Charging Network Usage Fees From OTTs Won’t Violate Net Neutrality, Says Telco Body COAI

Leading OTT service providers have been at loggerheads with Indian Telecom companies over the case of network usage charges after a consultation paper was introduced by TRAI in July
OTT Platform Netflix
OTT Platform Netflix

Telecom companies should be allowed to levy network usage fees from over-the-top (OTT) application services for enabling their digital traffic, Cellular Operators Association of India (COAI) said on Thursday. Charging such fees would not violate the principle of net neutrality, said COAI Director General Lt Gen SP Kochhar.

Leading OTT service providers and India’s telcos have been at loggerheads with each other over the case of network usage charges after telecom regulatory body TRAI introduced a consultation paper in July.

In its response to the paper by Telecom Regulatory Authority of India (TRAI), COAI had earlier stated that “OTT Communications services have led to Erosion of Revenues for the telcos”. The telco lobbying body had further argued that this situation necessitated a regulatory framework for OTT services similar to the one imposed on telecom service providers (TSPs).

What Is Net Neutrality?

The principle of net neutrality mandates that all internet providers give its users equitable access to all content and applications on the internet without any discrimination. If internet service providers (ISPs) or telecom companies give preferential treatment to certain type of data traffic, that would constitute a violation of the net neutrality principle.

“Net Neutrality concerns unbiased treatment of content and is completely unrelated to the fair share charge to be paid by OTTs to TSPs. It is worthwhile to emphasize here that our member TSPs are committed to follow the Net Neutrality principle as per their licencing conditions,” said Kochhar.

Justifying the call for network usage fees from OTTs, Kochhar said, “The money spent on network roll out [by TSPs] is far higher than what they get back.” Telecom companies can make returns on the large investments made on 5G rollout only if users utilising their network infrastructure, such as OTT service providers, pay a share of their revenue to TSPs, he said.

“While ARPU (average revenue per user) is rising for telcos, it is taking place at a lower pace when compared to capex. The ratio is skewed and it's not increasing the way it should,” the COAI director general added.

The Korean Example

The COAI cited South Korea as an example of implementing network usage fees on OTT providers. Since 2016, South Korea has been implementing a Sending Party Network Pays (SPNP) model that required internet service providers to levy usage fees for data traffic they receive from one another. This has now been extended to OTT service providers as well, driving a wedge between OTTs and network providers.

One common criticism of the Korean model is that it has increased network latency and subsequently hampered user experience. Kochhar dismissed this allegation and said, “It is not true at all. I was in [South] Korea last week and I can say that speed has not gone down.”

According to an Ookla report from earlier this year, the median mobile internet speed in South Korea was 118.76 Mbps at the start of the year, showing a 13 per cent hike in speed from the preceding 12-month period.

The telco body chief also clarified that the lobbying effort for network usage fees will not hamper aspirations of internet start-ups in India. “We’re worried about the big 4-5 players. Our concern is not to tax our start-up ecosystem,” he said.

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