A clutch of industry groups ITI, ADIF, IAMAI, and BIF have opposed telcos’ demand to regulate OTTs and charge ‘fair share’, citing violation of net neutrality principles and underlining the contribution of OTT services in data usage growth. Telcos have been batting for compensation from OTT players for using their networks. Put simply, OTT refers to applications and services that are accessible over the internet and ride on an operator’s network.

The Information Technology Industry Council (ITI) has argued that OTT Services are additive not substitutes for traditional telecommunications (or broadcasting) services.

ITI made these arguments in its counter comments to the Telecom Regulatory Authority of India’s (TRAI) consultation paper on the regulatory framework for OTT communication services, and the selective banning of OTT services, PTI reported from New Delhi.

OTTs, it said, provide bundled services that cannot be separated out into ‘OTT Communication Services’, or ‘OTT Broadcasting services’ making it nearly impossible to define OTT overall or in terms of subsets for regulatory purposes.

However, the functions of these services are already regulated under the IT Act, ITI further said.

Broadband India Forum (BIF) has asserted that demand for network usage fees from OTTs by telecom operators is outdated and would violate net neutrality principles.

“Overregulation of the OTTs would be counterproductive, as this will lead to a higher cost to customers and reduce consumer choice,” BIF President, TV Ramachandran said.

Further, it would also adversely impact innovation, lead to discrimination, adversely impact smaller entities and startups, and lead to a violation of Net Neutrality guidelines, BIF countered.

According to it, OTTs (content and applications over the internet) have been empowering individuals by boosting productivity and socio-economic standing in addition to having massive economic spill-over effects on the nation’s prosperity. BIF equated the latest demand by telcos to the old, legacy, and obsolescent Sending Party Network Pays (SPNP) system of the 1990s.

According to BIF, the telcos wish to cling to an old, legacy, and obsolescent system of SPNP, prevalent during the voice telephony era of the 1990s, when they ask for network usage fees to be paid by the OTTs for carrying the large traffic generated by the former.

The internet, it went on to argue, operates differently, from the old voice telephony system of the 1990s. Users not only want to communicate with one another but also want always to be online to connect to content, applications, and services. This is the reason why internet traffic is typically unbalanced between content and application providers and internet access providers.

Internet and Mobile Association of India (IAMAI), in its counter-comments, said robust regulatory frameworks for digital service providers already exist in India, under the IT Act, IT Rules, and DPDP Act. They are also required to comply with the Consumer Protection Act and Rules for consumer welfare, and the Competition Act for economic Regulation.

Under the IT Rules, digital service providers and OTT service providers are subject to dedicated compliance and reporting requirements. So, the introduction of a telecom regulatory regime for OTT services would undoubtedly qualify as an act of overregulation.

IAMAI also highlighted that revenue-sharing arrangements between OTTs and TSPs (telecom services providers) will lead to double payment. Over-the-top service providers have provided high-quality content for little to no cost to users. This in turn has spurred the rapid growth of data consumption and economic activity in India.

An SPNP mechanism, it countered, would effectively reverse this phenomenon by disincentivizing growth for OTT-based businesses, for whom a volume-based revenue-sharing mechanism would be a glass ceiling for continuing growth and may even act as a barrier to entry for startups.

Policy think tank for Indian Digital startups, The Alliance of Digital India Foundation (ADIF) said calls for revenue-sharing arrangements between TSPs and OTT applications persist, grounded in the misperception that OTTs are benefiting without making any contributions, whereas TSPs are burdened with infrastructure and licensing costs.

The proposed implementation of the suggested revenue-sharing model carries the potential to discourage the growth of digital enterprises, it said, adding that this model introduces a volume-based revenue-sharing system that could impede sustained expansion.

Additionally, it introduces an additional cost associated with accessing free or affordable content, and a portion of this expenditure may eventually be passed on to consumers, thereby increasing the cost of internet usage.

This approach also contradicts the principles of net neutrality outlined by the Ministry of Communications in 2018, emphasizing the necessity for the network to remain impartial toward all transmitted data, it said.