Why is the government pushing for regulatory mechanisms for OTT services?

General Studies Paper 3

Context

• On July 7, the Telecom Regulatory Authority of India (TRAI) invited responses to a consultation paper it released on a regulatory mechanism for over-the-top (OTT) communication services. The paper also mentions selective banning of these services.

The underlying issue

• The discussion on the selective banning of OTT services came after a Parliamentary Standing Committee issued a notice to the Department of Telecom (DoT) to explore this option due to the unrest caused by these platforms which have mass reach and impact.
• It is important to note that only OTT communication services like WhatsApp, Signal, Meta, Google Meet, Zoom, X, etc. were discussed in the consultation paper and not the ‘content’ OTTs such as Netflix, Amazon Prime etc.
• Content regulation is an altogether different subject and it comes under the ambit of the Ministry of Information and Broadcasting (MIB) and not the TRAI.
• The TRAI has also asked stake holders to define OTT, and a proposal on cost-sharing mechanisms between Telecom Service Providers (TSPs) and OTT services.

The conflict between TSPs and OTTs

• Telecom Service Providers are of the opinion that OTTs should be regulated and charged because they use and thrive on the infrastructure built by operators over the years. Currently, they aren’t.
• OTT communications services have led to erosion of revenues for the telcos.
• These platforms offer users an array of services, sending of Multimedia Messaging Services (MMS), instant messaging to voice and video calls, delivered over the internet.
• This circumvents the need for traditional telecom services, particularly voice calls and text messages, leading to a significant reduction in the revenue streams of telecom companies.
• OTT communication service providers neither contribute to the exchequer nor make investments like the TSPs in spread of network infrastructure in the country.
• The OTT communication service providers take a free ride on TSP funded networks without contributing to the setting up and maintaining digital infrastructure for access networks.

The demand

• There should be a policy framework to enable fair share contribution from large OTT service providers to telecommunication network operators based on assessable criteria like number of subscribers or data usage.
• To ensure fairness and compensate for the increased data demands, it is justifiable for OTTs to pay a fair and reasonable fair share charge to TSPs.
• The funds received by TSPs from OTTs will support the expansion of networks and enhance contribution to the exchequer, the COAI added.
• That is, all such OTT services should be governed by the same set of rules irrespective of whether they are provided by an operator on its own network or through the internet.

The argument for banning OTT services

• OTTs obtain the location of the customers and can easily bar access.
• Once the OTT communication services are under license this barring will be much easier to implement.
• TSP’s networks are capable of selectively blocking the OTT subject to details like IP addresses provided by the Competent Authority.
• Government should consider source-level blocking so that the desired outcome may be achieved without any significant difficulties.

Way forward

• OTT providers should implement IT solutions that would allow them to swiftly suspend their services in case of an internet outage.