Regulation of OTT services within the telecom regulation has been the issue of an ongoing debate between Telecom Service Providers (TSPs) and OTT service providers. TSPs argue that existing regulatory disparities give OTT players privileges but not responsibilities and that OTTs should be subject to similar rules as other telecom companies. On the other hand, tech companies providing OTT services, have said that OTT communication services, broadcasting services and internet-based communication can’t be termed as telecommunication services and therefore, should not be brought under the licensing framework. Moreover, OTT providers argue that the licensing requirement and similarly regulating carriage and content, might result in over-regulation. Potential risks related to OTT services are already regulated under existing and evolving regulatory frameworks around intermediary liability, consumer protection, privacy and data protection. Some experts believe that additional regulation of OTTs through means like licensing, would potentially stifle innovation and hinder economic growth, and could also have implications for privacy and data protection of consumers. This could adversely impact consumer interest.
The two central aspects of the debate are the presumptions regarding ‘same service, same rules’ and infrastructure cost sharing. Telcos have demanded that OTT messaging services be regulated, and the government levy a licence fee on OTT communication apps on par with telcos and that carriers should be compensated for all OTT data consumed on their networks. According to OTT players, they are responsible for more than 70 per cent of the growth in data traffic on the telcos’ networks. TSPs have also benefited from increase in data usage and tariffs. Therefore, TSPs are potentially benefiting through the content provided by OTT players. In respect of the issue of infrastructure cost sharing, OTT service providers have made investments in setting up of data centres, cache servers, content hosting centres and content delivery networks. They also help TSPs in efficient use of infrastructure.
Any proposed regulatory reform must be beneficial to the public at large. In the sense that it must foster competition, innovation, economic growth and increase consumer choice, accessibility, and quality of services. There are several implications for consumers which need to be explored and understood. One of the risks with the proposed cost-sharing framework which directly impacts the consumers is differential pricing for different sets of consumers. there is a substantial risk of increased cost to consumers if OTTs are required to share infrastructure cost, and should they wish to pass on the same, by imposing a usage fee on OTT services.The consumers will face double whammy as they might need to pay the TSPs for the broadband access and to the OTT providers for access to content. International examples also indicate that a revenue-sharing mechanism will not be in consumer interest. There are further risks of internet fragmentation, threats to net-neutrality, decrease in quality of services among others. Therefore, this project is undertaken to understand the consumer interest involved in the discussion around regulation of OTT communication services.
Consumer Unity & Trust Society (CUTS)
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Senior Research Associate