Industry stakeholders have been lobbying for regulations similar to those governing competing services like licensing requirements and pricing and quality standards
The fate of over the top (OTT) players hangs in balance, as telecom regulator Trai is all set to finalise its views next month on whether there exists a regulatory imbalance between the telecom industry and OTT players, including WhatsApp, Skype and Google Duo.
This comes amidst a scenario where the OTT industry in India is expected to grow manifold riding on the data boom in the telecom industry and, not to mention, videos have been the driving force behind the rising boom in the usage. Also, the affordable 4G smartphones, as well as feature phones coupled with cheap data tariffs, have added fuel to the fire.
Pertinent to mention here is that Trai is looking at OTT services which are similar to telecom players such as voice calls, messages etc, although not all OTT services or players are under the radar.
Apart from the regulatory issue with the telecom industry, some of the social media platforms like WhatsApp and Facebook have come under the ire of the government on issues such as fake news and data privacy. Separately, the ministry of IT and electronics have issued draft guidelines for intermediaries to bring online content under regulation.
A section of the industry is not in favour of OTT sector being regulated as it will kill innovation and the business model, while some feel there needs to be a light touch regulation considering the fact that telecom networks are capital intensive with security issues involved as well.
OTT provider refers to a player which offers information and communication technology (ICT) services, but neither operates a network nor leases network capacity from a network operator. Instead, they rely on the global internet and access network speeds.
India's video OTT market is expected to become one of the world's top 10 markets with a market size of $823 million, according to a joint study by Assocham and PwC.
With the launch of OTT services, video-on-demand (VoD) has been at the forefront of disruption in the media industry and the production budgets of companies like Amazon and Netflix are now rival of traditional studios, said Frank D'Souza, India partner and leader (entertainment and media sector), PwC.
Currently, India does not have any regulations governing OTT service providers. Industry stakeholders, who have been directly impacted by their business models, have been lobbying for regulations similar to those governing competing services like licensing requirements and pricing and quality standards.
"Any regulatory framework, in general, could impact the model of operations, the structure of transactions and funding arrangements," the report said.
In an interview to DNA Money last week, Trai chairman RS Sharma said the regulator hopes to finalise its recommendations on OTT consultation paper by February end. "We will be organising open house discussion on the issue soon. The comments from all stakeholders have come. And hopefully, by the end of next month, we should be able to come up with the recommendations."
In November last year, Trai had come out with its consultation paper on the same. In the paper, Trai has sought public opinion on whether the same rules should be applied to OTT applications as are applied to telecom operators. This has been a long-pending demand of telecom operators. This issue has been going on since 2015 when the regulator had issued a paper but did not come out with any recommendations. Subsequently, a fresh paper was issued.
As described by Trai, there are two types of OTT providers – one, OTT communication services (VoIP) providing real-time person to person telecom services using the network infrastructure of the telecom operator competing with them and another, OTT application services such as media services (gaming), trade and commerce services - e-commerce, radio taxi, financial services, cloud services (data hosting and data management platforms or applications) and social media using the network infrastructure of the telecom player but not competing with them.
Since the data boom in the Indian mobile market, OTTs have become drivers of data traffic for telecom networks. The future for telecom industry lies in content driven by OTT platforms, a senior executive of a telecom firm said.
Telecom players need to invest constantly in their networks to maintain the quality of services norms. OTT players are not subject to any levy despite huge traffic flowing through their platforms, the executive said, adding this needs to be addressed as this also involves security and interception issues.
Next month, there may be an end to the ongoing debate over whether there needs to be a regulatory arbitrage between telecom players and OTT players providing services similar to telecom.
CALL ON WAIT
- Trai to decide whether OTT players such as WhatsApp, Skype, Google Duo should come under regulatory ambit or not by February end
- Issue has been hanging since 2015 as OTT players had impacted voice revenues of telecom players
RAKING IN MOOLAH
- $5 bn – OTT industry size expected to reach by 2023
- $823 mn – India’s video OTT market expected to reach
- 48% – of India’s internet users are expected to be from rural areas
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