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Framework for OTT communication services

India is a lucrative market for OTT platforms. The digital and smartphone revolutions have played their roles in giving a huge boost to this segment in the past few years. With the content on OTT platforms being published without any effective central regulation, the need for dedicated rules for the video streaming players has come to the forefront as the content disseminated by OTT platforms does not go through the same regulations that content aired on televisions or released in theaters or published in print, which does not create a level playing field for all the stakeholders. Many content creators, therefore, take the OTT route to release their content to bypass these regulations.

The Department of Telecommunications (DoT), in a March 2016 reference letter, sought the recommendations of the Telecom Regulatory Authority of India (TRAI) on net neutrality and other related aspects like economic, security, and privacy issues, and regulatory framework for OTT services similar to services provided by Telecom Service Providers (TSPs), etc. Considering the complexity of the issuesa and other interrelated issues, the authority dealt with specific issues through distinct consultation processes.

Consultation process and responses of the stakeholders

On November 12, 2018, TRAI issued a consultation paper on the residual issue, i.e., regulatory framework for OTT communication services, and raised various issues for comments and counter-comments from stakeholders. Key responses received from the stakeholders on the issues raised in the consultation paper are:

Substitutability primary criterion for comparison of regtulatory or licensing norms and lists of such services. Some stakeholders suggested lists of services based on functional substitutability such as voice telephony (VoIP), messages (SMS), video calls, and instant messaging service. Functional substitutability may be the primary criterion for comparison of regulatory or licensing norms. However, other stakeholders highlighted that OTTs and TSPs operate in different layers, and OTTs are not substitutable but dependent on TSPs for network access. TSPs have exclusive rights like spectrum, interconnect with PSTN, network infrastructure, and obtain numbering resources.

Issue of non-level playing field between OTT providers and TSPs, impact on infusion of investments in the telecom networks and regulatory approach for OTT communication service providers. Some stakeholders agree that the issue of non-level playing field exists, and they proposed that OTT regulatory regime should mandate compliance to requirements like various regulatory requirements. While some stakeholders commented that no such issue exists as OTT operates in an extremely competitive market, OTT providers do not control infrastructure, and TSPs can directly use spectrum. Most of the stakeholders proposed that reducing the legacy regulatory barriers on TSPs, especially license fees, spectrum usage charges, other levies, and taxes, may improve the business case for TSPs. Some stakeholders suggested that regulatory or licensing imbalance is impacting infusion of investments. Some stakeholders suggested that OTT service providers may participate in infusing investment in the telecom networks by working out commercial arrangements with TSPs and allowing TSPs to offer OTT packs to consumers. However, some stakeholders commented that licensing imbalance is not impacting any infusion of investments, and OTT providers have increased the investment of TSPs by building physical facilities like data centers, fiber networks, servers, and routers. TSPs charge customers a regular direct subscription fee, and OTT works on zero pricing. TSPs benefited due to increased data usage by consumers with the use of OTT services.

Issues related to Interoperability, lawful interception of OTT communication and accessibility of emergency services. Majority of the stakeholders highlighted that interoperability may not be mandated among OTTs and should be left for market forces. Regarding interception of OTT communication services, some stakeholders commented in favor and submitted that OTT service providers collect and store personal information of the end users in their data servers located abroad, in turn leading to issues and dangers relating to data protection and national security. They have argued that it becomes difficult to retrieve the data due to jurisdictional issues. While some stakeholders suggested that the issue related to interception of OTT service providers whose data reside outside India may be resolved via the Clarifying Lawful Overseas Use of Data (CLOUD) Act1 of USA and the Budapest Convention arguing that these are effective solutions for cross-border data transfers. Other stakeholders proposed that data should be accessible in India-based servers. A few stakeholders mentioned that The Code of Criminal Procedure, 1973, (CrPC), and The Information Technology Act 20004 have sufficient rules that apply to OTT providers and other intermediaries. With regards to emergency services, some stakeholders representing consumers, and media services, agreed with the requirement of provisions for emergency services to be made accessible via OTT platforms. While most of the stakeholders opposed any measure for provisioning of emergency services.

Approaches adopted in other jurisdictions

Different approaches are being adopted in other jurisdictions for regulating OTT service providers like services provided by TSPs. Various countries have attempted to take measures regarding this issue. Jurisdictions like the European Union (EU) and Australia have enacted laws for electronic services, but they are still in the nascent stage of implementation. Indonesia has drafted some regulatory provisions but the final status of these is pending or in the proposal state. Few countries have specific laws and policies for regulating VoIP services, like the USA and Qatar. Countries like Russia, China, UAE, and Iran are using restrictive approaches by banning the OTT services using other national laws or court orders. Brazil is debating whether OTT services should be regulated. Countries like Argentina, Chile, Israel, South Korea, South Africa, Kenya, Ghana, Thailand, Sri Lanka, and Japan have not adopted any formal regulatory approach for OTT services. Some of them have provided apps like KakaoTalk17, Line18, and WeChat,19, respectively, as an alternative to foreign OTT services. Singapore and Malaysia have made regulatory licensing provisions for OTT Media services.

TRAI recommends
Economic aspects. Over the last few years, telecom has witnessed exponential growth in data traffic and service providers have launched tariff plans with unlimited voice usage as a part of data plans. It shows that with the increase in the usage of OTT, traffic of telecom services providers has also grown. Various studies on appropriate business models are already under consideration in various jurisdictions and it is emerging. Therefore, any regulatory prescription in haste may leave adverse impact on industry as a whole. Accordingly, the authority is of the opinion that market forces may be allowed to respond to the situation without prescribing any regulatory intervention. However, developments shall be monitored and intervention as felt necessary shall be done at appropriate time.

Security and privacy issues. Architecture of OTT communication services is evolving to protect the end users and encryption technology deployed in a manner, which prevents intermediaries from getting the communication in a clear text or in an intelligible form. Imposition of any requirements to cater to get the details of communication in an intelligible form or clear text would either lead to change in the entire architecture of such OTT services, which might not provide same level of protection as offered today or would require to introduce provisions that may make the agents involved in the communication vulnerable to unlawful actors. This matter is under examination of various international jurisdictions and no satisfactory solution has emerged as yet. As such, TRAI is of the view that no regulatory interventions are required at the moment.

Regulatory framework for OTT services. Regulation of OTT services is a widely debated topic in many jurisdictions as well as in ITU. While few jurisdictions have started exploring possibilities to regulate some aspects of a few OTT services through legal and technical measures, but these efforts are yet in nascent stage and the overwhelming majority of jurisdictions and the ITU are still studying various aspects of OTTs. Since, ITU deliberations are also at study level, therefore, conclusions may not be drawn regarding the regulatory framework of OTT services. However, in future, a framework may emerge regarding cooperation between OTT providers and telecom operators. DoT and TRAI are also actively participating in the ongoing deliberations in ITU on this issue. Based on the outcome of ITU deliberations, DoT and TRAI may take appropriate consultations in future. Hence, TRAI recommends that it is not an opportune moment to recommend a comprehensive regulatory framework for various aspects of services referred to as OTT services, beyond the extant laws and regulations prescribed presently. The matter may be looked into afresh when more clarity emerges in international jurisdictions particularly the study undertaken by ITU.

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