Tension brews between telecos, OTTPs over net neutrality

Towards the end of 2014, private telecom major Airtel announced its plans to charge extra for internet calls through VoIP (Voice over Internet Protocol) applications like Skype and Viber, but had to drop the idea after opposition from the  public. Airtel’s plan triggered a debate whether to allow the telecom companies to collect extra charges for over the top players (OTTPs) including VoIP services or not.

The issue of collecting charges from users of internet based voice and texting apps like WhatsApp and Viber, which are also called OTTPs, is a bone of contention between telecom service providers and OTT players. While telecom firms have been demanding sector regulator Telecom Regulatory Authority of India (TRAI) to regulate the services of OTT firms and providers saying such service would lead to eroding their revenue, experts have cautioned against such a move saying it is against net-neutrality principles. 

As per net neutrality, service providers should treat all data on the internet equally. They must not impose differential pricing or pose any kind of restriction on internet-based services among users, content sites, platforms and apps such as Viber or Twitter, which use the telecom network to deliver services without paying network operators.

The telecom firms had said that the industry was suffering a minimum loss of Rs 5,000 crore in a year due to subscribers opting for free messengers services or voice over internet calls. As telecom companies have invested huge money to create networks, regulating the services of OTTP would maintain both parties on a level playing field, they said. 

As the OTT players offered free messaging or voice service across any telecom network in India, their apps grew in popularity. These apps also made the mobile internet usage popular leading to increased penetration of the internet. 

As per the TRAI data, there were about 26 crore internet users in the country as on June 2014 which included over 24 crore consumers using internet over their mobile or through dongles. Internet penetration in the country increased by about 30 per cent, courtesy smartphone and dongles, it said. During 2014, telecom operators gained heavily from rise in mobile internet usage driven by applications like WhatsApp, Facebook, Skype and consumers adopted them as these applications reduced their phone bills.

Conventional telephony is functionally no different from VoIP. However, the reason behind the latter’s popularity is that it can even be used on mobile handsets unlike earlier when one needed a PC or a laptop. While mobile operators pay around 30 per cent of their revenues as levies and comply with guidelines related to service roll-out as well as security and accounting, VoIP services never bother about all these things.

From a subscriber base of nearly 91.5 crore at the end of last year, the industry was hoping to reach the 100 crore mark by the end of 2014. The various players who were seen devising new ways to expand their revenue base, caught on to the growing interest among consumers for mobile internet as a big opportunity.“The government should tax over the top (OTT) players like WhatsApp, Viber, Hike and Facebook as they are getting a ‘free ride’ on telecom networks without paying for spectrum or any other fee,” said Vodafone India MD and CEO Marten Pieters recently. The telecom companies had even written to TRAI saying that internet telephony is a licensed service permitted only under ISP or Unified License granted under the Indian Telegraph Act.
Threatened by WhatsApp

More than curbing Skype, the actual reason for the telecom operators to aggressively push for regulation of OTTPs was a recent announcement by WhatsApp that it plans to launch voice services over the Internet, said an official in the Department of Telecom. One of the fastest growing OTTPs with around 70 million customers in India, WhatsApp’s move into net telephony would have threatened traditional voice revenues of mobile operators, said the official.

“Companies offering OTT voice services, without holding a telecom licence in India, would essentially violate and circumvent Indian telecom licensing provisions and provide services that are otherwise only permitted under a telecom license,” Rajan S Mathews, Director General, Cellular Operators Association of India (COAI), says.However, experts differ from the telecom firms’ arguments. With India lagging behind in data services despite being a leader in wireless telephony, making popular services like VoIP or texting apps more costly may dent the growth of data services they say.

As more telecom players firm up plans for charging such services, the sectoral watchdog, TRAI – which has the power to control tariffs – may soon come out with regulations for messaging and calling applications. But the government must address the concern of the telecom firms including easing the burden of fees on network operators. Though it is not an easy task costing the government thousands of crores of rupees, which it earns as fees and levies, there is an urgent need to explore more alternatives. While there is a debate on net neutrality, the time has now come for TRAI to define what it means.

“Currently there is no law or framework surrounding this concept in India... We have our own socio-economic systems within which we need to address this issue,” TRAI chairman Rahul Khullar said on the subject.