Telecom regulatory authority, TRAI has issued a consultation paper to initiate a debate on how OTT services should be regulated (or not). Note that this debate will directly impact net neutrality and needs much more scrutiny and awareness (last date to reply to TRAI is April 24th*).
OTT over-the-top applications and services, essentially refers to apps and services which are accessible over the internet and ride on operators’ networks offering internet access services e.g. social networks, search engines, amateur video aggregation sites etc. For example, some of the OTT servics are Viber, WhatsApp, Skype, Hike, Ecomm apps etc.
TRAI : OTTs Are Killing Telecom Players
TRAI’s basic premise lies in the fact that OTT players will impact revenues of network operators, given their current business models are concerned.
This chart from Economist pretty much explains what TRAI is saying to say:Some of the noteworthy points from TRAI’s consultation paper are:
(1) From a telecom regulatory perspective, there are two broad categories of OTTs: OTT communication services in direct competition with the licensed communication services (real-time services) offered by the TSPs and other services that do not fall under the telecom licensing framework, but are offered competitively to users /non-real time services 17 as OTT apps and content e.g. booking tickets, stock trades, gaming etc.
(2) The revenue earned by the TSPs for one Minute of Usage (MoU) in traditional voice is 50p on an average, as compared to data revenue earned for one minute of VoIP usage which is around 4p. (On average, revenue earned through data by TSPs is around 25p /MB of data and the average size of a one minute VoIP call22 is around 150 KB).
It is this difference between prices of traditional telecom calls and VoIP calls that has prompted the proliferation and success of communication OTT apps. But the low cost of usage incentivises the user to have longer conversations in VoIP calls as compared to traditional telecom calls. While the average holding time in a traditional voice call is around 2 minutes, in VoIP calls it is more than 12 minutes.
The contention of the TSPs is that they have invested in building the infrastructure (capital costs) and incurred other costs associated with operation of the network (cost of spectrum, License Fee, Spectrum Usage Charge etc.) and the OTT players are freely riding on their networks.
TRAI Consultation Paper Wants You To Ponder On…
– Whether we really a regulatory framework? (hint: Airtel wants to charge OTT players).
– Should the OTT players offering communication services (voice, messaging and video call services) through applications (resident either in the country or outside) be brought under the licensing regime?
– Should the OTT players pay for use of the TSPs network over and above data charges paid by consumers?
– How should the security concerns be addressed with regard to OTT players providing communication services? What security conditions such as maintaining data records, logs etc. need to be mandated for such OTT players?
– How should the OTT players offering app services ensure security, safety and privacy of the consumer?
– How should the conducive and balanced environment be created such that TSPs are able to invest in network infrastructure and CAPs are able to innovate and grow? Who should bear the network upgradation costs?
– Should TSPs be allowed to implement non-price based discrimination of services? If so, under what circumstances are such practices acceptable?
– Is there a justification for allowing differential pricing for data access and OTT communication services?
[Read the consultation paper here. The last date to reply is 24th April, 2015 on email id email@example.com.]