The Telecom Regulatory Authority of India (TRAI) on Monday released a 42-page ‘Consultation Paper on Regulatory Framework for Over-the-top (OTT) Communication Services’. The document can be read here. OTT Services refer to applications and services that are accessible over the internet. The TRAI paper notes that there is no globally accepted definition of OTT, and that OTTs offering services such as voice calls and messaging overlap with services offered by Telecom Service Providers (TSPs). This, therefore, may include but would not be limited to Amazon Prime, Netflix, HotStar (read more on OTT below).

In the consultation paper, TRAI has focused on the definition, regulatory issues and economic concerns pertaining to OTT services which can be regarded same or similar to the services provided by Telecom Service Providers (TSPs). According to a statement issued by TRAI, the consultation paper is aimed at analyzing and discussing: the implications of the growth of OTTs; the relationship between OTT players and TSPs and similarity between services provided by the TSPs and OTT players; changes that may be required in the current regulatory framework to govern these entities and the manner in which such changes should be effected.

DEADLINE

TRAI has asked for comments on the issues raised in the consultation paper by December 10, 2018, while the deadline to submit counter comments is December 24, 2018. The comments may be sent on advqos@trai.gov.in.

Telecom companies in India have long been demanding that OTT players be regulated, as they offer similar services without the attendant licencing obligations, conditions and levies (such as licence fee). In addition, telecom operators also have to abide by stringent service quality benchmarks and invest in network and infrastructure.

Importantly, the TRAI says that “While analysing the issues and responding to the consultation paper, it may also be noted that current deliberations are not intended to revisit regulations or recommendations referred earlier, which have broader implications and were therefore concluded first following due consultation and diligence.” This means that they won’t be willing to reverse decisions taken related to Differential Pricing and Net Neutrality.

Overview

Some of the key factors related to TSPs that could have a bearing on the issues related to OTT regulation are:

  • Internet access at more affordable prices
  • Increased geographical and population coverage of mobile broadband technologies such as 4G
  • Competitive data tariff plans and unlimited voice calls
  • Penetration of smartphones leading to increased data usage

Defining OTT

In its 2015 consultation paper on Regulatory Framework for OTT services, TRAI defined an “OTT provider” as a service provider which offers information and communication technology services, but neither operates a network nor leases network capacity from a network operator. Instead, OTT providers rely on the global internet and access network speeds (Refer to page 5 of the Consultation Paper). Therefore, they have been divided into three types:

  • Messaging and voice services
  • Application ecosystems, linked to social networks, e-commerce
  • Video/audio content

However, the paper raises that many OTT applications provide multiple services within the same platform. Therefore, it asks for consultation on the questions:

Which service when provided by the OTT service provider should be regarded as same or similar to service as being provided by the TSPs? TRAI asks the stakeholders to list all such OTT service with description comparing it to services being provided by TSPs.

If substitutability could be treated as the primary criterion for comparison of regulatory or licensing norms applicable to TSPs and OTT service providers? TRAI asks for the factors and aspects that should be considered to identify and discover the extent of the substitutability.

Economic Aspects

Obligations such as license fee, spectrum usage charges, taxes, affect profits earned by TSPs. The paper talks about how the growth in OTT services and consequent data traffic has led to growth for TSPs business. But average price per GB has sharply declined from the average of Rs 75.57 per GB in the year 2016 to Rs 12.06 per GB in the year 2018. And how the shift from conventional messaging services provided by TSPs to OTT based services owing to substantially lower costs of communication (read page 19).

  • Fair and reasonable opportunities to all market players: It is argued that OTT players do not have licensing and regulatory obligations while TSPs incur license fees and have to meet regulatory obligations. It is also argued that OTT players have opportunity to earn revenue from alternative sources using data of their subscribers and can offer services which may be prohibited for TSPs.

In the light of the above arguments, TRAI asks:

Whether regulatory or licensing imbalance is impacting infusion of investments in the telecom networks especially required from time to time for network capacity expansions and technology upgradations? If yes, how OTT service providers may participate in infusing investment in the telecom networks? Please justify you answer with reasons.

Would inter-operability among OTT services and also inter-operability of their services with TSPs services promote competition and benefit the users? What measures may be taken, if any, to promote such competition? Please justify you answer with reasons.

Factors relating to the regulatory framework

The consultation paper also deals with question of the lawful interception of OTT communication keeping in mind privacy and cyber-security obligation under IT Act, 2000.  The consultation is mindful of the regulatory and market imbalance between TSPs and OTT service providers. While TSPs are regulated under TRAI Act 1997 and the Indian Telegraph Act, 1885, jurisdiction related issues in OTT are yet to be resolved. TRAI asks:

Are there issues related to lawful interception of OTT communication that are required to be resolved in the interest of national security or any other safeguards that need to be intituted? Should the responsibilities of OTT service providers and TSPs be separated? Please provide suggestions with justifications. 

Should there be provisions for emergency services to be made accessible via OTT platforms at par with the requirements prescribed for telecom service providers? Please provide suggestions with justification. 

Is there an issue of non-level playing field between OTT providers and TSPs providing same or similar services? In case the answer is yes, should any regulatory or licensing norms be made applicable to OTT service providers to make it a level playing field? List all such regulation(s) and license(s), with justifications. 

In case, any regulation or licensing condition is suggested to make application to OTT service providers, then whether such regulations or licensing conditions are required to be reviewed or redefined in context of OTT services or these may be applicable in the present form itself? If review or redefinition is suggested then propose or suggest changes needed with justifications. 

TRAI has also asked the stakeholders to bring attention to any other issues related to the matter.

Also Read: Regulatory Framework for Over-the-top (OTT) services/ Internet services and Net Neutrality