Question 1: Is it too early to establish a regulatory framework for OTT services, since internet penetration is still evolving, access speeds are generally low and there is limited coverage of high-speed broadband in the country? Or, should some beginning be made now with a regulatory framework that could be adapted to changes in the future? Please comment with justifications.
The OTT market has been around and popular in India for at least five years now. The proliferation of mobile apps in the past two years is one of the reasons that real potential is now being acknowledged, put to use and in some circles, being perceived as a threat to the revenues of the traditional services. In a way, OTT services are disruptive in nature. However, the market models of services are not in their nascent stage anymore. I think that the time is right for the regulatory authorities to pay attention to scrutinizing the impact of such services with various economic, social, individual, national and international interests in purview.
Question 2: Should the OTT players offering communication services (voice, messaging and video call services) through applications (resident either in the country or outside) be brought under the licensing regime? Please comment with justifications.
In paragraph 2.40, it is specified that in the Indian Telecom Licensing Regime, “the scope of Internet services License was restricted to Internet Telephony Services without connectivity to Public Switched Telephone Network/ Public Land Mobile Network in India.” These guidelines have been dated 1 April 2002 and 24th of August 2007. Consequently, there is a gap of about eight years since those guidelines were enacted and the current issue under discussion. During this period, the Internet has grown phenomenally and has surpassed all expectations in terms of growth and scope.
The OTT service providers fall under this license whereas the Telecom Service Providers operate under a separate licensing regime where “voice and messaging services can be offered only after obtaining a license”. As claimed by these TSPs, many of these OTT services are similar in nature to what the TSPs have been catering to. However, they are unencumbered by the licensing agreements that the TSPs have to abide by while providing those services. Also, they are essentially piggybacking the infrastructure provided by the TSPs, which enables them to offer similar services at drastically lower costs.
As a result, there is the absence of a level playing ground for the two competing products same consumer services segment. Thus, it would be worthwhile to reorganize the services provided by OTT service providers in terms of the consumer services segment they cater to, rather than blindly classifying them as data services. In the light of the above argument, I agree (partially) that some OTT services, like the communication services, should be brought under the Telecom licensing regime.
Question 3: Is the growth of OTT impacting the traditional revenue stream of TSPs? If so, is the increase in data revenues of the TSPs sufficient to compensate for this impact? Please comment with reasons.
Answer: Yes, the growth of OTT is impacting (or will impact) the traditional revenue stream of TSPs. No, the increase in data revenues is not justified as a compensatory measure to balance this impact.
The question explicitly focuses on traditional revenue streams of the TSPs. This reasoning is dogmatic in a way that it grounds itself and consequently, the market in traditional grounds. Traditional TSP service provisioning is through circuit-switched networks, which are facing an overwhelming competition from their packet-switched counterparts from the Internet. In a way, the superiority of packet switched networks is being undervalued when the TSPs whine about the loss of traditional revenue. It is partially their fault that they have failed to keep up with technological advances and a seemingly better competitor is out-doing them.
There has been recent interest in converging the circuit switched benefits like QoS and ability to provide Service Level Agreements (SLAs) to the users with the benefits of a packet switched network among telecom operators internationally as is reflected by the development of MPLS infrastructure which weds the best of both worlds into one (as a collaboration between ITUT and IETF). And in paragraph 2.22 and 2.23, it is mentioned that the TSPs are indeed migrating their network infrastructure. But the assertion that “till voice telephoning migrates fully to VoIP, OTT players will need to interconnect with incumbent TSPs. This is apart from the fact even in VoIP the underlying data connectivity is through the telecom pipe provided by the TSPs… Therefore, the question that arises is whether there is need for regulation to be put in place”, is partially flawed on account of the reasoning behind it.
Question 4: Should the OTT players pay for use of the TSPs network over and above data charges paid by consumers? If yes, what pricing options can be adopted? Could such options include prices based on bandwidth consumption? Can prices be used as a means of product/service differentiation? Please comment with justifications.
By making a general statement that OTT players must pay for use of the TSP networks over and above data charges paid by consumers, we are relegating a vast pool of OTT players which do not directly compete with any of the established service sectors into a flawed pricing model.
As per the recommendations in answer to Question 2, and the classification of OTT services must take place, and based on their service segment, the respective regulatory laws must be applied. This may cause additional costs for the OTT players, for example for e-retailing sites and apps to register as a retailing service like the brick and mortar retail outlets do and undergoing the same kind of licensing agreements. However, services like Wikipedia are novel in a way that they act as a knowledge repository rather than a targeted service that earns revenue and it would be in best interests to keep such services as simple data services.
Also, if a service provider has to pay each and every TSP network to allow its use on the TSP’s network, it can lead to malpractices like discrimination which directly affects the consumers.
Question 5: Do you agree that imbalances exist in the regulatory environment in the operation of OTT players? If so, what should be the framework to address these issues? How can the prevailing laws and regulations be applied to OTT players (who operate in the virtual world) and compliance enforced? What could be the impact on the economy? Please comment with justifications.
Answer: Yes. Imbalances exist in the regulatory environment in the operation of OTT players.
The answer to this issue might be found if we start thinking about off-line and online services in a unified way. For example, Skype and GSM services provided by Telcos may not be classified as packet and circuit switched networks, that is, not on the basis of the underlying technology, but as voice service providers, or even better, real-time communication services providers.
Based on this kind of classification we can arrive at upgraded regulations which cater to both kinds of technologies which inherently provide the same service. By doing that the OTT services would be obliged to provide features like lawful interception, detailed logs, providing mandatory emergency services and acquiring of service license before they can start operation in a country while they can still compete with the traditional service model in terms of pricing and revenue. Meanwhile, the traditional service providers have an option to upgrade themselves into fully IP-based networks as envisioned through LTE which would allow them to drastically cut their own rates in order to compete with the OTT players.Thus by following this evolutionary model of classifying services in segments rather than their underlying technology, we may achieve a level playing ground among different players.
Question 6: How should the security concerns be addressed with regard to OTT players providing communication services? What security conditions such as maintaining data records, logs etc. need to be mandated for such OTT players? And, how can compliance with these conditions be ensured if the applications of such OTT players reside outside the country? Please comment with justifications.
Answer: By the introduction of regulatory reforms into the current telecom licensing regime, we can mitigate security concerns arising from these OTT players. The same rules which apply the current telecom operators in terms of security should apply to these OTT players. Should these players not comply the requirements, the regulatory authority may choose to block such services through reasonable network management.
Question 7: How should the OTT players offering app services ensure security, safety and privacy of the consumer? How should they ensure protection of consumer interest? Please comment with justifications.
Answer: This question is hard to answer in the view of above-suggested reasoning. The Internet is an open framework. The unprecedented innovation that it has seen in recent years owes much of its success to this openness. It might be the case that some OTT providers use techniques which are not secure, but such malpractices are revealed at very rapid rates owing to this openness of the Internet. There are open standards like SSL which the service providers on the Internet must adhere to, and any loopholes in the service are quickly exposed. However it is these service providers who have been innovating and should their means and methods we restricted by regulatory compliance to certain protocols, innovation will be stifled. Thus, I think that the discretion to use the app service must lie with the customer, and conformance on such matters of innovation should not be made binding on app services.
Question 8: In what manner can the proposals for a regulatory framework for OTTs in India draw from those of ETNO, referred to in para 4.23 or the best practices summarised in para 4.29? And, what practices should be proscribed by regulatory fiat? Please comment with justifications.
Answer: The proposals made in paragraph 4.23 are rather absurd in a way that they skew the market, and tip it in the favour of telecom service providers. To reiterate, such kind of model where the app service providers have to pay the network providers a nominal fees to use the networks will not only burden the app providers, but may also lead to network fragmentation and discriminatory practices. Not only that, the customer always stays at the receiving end of all the effects of such practices and the app providers may then extract the cost from the customers.
The additional key practices as mentioned in 4.29 are much more amicable in a way that they are in tune with the kind of classification of services that I have discussed in the previous questions and are much more suited in providing a level playground for the parties in the same service segment. The principles of Net Neutrality as defined in South Korea are elegant and since South Korea has been one of the first countries where Internet penetration has been more than 90% since a long time, it provides a very good case study for evaluating the impact of such regulatory measures. Even FCC is soon converging to quite similar rules after many iterations.
Question 9: What are your views on net-neutrality in the Indian context? How should the various principles discussed in para 5.47 be dealt with? Please comment with justifications.
Answer: Net neutrality, as spoken of by the netizens that “each and every packet must be treated the same”, as it seems to me, is a result of ignorance on how the Internet really works and how the Internet landscape has changed in the past decade. It serves as an excellent theoretical model, something which we must strive for in a utopian environment where we have surplus bandwidth and no network outages, or congestion.
However, as the triple play services converge onto the same IP path, it places unprecedented load on the existing networks. In such a scenario, it makes little sense to forward time insensitive data at the same priority as real-time voice or video traffic. Not just in the Indian scenario, but also on a global context, this skewed view of how Internet works and the call for net neutrality along those lines disregarding the concerns for efficiency can lead to impeded development of infrastructure (as long as the TSPs are required to do it). Innovation is needed not only on the OTT level, but also in the core network and the means of transmission of these packets.
All the concerns listed in 5.47 revolve around a very solid team of transparency and accountability on the part of the telecom service providers. Particularly the last point raises an ethical issue if the TSPs are given a free hand to deal with network infrastructure and OTT services. This point, as a prerequisite envisions the existence of same service on prioritized and unprioritised basis through the same network. For example, even if Airtel and other Telcos in India have started a ‘Whatsapp pack’ plan, it should not mean that those who do not have a specific ‘Whatsapp’ data plan, but a more generic, say the 700MB monthly pack would be given lower than normal speeds for WhatsApp data. This means, that the existence of premium plans ensures better and assured quality of service to the subscriber by creating ‘fast lanes’ of Internet traffic. This must not mean that the general lane’s traffic capability is compromised to force the customer into spending more and getting a premium plan.
Thus, the regulation must set minimum quality of service requirements that each TSP is mandated to comply with, and should a TSP be found guilty of floundering the rules, they should be penalized.
Question 10: What forms of discrimination or traffic management practices are reasonable and consistent with a pragmatic approach? What should or can be permitted? Please comment with justifications.
Answer: Of all the packet classification and traffic management practices mentioned in the paper, I find ‘bandwidth caps’ be the most acceptable approach. This approach is most appropriate because it complies with the principle of transparency, and the customer knows what he’s buying. Thus, it is up to the customer to determine how he’s going to spend his quota of bytes. He may spend it all on the first day itself, provided network bandwidths allow him to do so or he may be frugal about byte expenditure and distribute it through his plan period.
The network operators must not put any kind of ‘fair usage policy’, not unless excessive traffic due to a particular user is causing network meltdown or failure. Even in that scenario, the network operators have an obligation of informing the user about the data limiting and what he may do about it. The user must be aware of what he is getting when he is paying the money.
Question 11: Should the TSPs be mandated to publish various traffic management techniques used for different OTT applications? Is this a sufficient condition to ensure transparency and a fair regulatory regime?TSPs be mandated to publish various traffic management techniques used for different OTT applications? Is this a sufficient condition to ensure transparency and a fair regulatory regime?
That might not be sufficient, but it would be a good start.
Question 12: How should the conducive and balanced environment be created such that TSPs are able to invest in network infrastructure and CAPs are able to innovate and grow? Who should bear the network upgradation costs? Please comment with justifications.
Answer: Given that the network operators are also in the process of upgrading their networks to fully packet-switched networks, it is about a matter of time that they do so. Post that, it makes little sense that the TSPs should share the network upgradation costs with anybody since their own services would be based on byte packets, and with regulations in place, they would be competing with their communication services counterparts (OTT Service Providers) on even playing grounds.
If the CAPs are made to share the upgradation costs, it almost precludes the entry of the local businesses from expanding their business by foraying into the Internet domain. These local businesses have so far existed in the brick and mortar form and are inherently local in scope, but there is much to gain even for them the increased acceptance and penetration of Internet throughout the nation. This sharing model may thus prove to be an obstacle for such businesses, thus stifling innovation and growth for CAPs. This may also cause the established big CAP players to monopolize the Internet market segment.
Hence, it makes little sense that anyone else other than the telecom operators themselves should pay the upgrade costs.
Question 13: Should TSPs be allowed to implement non-price based discrimination of services? If so, under what circumstances are such practices acceptable? What restrictions, if any, need to be placed so that such measures are not abused? What measures should be adopted to ensure transparency to consumers? Please comment with justifications.
Under no circumstances are such practices acceptable and it should be a punishable offense. Not only would such practices be a direct violation of the net neutrality principles, but would also be the direct violation of the human right to choose. Such practices have been seen in the past, for example, Reliance has banned many IP is on a temporary basis whenever a movie is going to be released under its banner. It may be contended that such a move was targeted towards reducing piracy but the truth is that by restricting access to certain file-sharing sites to prevent a single theft, they displeased many customers who wanted to share an ordinary document. As per the most commonly accepted definitions of net neutrality in the legislative circles across nations, blocking of lawful content is a violation of net neutrality.
Question 14: Is there a justification for allowing differential pricing for data access and OTT communication services? If so, what changes need to be brought about in the present tariff and regulatory framework for telecommunication services in the country? Please comment with justifications.
Answer: In my view, if the user signs up for a particular quality of service for his Internet connection he must not be denied any part of it. This means, if I buy an Internet plan that purports to provide at least 2 Mbps speed up to 20 GB of data, I should not have to pay any premium price for using it for video conferencing, media streaming, online gaming, or mere browsing.
In the presence of proper regulatory licensing of the OTT communication services, if they can still somehow manage to provide me with cheaper services as compared to the telecom operators, and if I have paid the price to the OTT service provider, the network operator should not be allowed to deny me the quality of service for which I have paid for.
If however the user explicitly signs up for a differential pricing plan, as Airtel had introduced under its ‘My Plan’ scheme where the user could juggle between the quota of various services like STD calling, local calling, SMS and 3G data, that is also not a problem.
The point being made is, differential pricing should not be the norm but the occasional exception and must coexist with uniform pricing models.
Question 15: Should OTT communication service players be treated as Bulk User of Telecom Services (BuTS)? How should the framework be structured to prevent any discrimination and protect stakeholder interest? Please comment with justification.
Answer: As per the points raised in paragraph 6.28, if the regulatory framework can ensure transparency and fairness, this model could work. However, this places load on the OTT applications and that can stifle innovation. If the framework discussed in above questions is disregarded, then treating OTT communication service players as BuTS is acceptable. If the above framework is accepted, there is no need of such treatment.
Question 16: What framework should be adopted to encourage India specific OTT apps? Please comment with justifications.
Answer: India specific OTT apps may or may not be encouraged in the current model, but if the OTT service providers are made to share the revenue the TSPs, it will surely discourage the entry of small players who right now are free to experiment and venture into the Internet domain because of its openness and because of less hassles and regulations.
By bringing the OTTs under the ambit of regulatory laws in their respective service categories, the problems of international buying can be ameliorated. For example, the international brands which do not have their market presence in off-line retail stores may need to get permissions from the regulatory authority before they can retail their merchandise on domains which transact in the Indian currency. Most e-retailers who have international presence also have tailored Indian sites, for example, amazon.com (transactions in Dollars) has the Indian version as amazon.in (transactions in Rupee) and ebay.com has ebay.in.
Question 17: If the OTT communication service players are to be licensed, should they be categorized as ASP or CSP? If so, what should be the framework? Please comment with justifications.
Answer: In the current context, when the IP network follows best effort delivery, it will be very hard to provide the service level agreements and QoS guarantees in the OTT communication services. Thus, categorizing them as CSP is disadvantageous. In the same context, they qualify more as ASPs, and should be categorized as such. This framework, they should still be registered and licensed as recognized service providers, but be waived off some of the requirements of a pure CSP, such as provisioning of emergency services like ‘100’.
However, in the LTE model, where the convergence of circuit switched and packet switched networks is accomplished completely in the entire network using virtual switched circuits (MPLS), such QoS and SLA guarantees can be provisioned more easily. In such a scenario, they become proper CSPs and the categorisation should be as such along with the regulatory rules.
Question 18: Is there a need to regulate subscription charges for OTT communication services? Please comment with justifications.
Answer: Given the open nature of Internet, it becomes a self-levelling field and there should be no need to regulate subscription charges.
If one particular OTT service starts charging a different pricing model which is better than the others available in the market, it impels the other providers to follow suit by increasing the efficiency of their algorithms. Such competition furthers innovation.
If it starts charging higher prices, then, customers quickly abandon ship due to the availability of alternates.
Question 19: What steps should be taken by the Government for regulation of non-communication OTT players? Please comment with justifications.
Answer: The government should classify them into appropriate service categories on case by case basis and apply the rules which make evolutionary sense should the off-line counterparts of those services turn to the Internet. Thus, e-retailing and traditional retailing are classified as ‘retailing’, with a view that the retailers who once owned shops in the real market are now setting up shops in the virtual market also. This would allow bidirectional movement. For exa will receive oestrogen mple, an e-retailer wants to set up a real showroom in the market, (like Lenskart did) it should be easy for him such that he does not have to pay additional licensing fees but only the rent. Likewise, if an off-line retailer wants to start an online shop, he should not have to do anything more than buying a domain and getting a website made, and of course, making agreements with the courier service.
Question 20: Are there any other issues that have a bearing on the subject discussed?
Answer: Many issues have been discussed in the consultation paper which may not have been reflected in these 20 questions. However, they should suffice for the beginning of such measures.