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TRAI gets moving on OTT, issues consultation paper

MUMBAI: The Telecom Regulatory Authority of India (TRAI) is seeking to analyse the implications of the growth of over-the-top (OTT) services and consider whether or not changes are required in the current regulatory framework. For this purpose, the sector regulator has issued a consultation paper (CP) on ‘Regulatory framework for OTT services’.

Issues arising from net neutrality, network discrimination and traffic management practices, non-price-based discrimination of services, ensuring transparency to consumers, and pricing-related matters including differential pricing for data access are discussed in the CP.

The other key things discussed are policy and regulatory environment and need for regulation, current policy dispensation for OTT players vis-a-vis telecom service providers (TSPs), security concerns of OTT players providing communication services and issues related to security, safety and privacy of the consumer.

The term ‘OTT’ refers to applications and services that are accessible over the internet and ride on operators’ networks offering internet access services like social networks, search engines, and amateur video aggregation sites.

OTT services include Skype, Viber, WhatsApp, Chat On, Snapchat, Instagram, Kik, Google Talk, Hike, Line, WeChat, Tango, e-commerce sites like Amazon and Flipkart, Ola, Facebook Messenger, BlackBerry Messenger, iMessage, online video games and movies (Netflix, Pandora).

TRAI said that TSPs offering fixed and mobile telephony are currently being overwhelmed by OTT applications and services.

The regulator has sought views of stakeholders by 24 April and counter comments by 8 May.

To understand the underlying issues, the authority had conducted a seminar on ‘Regulatory framework for OTT services’ on 5 August 2014, in which representatives of TSPs, OTT providers and legal experts presented their views.

How telecom service providers look at OTT

The contention of the TSPs is that they have invested in building the infrastructure (capital costs) and incurred other costs associated with operation of the network (cost of spectrum, license fee, spectrum usage charge), and the OTT players are freely riding on their networks.

The counter to this argument is that the use of OTT apps results in increased data usage leading to additional revenue for the TSPs.

The growth of OTT services has brought about a fundamental shift in other spheres including telecom and TV, TRAI said in the CP.

Earlier, networks used to be built around specific applications such as voice, internet, or pay TV. Voice, messaging and video content have now been reduced to mere bytes, it added.

Carriage separated from content in internet networks

According to the authority, carriage is separated from content in internet networks, which enables OTT content and application service providers to deal directly with end users.

TSPs are excluded from the said transactions, with no control over the content or the application, it said.

The move to long-term evolution (LTE), all-IP architecture will further facilitate this delinking of delivery of services from the underlying network, it further stated.

TRAI said that the characteristics of OTT services are such that TSPs realise revenues solely from the increased data usage of the internet-connected customers for various apps. The TSPs do not realise any other revenues, be it for carriage or bandwidth. They are also not involved in planning, selling, or enabling OTT apps.

On the other hand, OTT providers make use of the TSPs’ infrastructure to reach their customers and offer products/services that not only make money for them, but also compete with the traditional services offered by TSPs. Leaving aside TSPs, these apps, e.g. e-commerce sites, banking, etc., compete with brick-and-mortar rivals, it noted.

The affordability of smartphones and the upgrading of access networks by the TSPs are among the important factors contributing to OTT growth.

Digitalisation of content has reduced conservation, reproduction and distribution costs, which, in turn, has promoted the explosive growth in the supply of online content.

Paradoxically, the broadband networks provided by incumbent TSPs are used as a platform by the OTT players for the development of new businesses.

The growth of traffic apart, the OTT applications have created an increasing demand for faster broadband speed, which necessitates huge investments in network upgrade by the TSPs.

It thus becomes clear that in future, the provision of services by OTT players will impact revenues of network operators insofar as their current business models are concerned. This has already started happening in some developed countries, TRAI noted.

These developments have implications for the operations support system and business support system (OSS/BSS) of the communication systems used by the TSPs to support end-to-end telecom services.