The Centre’s insistence on regulating Over-the-top (OTT) communication services platforms like WhatsApp, Telegram, and Signal could be counterproductive. It may kill innovation space and make data services more expensive for users. The Telecom Regulatory Authority of India (TRAI), in 2020, had given its recommendation that there was no need to regulate OTT communication services. However, the Centre has pushed the regulator to issue a fresh consultation paper with an aim to level the playing field with telecom operators.
It has been argued that while telcos have to follow various regulatory requirements including paying licence fees and observing security requirements, OTT players do not have to comply with such rules even though they provide similar services. It is a fact that the advent of applications such as WhatsApp has impacted telecom operators’ revenues from traditional voice calls and SMS services. But their share of the revenue from data usage has grown by more than 10 times from 8.10 per cent in the quarter ending June 2013 to 85.1 per cent in December 2022, largely driven by OTT applications that are available for no cost to users. If OTT players are asked to pay a licence fee, their services may no longer be available for free. This will have a cascading effect on usage which in turn will hit data consumption, impacting the revenues of the telecom operators, leaving them with lower cash flows to reinvest in network rollouts.
Instead of imposing licensing fees and introducing new regulations for OTT players, the Centre should relax the regulatory conditions for telecom operators if it really wants to level the playing field. For example, the licence fees and other levies for telecom players can be brought down to just 1 per cent to cover administrative costs. As for the need to make OTT players comply with national security requirements, there are various provisions under the IT Rules that already make it mandatory for all OTT players to provide access to user data. The new Personal Data Protection Bill also gives unrestricted access to the Centre when it comes to national security.
The TRAI’s other proposal to ban specific OTT applications during a public emergency also needs to be thought through. TRAI’s consultation paper follows a report by the Parliamentary Standing Committee on Communication and Information Technology in 2021. It observed that since a complete shutdown of telecom services/ internet affects the people in many ways, the Centre should explore if it was technically possible to shut down only those services in areas likely to be used by terrorist/anti-social elements. However, the DoT has acknowledged that services hosted on the cloud are difficult to ban selectively since they operate from multiple locations in multiple countries. Even if OTT players are asked to set up local cloud servers, it could lead to an invasion of user privacy because they will be forced to share their location and IP addresses with the OTT player. The Centre should move ahead with care.