Big Tech Flexes Muscles Against Telcos

Every time one watches a favorite movie or web series streaming on one of the many OTT apps, one consumes precious bandwidth. However, does it mean that such services should be categorised as a telecom service? Well, global technology companies, often referred to as Big Tech, do not think so. 

These companies, which includes Amazon, Apple, Google, Meta, Microsoft and Netflix, argue that there are fundamental differences in the tech, operations and functions undertaken by an OTT company as compared to a telecom operator. The giants, collaborating under the Asia Internet Coalition (AIC) have made these points in a representation to the Telecom Regulatory Authority of India (TRAI). 

Their response was directed at a proposed regulatory framework for telecom operators that TRAI brought out last month (read it here) which noted that OTT platforms too needed to operate under the definition of a telecom service. Remember, social media platforms such as WhatsApp and Google Meet fall under this definition. 

The Telecom Act is where the original issue stems from

The battle over the interpretation of what constitutes a telecom service as per the new Telecom Act. Now here is what it says: telecom services are those that involve “transmission, emission or reception of any messages, by wire, radio, optical or other electro-magnetic systems, whether or not such messages have been subjected to rearrangement, computation or other processes by any means in the course of their transmission, emission or reception”. 

Now, if that definition reminds you of a certain exchange of words between a professor and the fictitious Ranchod Das Shyamal Das Chanchad (later Phunsukh Wangdoo) in the 2008 blockbuster “Three Idiots”, you aren’t alone. Because, the Act also defines messages as “any sign, signal, writing, text, image, sound, video, data stream, intelligence or information sent through telecommunication”.

Remember that confused look from the professor when Chanchad describes a book in similar terms? Well, suffice to say that the telecom operators and the OTT enterprises have the same question to ask the government. The latest attempt by the AIC is just a rejoinder to what they perceive as the ambiguity in the law. 

Big tech argues that OTT and telecom are not the same

Duh! We know that. According to the AIC, which gets its power from the global Big Tech companies and their deep pockets, the OTT services function on an application layer whereas the telecom providers operate on a network. Unlike the latter, the OTT does not have rights to acquire spectrum or to interconnect with public switched telephone networks. 

“OTT communication services are not substitutes of traditional telecom services,” it says while further stating that OTT services offer additional functionalities like group chats, voice notes and in-app content sharing. It goes on to suggest that including such services in the new telecom framework negates net neutrality principles that will harm consumer interests. 

“At the outset, we would like to submit that OTT communication services are already regulated under a host of laws, including as ‘intermediaries’ under the IT Act and the rules and regulations issued thereunder. Thus, concerns that OTT communication services operate in an ecosystem where there is no regulatory oversight are unfounded,” the AIC says. 

The clinching argument appears to be sensible

Their clinching argument is that OTT services already have a whole lot of regulations in India that include requirements for interception, take down of content, reporting of incidents and user grievance redress mechanisms. All of these are contained in the IT Act, and thus these companies do not need to be a part of the telecom rules. 

Seems like a valid point, given that one business entity providing services need not be a part of two sets of rules, especially if one of them contains the carrier. It is assumed that the latter infers the former. Of course, we all know that the AIC’s push is coming as a counter to the telecom operators wanting their share of the OTT pie on grounds that they are the carriers, just as satellite service providers have been for content streaming. 

What’s ailing the telecom providers though?

The telecom companies that include Reliance Jio, Airtel and Vodafone Idea, want a new authorization framework in the rules so that they too contribute to network development costs based on their traffic consumption, turnover and user base. For those unfamiliar, Jio has 475 million subscribers and controls a lion’s share of this growing market. 

Of course, one can understand the challenges faced by telecom providers, given the low average revenues per user (ARPU) of just about $2 a month on projects that collectively cost more than $19 billion for the 5G spectrum. No surprises that these companies want some regulatory intervention to spruce up their bottom lines. 

Amidst all this brouhaha, one wonders which side of the fence is Reliance, which now has growing interests not just as India’s largest telecom provider, but also as a major OTT player, having acquired HotStar’s India operations from Disney. Then there is also this major push on digital retail that the company went for in recent times. Not to mention multi-billion deals with Big Tech giants such as Google and Meta.