Telecom service providers, OTT cos' interactions symbiotic, pro-competitive: CCI study

Interactions between telecom service providers and OTT companies are symbiotic and pro-competitive that trigger a virtuous cycle within the digital economy, according to a market study on the telecom sector by the Competition Commission of India (CCI).

It found that TSPs have accepted the new business reality that internet-based Over The Top (OTT) applications and services bring revenue, more content and spur investments in network upgradation.

The interactions between them are now symbiotic, as operators bundle OTT services to push more data through telecom pipes and OTT services benefit from the large subscriber base of telecom providers.

Tariff packages now include OTT services, giving rise to "triple play" services -- voice, video and data.

"Engagements between telcos and internet-based services companies have moved beyond contractual agreements to other forms of strategic transactions," as per the study.

Many TSPs (Telecom Service Providers) have also ventured into building their own digital content.

"Interestingly, the experts we spoke to did not view technology convergence and the resulting integration across the infrastructure and content value chain as a competitive concern by itself," the study said.

In fact, these are believed to be pro-competitive that trigger a virtuous cycle within the digital economy, it added.

According to the study, in general, across the digital economy and arguably elsewhere, the relationship between size and antitrust has become more subtle.

Even though the terms of negotiations between different parties remain privileged, there is no reported abuse of market power, it noted.

Telecom operators are investing in digital content companies, digital payments platforms, and social media firms and vice versa, which may lead to a preference for their own content or network.

However, the study said that most stakeholders in India currently view these partnerships as a "win-win" situation for operators, companies as well as consumers. They did not anticipate any imminent threat of vertical consolidation on the competition.

OTT companies clarified that these relationships have proven to be mutually beneficial since net-neutrality regulations in India prevent discriminatory treatment, the study noted.

"From a competition standpoint, there is a parallel to the principle of search neutrality that bars search engines from promoting their own business in response to queries.

"The CCI has to be vigilant that such vertically integrated infrastructure providers do not indulge in actions that could or have the potential to foreclose entry in the application layer. If any conflict of interest arises because of such agreements, it could be looked at by the CCI on a case by case basis under the Competition Act, 2002," the study said.