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Reliance Communications’ CS Rao: Telecom Operators & Internet services need to share revenues

Our notes from the TRAI seminar on the regulatory environment around OTT’s, essentially, regulation of Internet services on Mobile. For context, read this and this. Please pardon the typos. Some parts of the talk have been paraphrased.

CS Rao, Reliance Communications:

High end users are nearing the saturation for mobile internet speed, and smart digital services are on the rise. It is service centric (telecom operators) vs experience centric (Internet services). The telecom world today is based on the Interconnect Usage Charges regime: It is all on wholesale and retail model. Mobile termination charges are fixed by the operators and we look at web content and cloud applications as a VAS model.

Towards 4G, it’s an all IP network, and all services will be IP services, including voice. Video services will move towards expectations of HD (High Definition). The gateways should have the emphasis on QoS and the API. What worked so far may not work in the future. That’s the fear that we as telcos have. Because of services like Whatsapp, Viber, Facebook, Twitter etc. Even players like LinkedIn Yammer, Cisco Webex will come in. At the same time, there is a contextual change: a multiple of US and Europe centric social communication platforms and other platofrms like Android and Apple. Mutiple OS, devices, there will be some regulatory pressures on migrating towards an IP interconnect regime.

We are facing multiplicity of services, devices, networks, ecosystems, interactions. Between all this, the bottom line is that we’re a federated telecom service provider. We all know that OTT models will become inevitable. Not all devices will be on one operators network. Some devices may be on telcos (telecom networks), some on OTT (IP based). This is a federated telecom model. We feel that we’re in a position with extensive competition, changing user behavior. collaboration is slow, regulation is high. We need to do something to change strategy.

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The imminent future threat is around the corner: all the web services. Chrome supports VoIP as a part of the browser, with Voice, SMS and any other interactive communication. How can telcos beat the OTT services challenge. We feel that we have to work with OTT’s.

To support each app and each type of device is a major challenge. What is the impact of all these OTT services? The radio network has to support a multitude of devices, and use the spectrum most efficiently. The OTT traffic and adoption cycles puts pressure on the network. We feel it’s the incremental estimated investment burden.

Investment required per user:

– RAN: $20
– Backhaul, transport and core: $15
– OSS/BSS: $3
-Analytics BI NPM, CEM SON: $7
– Compliance and security: $4
– SDP: $3
– Rest: $3

The simple electronics cost is $55. If we assume that only 20% of subscribers are going to adopt, the investment will be $1.1 billion.

If telcos adopt a non-neutral approach, with apps, content, and legal permission to meet consumer demand: If all of that was to be considered, we only get that little centered, that you can see is a very small fractional percentage would use. The non-neutral point of the telcos, this is where the problem is.

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Can we do a zero-rated data delivery? That’s the option that some of us are adopting with Facebook and Google. Or do we do a sponsored data plan? Or an application specific data packs, or we block some apps, or do we do some QoS based services on a fast lane, or paid pairing. These are practical forms of non-neutral mobile broadband, with only a small percentage of variants and use cases.

If we have to face the reality. A telco service that is service-centric and an OTT space which is experience-centric need to come together into a product centric Telco-OTT world.

In all this, one of the things is that it has to be around communication, connectivity, content and cloud. Four telcos are already doing this. Mobile advertising is being done at Singtel. Telenor is doing movies on demand. KDDI Japan is doing music service. Swisscom is doing home automation.

What are the options? We have to create a value proposition for both telcos and OTT. There are always decoupled from the access network. It’s an issue of demand and supply. The resource model is very constrained. The telcos have to develop digital service arms and learn from OTT service lifestyle. Telcos can give ubiquity which OTT won’t give.

Megabyte consumption is not commensurate with the tariffs in vogue. The ability even for high end users to use data is reaching saturation point. It’s about affordability of data services.

The OTT’s have no licensing, no regulation, no customer support. I’ve tried to download office 365, and I couldnt get that working for 6 days. When operator services are not delivered, we get a notice from TRAI. These are some things are no obligation for QoS for OTT. Whatsapp is a huge security issue in Saharanpur. Revenues are being earned from Indian subscribers, on a scale of 1/3. There is no monitoring, no hazards. this is where they are offering services free of cost.
OTT is a tradeoff for telcos:

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What we are requesting is:

– major regulatory realignment as consumers move from minutes to MB
– m2m arrangements on data based service delivery
– IUC and termination regulations gains importance
– DNA (device, network and applications of TSP model needs assurance for harmony.

TSPs and OTT’s want a win win position. TSP’s and OTT need to share revenues.

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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