OTT regulation should be guided by the need to protect consumer interest: CUTS International

March 2, 2023

Currently, a debate is ongoing between the telecom service providers (TSPs) and over the top (OTT) service providers on regulation of OTT services. The OTT service providers are currently regulated under the Information Technology Act, 2000, and will be subject to additional obligations under upcoming digital personal data protection law. The TSPs have demanded that OTT service providers should share the infrastructure cost and be subject to similar rules as them.

“The consumer voice has been missing from the debate on OTT regulation. Regulations are aimed at preserving and enhancing consumer interest. Any change must prevent unintended adverse consequences on consumers, and should be beneficial for them,” said Amol Kulkarni, Director (Research), CUTS International.

Subjecting OTT service providers to additional unreasonable regulations may negatively affect consumers. For instance, some OTT service providers, particularly the smaller ones who offer unique and customised content to consumers, may not be in a position to enter into mutually beneficial cost-sharing arrangements with the TSPs. Their services may be deprioritised or disallowed on the network, impairing consumer choice for accessing services they desire.

Similarly, should OTT service providers decide to pass on the cost, the consumers will face double whammy as they would need to pay the TSPs for network access, and to the OTT services providers for accessing their services. This might particularly impact consumers who overwhelmingly depend on OTT services for information, education, upskilling, and income generation.

To meet additional costs, OTT service provides may be forced to redirect investment planned towards expansion, enhancing consumer experience, improving quality of services, and redressing grievances. This could also adversely impact consumer welfare.

Moreover, the risks or concerns intended to be addressed by subjecting OTT service providers to regulations similar to TSPs, in addition to the regulations they already need to comply with, are not clear. Such additional requirements could act as barriers to entry for potential players, thereby adversely impacting competition and innovation in the market, which is critical to preserve and promote consumer interest. The potential of the OTT industry to generate employment and contribute to the national economic growth may also be affected if avoidable regulations are adopted, and could run contrary to the ease of doing business agenda of the government.

“Creating a level playing field between OTT service providers and TSPs by subjecting both to similarly stringent regulations may not be right approach. To the contrary, there is a case to rationalise the regulatory framework for TSPs by doing away with unreasonable requirements they are subject to,” said Kulkarni.

Any change from the regulatory status quo for OTT service providers should pass the tests of legitimacy, necessity, and proportionality, and be subjected to cost and benefit analysis. Similarly, applicable frameworks for TSPs, including the draft Indian Telecommunications Bill, should be reviewed on these parameters to create a future ready regulatory framework for the country.

For further details, contact:
Vijay Singh,
Shiksha Srivastava,