Consensus to be built between OTT players and telcos by DoT soon

The Department of Telecommunications (DoT) will invite telecom companies and communication apps for a joint discussion on the proposal of imposing interconnect usage charge or revenue sharing, officials said. Industry representations on the matter have so far been separate and sporadic, with each side arguing against the other.

Consensus on the issue may lead to a formal mechanism by which the extent of such charges can be decided, officials added.

The Cellular Operators Association of India (COAI) – which has all three private telecom service providers (TSPs) Reliance Jio, Bharti Airtel, and Vodafone Idea as its members – has suggested levying a licensing fee of 8 per cent on OTTs. Meanwhile, the Internet & Mobile Association of India (IAMAI), which represents online businesses in India, has opposed the demand, calling it “a covert attempt to dilute net neutrality in India”.

Officials say that while the government will take the final call, the far-reaching implications of the proposal merits a joint discussion on the matter. However, they added that the government was not looking to mediate. “The government is not trying to create a consensus on the issue and mediate between two groups. The department will take a call as per established norms of stakeholder consultations,” an official said.

The DoT has received suggestions to also impose a licence fee on a recurring basis on OTTs as a percentage of their adjusted gross revenue (AGR).

The draft telecom Bill mandates that OTTs be subject to rules similar to those that apply to telcos, as internet-based service providers.

As a result, OTTs may have to take out licences to operate, and as licensed entities, potentially share revenue with telcos.

It extends the definition of telecommunication service to include OTT players such as WhatsApp, Signal, Zoom, Skype, Google, and Telegram, which provide (voice or video) calling and messaging services.

The definition was amended after TSPs had argued for years for a level-playing field, since OTT communication and satellite-based services offered audio and video calls and messaging without paying for licence or spectrum.

Back and forth
In November, COAI had pointed out to the government that it will be able to collect up to Rs 800 crore of taxes from OTTs if it imposes taxes on them. If the TSPs receive revenue from OTTs, it will then count towards the TSPs’ annual gross revenue calculations, and subsequently be taxed by the government, it has argued.

“Hence, the OTTs will effectively be contributing to the national exchequer through the TSPs. The revenue collected by TSPs from the OTTs will help the TSPs rollout and expand networks to meet the infrastructure requirements for OTT services,” COAI said earlier this week.

COAI has repeatedly stressed that communication OTT players consume large amounts of bandwidth. This puts tremendous pressure on the network infrastructure established by TSPs. “Apart from investing massive amounts in creating the network infrastructure and incurring huge operational expenses in terms of meeting various regulatory compliances, TSPs also pay exorbitant levies and taxes in terms of licence fee, SUC, GST, etc,” COAI Director General S P Kochhar has said.

According to an Axios report, European TSPs only earned 44 per cent of their potential annual general revenue due to OTTs loading their data and using services for free.

IAMAI has said the sending party network pays (SPNP) model would sound the “death knell” for the digital economy. “Calls for an SPNP mechanism have re-emerged even though the demand for telecom services is entirely dependent on the ability of OTT services to attract users. Levying additional cost on OTTs, without providing any additional services, would be akin to exacting tribute,” it said. Business Standard