Centre for Internet & Society

Urgent need to further enhance the symbiotic relationship between OTTs & TSPs. TSPs need to be provided regulatory relief so that they operate in a win-win ecosystem. Licensing OTTs is not an option. Global investments by OTTs growing – was US$ 300 Billion between 2014-2017.

The blog post was published in News Patrolling on April 6, 2019.

New Delhi, Friday, 5 April 2019: Broadband India Forum (BIF), an independent policy forum and think-tank, today held an event on the ‘Regulation and Substitutability of OTT Services with Telecom Services’. The event was presided over by the Chief Guest, Mr. Yaduvendra Mathur, Special Secretary, NITI Aayog and other industry luminaries including Mr. Rajat Kathuria, Director and Chief Executive, ICRIER and Mr. Ashwinder Sethi, Principal, Analysis Mason.

The event also included a lively panel discussion that was moderated by Dr. Mahesh Uppal, Principal Adviser, BIF. The panel represented multiple stakeholders from the industry including the Government, consumer group, OTT service providers and operators. Panelists included Mr. Sushil Kumar, DDG (IOT) TEC, Department of Telecommunications; Mr. Rajan S Mathews, Director General, COAI; Ms. Anubha Sinha, Senior Programme Manager, Centre for Internet and Society; Ms. Amrita Choudhury, Director CCAOI; Mr. Nikhil Pahwa, Founder and Editor, MediaNama and Mr. Abhishek Malhotra, Managing Partner, TMT Law Practice.

Themed OTT: A Win-Win for all, the event was crucial in determining the development of synergies between TSP networks and OTT players. OTT and Telecom Service Providers (TSP) provide different services and experience different sets of challenges. Thus, arises the need to further enhance collaboration between TSPs and OTT players, which was the key discussion theme today.

Mr. Yaduvendra Mathur, Special Secretary, NITI Aayog said, “We believe that there is much that both OTTs and TSPs have to gain from each other. There is a strong case for an even stronger relationship between them to emerge given the continued and exponential consumption of data in India at the lowest rates globally. In the short term there will be some pain for the TSPs and there needs to be a mechanism to address this. One of the other issues that needs to be addressed is the democratization of hotspots across the country. We need to provide our rural population an even greater immersive experience via their smartphones – across not just entertainment but also health, education and a range of other services.”

Mr. Rajat Kathuria Director and Chief Executive, ICRIER in his address said, “We believe that the TSPs have a legitimate concern with regards to their financial health. But that is with regards to reducing their financial burden and not with regards to license OTTs. We need to address the financial health of the sector to address the issue.”

Mr. TV Ramachandran, President, Broadband India Forum said, “Just as mobile transformed India, OTT is the next dimension of change. OTT services have added to the GDP of the country as well as to the productivity of people. This is in addition to the other benefits that they deliver to the TSPs at a time when their revenue from voice is zero. OTT is a very powerful and necessary lever for TSPs and ISPs as revenue generators. TSPs must be provided relief from excessive levies and taxes to ensure that they’re healthy. TSPs create a value for whole of economy and hence their financial health is important for the whole of Indian economy to grow and prosper. Thus, there is a need to create an ecosystem that is a win-win for them and all other stakeholders in their ecosystem. Also, OTTs do not fall under the Telegraph Act. In conclusion, I would say that both need to work together to advance Digital India’s goals.”

Mr. Ashvinder Sethi, Principal, Analysis Masonhighlighted the global investments that have been made by OTTs. From 2014-17, OTTs have invested over US$ 300 billion in hosting, transport and delivery infrastructure. Their average annual investments have more than doubled since 2011-13 – growing from US$ 29.6 Billion to US$ 69.7 Billion in 2014-17. While North America accounted for the largest regional share of OTT investments from 2017-17 followed by Asia-Pac and Europe. Asia pacific with close to 3X growth is driving higher demand and higher investments as compared to Europe, LatAm & the MEA.

The attendees shared a strong perspective that the root cause of the issue between OTTs and TSPs was not related to competition but due to legacy issues being faced by the telecom sector that were hampering investments in the sector. These issues relate to high levies and duties, onerous licensing conditions and spectrum pricing. The Indian Telegraph Act does not apply to OTTs – central to the Telegraph Act is the concept of owning, establishing, operating maintaining a telegraph which, as defined in the Telegraph Act, is what attracts licensing. OTT’s do not own, establish, operate or maintain a telegraph – so the question of attracting licensing does not arise.

The discourse on policies towards OTTs and TSPs is far from settled. However, it may be considered that in the case of new generation internet-based services that have significant socio-economic impact, – it would be premature to pass hard rules. Careful and planned approaches to soft law can be attempted and later developed into more firm rules as the sector matures.