India’s telecom regulator is soon expected to release a consultation paper on licensing of VoIP (voice over Internet protocol) services such as Skype, WhatsApp and Viber. In April 2015, major telecom companies expressed their desire for licensing of Internet services including VoIP and to come up with a revenue-sharing plan with them for protecting their revenues during TRAI’s consultation.
At that time, the regulator released a consultation paper titled “Regulatory Framework for Over-the-top (OTT) Services,” and invited comments on the issues of licensing of Internet services and whether operators should be allowed to discriminate between different types of internet services and companies.
Here are the arguments made by major telecom firms including Airtel, Idea Cellular, Reliance Communication, Vodafone, MTNL and Sistema Shyam Teleservices regarding VoIP from that consultation process:
Same Service Same Rules
Telecom operators say that Internet companies providing communication services such as voice calling should be bound by the same conditions as them. They argue such services are “perfect substitutes” of voice calling, which accounts for around 80% of the revenues of telecom companies. Therefore, such companies need to acquire licenses from the government, like telecom operators.
MTNL said VoIP companies should not be allowed to go ahead with their business until a regulatory framework is decided. “Considering the volume of traffic generated within the country due to these OTT applications / services, no OTT player would like to discontinue its services in the country for the reason of compliance to some regulation / law of the land etc,” MTNL said in its response to TRAI.
VoIP Calls Are Eroding Operator Revenues
Telecom operators say VoIP services have become hugely popular among the users in the recent years. Users spend more time making calls from Skype, Viber and WhatsApp among others. According to telcos, using these platforms is cheaper to make calls over the Internet than on traditional circuit-switched networks. So VoIP services are essentially eating into the revenues of operators.
Airtel had this to say:
While a minute of voice, which utilizes network resources equivalent to 0.25MB of data, realizes a revenue of 36 paisa, TSPs realize only 6 paise when the same network resource is consumed as data for OTT communication services (VoIP)…At current realization, every 1 per cent of TSP voice minute that is substituted by OTT VoIP would lead to a Rs 1200 crores revenue loss to the industry.
This, Reliance Communication wrote in its response to TRAI, is leading to significant loss in revenues from international calling and roaming. “The onslaught of these VoIP services has already taken away the international calling market thereby affecting the services of the access service providers along with the ILD Operators,” it said.
No Licensing Will Result In Higher Data Rates
This is an extension of the above argument. Telecom companies said they expect VoIP calling to flourish in India as data networks improve. But it will be very difficult for them to provide affordable Internet to its customers in the current regulatory system as it will lead to the decline in its revenue from voice calling. This will force telecom operators to increase data tariffs to make up for its losses.
Idea estimates the data tariff to go up 6-10 times the current rate. Arguing that this may ring the death knell for other internet applications, it said: “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.”
Establish Revenue Sharing Arrangements With Operators
Telecom operators accuse Internet applications and services of being freeloaders that use their network and infrastructure to reach customers. Telecom operators, on the other hand, have spent millions in licensing spectrum and setting up telecom infrastructure. So telecom firms demand Internet services including VoIP companies should pay them for using their resources.
Many telecom firms acknowledge data revenues have been rising but that increase is not big enough to cover the decline in its traditional revenue streams. This will hinder telecom firms from investing in upgrading their infrastructure.
“Unless there is an opportunity for the TSPs to maintain a sustainable and viable business case, the TSPs will not be in a position to make the huge investments that will be required to meet the increasing broadband demands of both customers as well the OTT players, which may potentially lead to poorer operational networks in the country,” said Vodafone in its response to TRAI in 2015.
Telecom operators argue VoIP services pose significant security risks. Their servers reside outside India so their traffic can be monitored by foreign governments but not by the Indian government, telecom firms said in their comments.
Extending their arguments of same service same rules, mobile operators said ordering Internet services to comply with government regulations such as allowing interception of traffic and relocating servers in India can mitigate the security risks.
“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,” Airtel said in its response to TRAI.
Disclosures: MediaNama has taken a strong position in favor of Net Neutrality and against price discrimination; Founder and editor of Medianama Nikhil Pahwa and the author are volunteers with the SaveTheInternet coalition.