What telcos and service provider associations said about OTT services in reply to TRAI paper

The Telecom Regulatory Authority of India (TRAI) has published the responses and comments received for its consultation paper on the regulatory framework for OTT services. The regulator has organized the responses from the stakeholders into three categories: i) comments from service providers ii) comments from service provider associations iii) comments from other stakeholders which includes individuals, organizations and consulting firms.

We’ve collected some of the comments made by telcos and bodies and we shall be coming out with a three part series. Part one deals with comments on OTT services. Part two deals with their views on Net neutrality and part three will talk about comments made on zero rating.

Comments by telecom service providers on over the top (OTT) services

Bharti Airtel’s responses:

• It is critical that the playing field be leveled and those providing the same services be governed by the same set of rules. In short, the OTT Communication Service Providers should be governed by the same set of rules as are applied on TSPs.
• The other important point to highlight is the fact that, at present, there exists a substantial arbitrage between voice and data realization per unit of network resource and, an unintended consequence of a significant growth in OTT voice communication services (and the resultant substitution of TSP voice), could well result in one of two possibilities – a significant rise in data prices or a slowdown in investment.
• While a minute of voice, which utilizes network resources equivalent to 0.25MB of data, realizes a revenue of 36 paisa, TSPs realizes only six paisa when the same network resource is consumed as data for OTT communication services (VoIP). This differential pricing was designed to drive data adoption in the Indian context.
• OTT Communication Service Providers, meanwhile, are able to offer calls across telecom networks in India using strong encryption and switching servers located outside the country and hence effectively prevent any lawful interception and/or monitoring of calls handled in their switching servers/network. These players also avoid sharing subscription details of customers and/or logs of communications.
• TSPs follow TRAI regulations of Unsolicited Commercial Communications (UCC) and National Do Not Call Registry (NDNC). Stringent penalty provisions for violation of these regulations have been prescribed by TRAI. However, OTT Communication Service Providers’ services are outside the scope of this regulation and therefore they are able to generate significant amounts of spam and unsolicited communication without any adverse effects. Similarly, OTT Communication Service Providers are not subject to customercentric regulation, such as metering and billing audits, quality of service, etc.

Vodafone’s responses:

• Over the top (OTT) communications services ride on the networks of the TSPs and thereby provide services in competition with traditional telephony services of TSPs. These services are often free to the customer, being funded via advertising or other business models. This has led to a significant decline in revenue for telecoms operators, who are, at the same time, pouring increasing investment in networks and acquisition of spectrum, payment of licence fees, spectrum usage charges, etc to meet escalating demand.
• Our submission is that the Authority may first look at which obligations should be extended to all internet services – these could be obligations around transparency, privacy, security and consumer protection, to encourage growth, create a resilient and safe internet and build consumer confidence and trust.
• Messaging revenues have declined from 7%-10% to 3% due to the increased uptake of OTT messaging services such as WhatsApp, etc Increased calls through apps such as Skype, Viber etc have also impacted the voice revenues of the TSPs and the decline is, at present far more evident in the international calling segment.
• Going forward, we expect this trend of app to app calling or messaging to become even more prevalent with the increased uptake of smartphones, and wider 3G network coverage leading to greater take-up of 3G services and the imminent introduction of 4G services by various TSPs. Voice revenues, which constitute 80% of TSPs’ revenues, are thus under severe threat.

Idea’s responses:

• There is a need to maintain parity between current tariffs for voice services and VOIP services by allowing the telecom operators to charge differential tariff for data traffic for VOIP applications. If the decision is made to have the same data tariff for VOIP and other data applications, it will result in the current data tariffs increasing anywhere between 6 to 10 times from the current levels – detriment to the growth of non-VOIP data applications and the vision of a “Digital India.”
• VOIP significantly compromises TSPs ability to offer affordable data services to lower strata and rural India and thus would be the single biggest reason for the rise in data tariffs. This data tariff increase would thus impact other important applications of internet and would jeopardize the real use of internet and prevent the spread of benefits of Internet to the unconnected population of India.
• Some of the services being provided by OTT players are a perfect substitute of PSTN/Internet Telephony services, but with lower QoS standards than offered by Licensed Telecom Service Providers (TSPs) in India and violate the basic principle of ‘SAME SERVICE SAME RULES”.
• Companies offering OTT voice services without holding a telecom license in India would essentially violate and circumvent Indian telecom licensing provisions and provide services that are otherwise only permitted under a telecom license.
• Proliferation of unregulated VoIP/Internet Telephony at a massive scale is leading to a significant disruption in the existing voice business of TSPs and would discourage TSPs capability and incentive to invest in infrastructure.
• We recommend that OTT players especially those providing communication services should pay the TSPs for creating the above value in the following manner: Option 1: TSPs should be allowed to charge for communication services over and above the charges being applied for bundled data or data packs. Option 2: Payment by OTT communication service providers. The OTT players should deploy their servers within India. Consumers will pay normal data charges for using OTT communication services and the deficit will be paid by the OTTs, based on volume of traffic. The pricing for message, file transfer, voice can be different. The commercials of this arrangement to be mutually decided between OTT players and TSP.

Reliance Communications’ responses: 

• Classification of internet applications into various categories viz, communication OTT applications, i.e. Voice and Video, Messaging and E-mail and Social Networks and non communication / other OTT applications is essential for balancing the requirements of legal governmental control and freedom of speech and expression.
• The OTT players should be asked to register themselves as OSPs, with DoT for provisioning services in India, albeit with certain essential responsibilities and accountability being obligated on them in national and societal interest, especially for LIM and sharing of revenue with the national exchequer.
• Similar to the mutual commercial agreements between the DTH infrastructure providers and content providers, TSPs too should have the freedom of commercial negotiation with OTTs who are utilizing the TSPs’ network and bandwidth for delivery of its services.
• Pricing model and options, i.e. bandwidth / time / website access based, to be adopted for the commercial agreement between the TSP and the OTT service provider and the same should be left to the mutual arrangement between them.
• Security concerns, maintaining data records, logs etc. and ensuring security, safety and privacy of the consumer data as well as their compliance can be addressed by mandating (a) OSP registration of OTT service providers, (b) institutionalizing internet content regulation, (c) local hosting of their infrastructure and (d) mandating their peering with the local TSPs.
• The OTT based tariff plans that afford the flexibility of making the consumer pay for his preferred usage only are advantageous to the consumers.

Comments made by service provider associations 

ASSOCHAM’s responses:

• OTT services being an evolved form of VAS and the VAS ecosystem having stabilized satisfactorily to co-exist with the telco eco system without licensing, we strongly recommend that a similar approach be considered for OTT services. This would be a clear Win-Win for all the stake holders-the Government, the consumer, the OTT player and the telco.
• The European Commission has decided to bring the OTT players like Whatsapp and Skype under some kind of regulatory framework to create a level playing field between them and mobile operators. The European Commission has also reportedly promise a “comprehensive investigation” into platforms such as Amazon and Google to look at how they display search results and use customer data

IAMAI’s responses: 

• There is a general perception that VoIP is cheaper than traditional voice calls,which is not true. For e.g. A 60 minute call over IP can consume around 35 MB only for voice and similar duration video call will consume 240 MB of data. Therefore, a voice call of one minute duration over the Internet can cost between 15 paisa to Rs 6 depending on the bandwidth. This effectively adds up to Rs 180 per hour which is three times more than the average call rate for a subscriber
• The point that TSPs have invested in building the infrastructure and the OTT players are freely riding on their networks is a misnomer. TSPs are already fully compensated by end user consumers for access to the broader Internet. TSPs should not charge Internet application and content providers in order to reach end users. Imposing additional charges on Internet services will hamper innovation and consumer choice. The important issue here is not that internet platforms and services are the free riders but is in fact the heavy cost of spectrum. The TSPs in India have been bearing the burden of expensive spectrum cost is not an issue between TSPs and the content providers but between the TSPs and the Government.
• Growth of social media and apps like Facebook, Whatsapp, Skype and Viber have all created communication a lot easier and less expensive and have challenged the telecom players worldwide who missed to see it as an opportunity to create the infrastructure themselves to facilitate such services to its customers. Hence, it is
  regressive to regulate the Internet Content Providers on the basis of that analogy.

NASSCOM’s responses:

• There is absolutely no need from a logical point of view, no competence from a legal point of view and no practicability from a technology point of view of bringing in the type of regulations/ controls on Internet platforms and Applications (referred to as OTT services in the TRAI paper) envisaged in the consultation paper.
• Introduction of pricing for Internet Platforms and Services-originated traffic opens up the possibility of price-based discrimination, and an opportunity to foreclose entry to other than the TSPs own Internet Platforms and Services, if they are seen to be competing with the TSPs. Contrary to the proposition that ‘prices be used as a means of product/service differentiation’, we recommend that specific steps are required to prevent use of pricing as a form of barrier.
• Traffic management practices (for OTT services) that are reasonable and consistent should be implemented in a transparent manner. This will require audits and scrutiny as well as safeguards and penalties to prevent misuse. Therefore full disclosure to the regulator would be essential. Making available traffic management policies and sharing information on how telecom services are affected by traffic management with the users is important and necessary.
• Any proposal to introduce differential pricing for data access for traffic originating from Internet Platforms and Services_to protect ‘traditional revenue streams’ of TSPs is not in the interest of the consumer. The TSPs offer access to the Network which is being duly compensated by the end user through the data plans.

COAI’s responses:

• While we acknowledge the role of OTT players, however, it is pertinent to note that some of the services that are offered by the OTT players such as messaging/instant messaging and VOIP telephony are perfect substitutes of the services that are being offered by the TSPs under UASL/UL. There is thus a need to address the various regulatory imbalances and ensure Regulatory Neutrality. For this, the Authority should apply the principle of, “Same services, Same rules”. Only under such an environment, the TSPs will get a fair chance to compete with OTTs on similar pricing and terms.
• The data network utilization due to these services (OTT services) increases the data revenue of the service operators, however the increase in data revenue is insufficient to compensate for the loss in revenues due to OTT services.
• According to an industry research, the number of mobile operators generating revenues from OTT services by charging for data is falling year-on-year. In 2013, this figure was one-fifth, down from 26% the previous year, and 50% in 2011. TRAI has itself highlighted the fact increased data usage fails to compensate for loss of revenues to TSPs arising due to OTT services. Further, these services also put strain on the network, thus requiring further investments.
• TSPs should be given the freedom to negotiate commercial arrangements with OTT players. The operators should be allowed to engage with the OTT players to get into the bilateral arrangements providing adequate measures for consumer protection.
• Service Differentiation is a common business practice that is widely practiced across various industries. Take the examples of: a) Tatkal rail tickets, first class, sleeper class, unreserved – differentiated products different prices b) First class business class and economy class in airlines c) National expressway or highway vs a regular road d) Travel by bus, taxi or an auto e) Priority banking, personal banking f) Regular water, mineral water. We believe that even in the matter of OTT, TSPs should be allowed differential pricing for data access and OTT communication services as long as the TSP shall not discriminate between subscribers of the same class and such classification shall not be arbitrary.

(With inputs from Riddhi Mukherjee)

Also Read: TRAI’s Internet Licensing and Net Neutrality Consultation Paper: Simpler, Shorter Version

Image Credit: Flickr user Sam Azgor