom-like services to compensate telecom service providers for using their networks.

Q5: What is the “same service, same rules” principle advocated by COAI?

A5: COAI’s “same service, same rules” principle suggests that OTT communication services offering services similar to traditional telecom companies should adhere to similar regulatory and security obligations. This principle aims to create a level playing field between OTTs and telecom operators.

Q6: How does COAI propose to measure the impact of OTTs on telecom networks?

A6: COAI has quantified the impact of major OTTs on telecom networks, stating that they account for approximately 56% of global data traffic on telecom networks. The association suggests that fees imposed on OTTs could contribute substantial revenue to the government.

Q7: What recommendations has COAI made for reducing levies in the telecom sector?

A7: COAI has recommended reducing the licensing cost from 3% to 1% to provide telecom operators with additional funds for network expansion and development.

Q8: What is the Telecom Development Fund mentioned by COAI?

A8: COAI suggests using contributions from entities that generate traffic, such as OTTs, along with budgetary allocations and spectrum auction proceeds, to fund the Telecom Development Fund. This fund could support initiatives related to telecom infrastructure and development.

Q9: How does COAI propose to ensure user safety in the OTT space?

A9: COAI recommends aligning the authority of the Telecom Department with the Telecom Regulatory Authority of India (TRAI) and expanding its jurisdiction to cover issues like cyber or financial fraud and unsolicited commercial communications. This unified regulatory agency would address user safety concerns.

Q10: Is COAI’s regulation proposal limited to communication apps, or does it apply to other OTTs as well?

A10: COAI’s recommendations primarily focus on OTT communication services offering telecom-like services such as voice calls, video calls, and messaging. However, COAI has left open the possibility of similar arrangements with other types of OTTs in the future. Currently, the proposed legislation addresses communication apps.

Please note that the debate around OTT regulation is ongoing, and the final regulatory framework may differ from the proposals made by COAI and other stakeholders.

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