Brothers Turn Foes: Telcos Lock Horns with OTTs; Turn on Licensing Screws

Battle-lines are being drawn by India’s telecom service providers, who have now unholstered weapons of OTT destruction and are seeking a nod from the Government to fire at will. The ammunition being used could be life-threatening for OTTs – a strident call from India’s three private telcos to the Department of Telecom, praying that ‘over-the-top’ players be treated as ‘service providers’.

 If the telcos manage to wrest this battle, the war would be all but lost for OTT firms in the first standoff itself. That’s because for regulatory and financial purposes, over-the-top firms would be treated by DoT as an ‘access service provider’, liable to pay annual license fees and other Government levies, apart from being taxed and regulated in a stringent manner.

Battles such as this have been triggered by the Telecommunications Act 2023 over the still-under-debate interpretation of ‘telecom services’ under the proposed legislation. The irony of what is happening should not be lost on anyone – two erstwhile friendly and symbiotic industry segments, which for long leant on each other for growth and sustenance, have fallen apart to an extent that they are pulling out swords to cut themselves a larger slice of the communications revenue pie.

To recap, the three surviving Indian telcos (Jio, Bharti Airtel and Vi) are bidding to push OTT services (WhatsApp, Google Meet, Hotstar, Netflix, etc.) onto the same ‘playing field’ as themselves, level or not, to ensure they are subject to similar licensing and taxation norms. Retaliating to this “preposterous” move, OTT firms insist their services are “fundamentally different” and should not be viewed from a “same service, same rule” perspective.

The Devil Lies in the Interpretation of the Act

The fires engulfing the communications sector today started life as a spark last year, when the DoT issued a revised version of the Telecommunications Act 2023, defining telecom services as “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”.

Further, messages were summarily described as “any sign, signal, writing, text, image, sound, video, data stream, intelligence or information sent through telecommunication”.

This saw some telecom ancillary players applaud the Government. And perhaps to garner eyeballs, they also issued statements that the new Act would bring in greater transparency, since OTT firms would potentially need authorization (read ‘licensing) from the Government to offer services. The only eyeballs that popped out after this statement were those in OTT heads, who went into panic mode and inundated the DoT with queries.

The brouhaha that followed saw then Telecom Minister Ashwini Vaishnav issuing a public statement, shared with the media too, that OTTs were not under the ambit of the Act in any manner. This denial sent telcos into hibernation mode for a few months, but they have now returned to the business end of things with their ‘own interpretation’, triggering this faceoff.

COAI Flexes Muscle, NASSCOM Plays Mediator

The Cellular Operators’ Association of India (COAI) fired the first salvo in this bullets-or-billets skirmish with a statement that laid out its ‘clear understanding’. “As per our understanding, OTT communication services are covered under the new Telecom Act as an access service. To address the issues of non-level playing field and ensure adoption of the principles of ‘same service, same rule’, these competing and substitutable services should be included under Access Services authorisation as per the new framework,” COAI said.

This opening barrage frayed nerves all around, especially in the OTT camp, forcing industry body Nasscom to try and calm things down by reminding everyone of the past. “OTTs and Telecom Service Providers (TSPs) complement each other and OTT service providers contribute immensely to the revenues generated by TSPs,” NASSCOM said.

Telecom honchos insist that they were standing up for their rights and sticking to their guns: “We (telcos) spend thousands of crores on spectrum, even more to set up the physical infrastructure and maintain it. While doing this, we acquire a license to offer services. OTTs also offer calling and messaging, but spend nothing on spectrum or licenses. With India going digital, this is a terrible mismatch and business drawback for us. We look forward to the revised Act bringing in equal opportunities.”

 Revised Bill has Courted Controversy All Along

Even when it was first introduced, the Act managed to spark an all-round debate and stirred up the proverbial hornet’s nest – it catalysed political brouhaha, scathing debates over the intent of the changes, implications on national security, all of them counter-balanced against the desperate need to revive an industry sector that has been facing tough times for long. From its decade-long heyday from 2005 to 2015, when Indian telecom had 12-14 operators in each telecom circle, there are three players left across the nation today.

The initial controversy erupted because revised clauses in the Act allow the Government to take over, manage or suspend the use of telecom networks for reasons of national security, and the Government also has a contentious right to decide when to allocate spectrum administratively, bypassing auctions. That’s a sore point, because it was the astronomical sums quoted by telcos for spectrum in the auctions that brought the industry to its knees.

The revised Act seeks to replace the 138-year-old Indian Telegraph Act 1885 and had created a storm even before this latest battle-cry was sounded by private telcos. Another itchy point comes from the radical changes proposed, especially related to the takeover of operations of any telco for ‘national security’ – that’s why private operators are miffed. Just between the three surviving telcos, investments of nearly Rs 10,00,000 crore have been made so far.

With so much at stake for so many – even today’s depleted telecom sector employs 11.59 million direct and indirect employees – patience is running thin and everything not white in color is seen as a potential red herring. The authorities would, thus, do well to bring in the Act like a calming breeze that gives life and fresh breath to everything it touches, not a veritable storm that pulls out by roots everything but the mightiest oak.

—     The writer is a veteran journalist and communications specialist. He can be reached on narayanrajeev2006@gmail.com. Views expressed are personal.