It is verily believed that the mobile operators’ lobby is proposing to ask its members to provide granular data on the amount of bandwidth consumed by their customers on their networks when using the content and application platforms of Alphabet, Amazon, Meta, and Netflix. It is also believed that they will be placing this information in the public domain for all to see.
The above mentioned decision by the operators is apparently to highlight the fact that the use of OTTs (as the rightful content and application providers – are loosely referred to) is resulting in 70 to 80 percent of data traffic on their networks. While the lobby’s intent to openly and transparently share the information is to be lauded, they seem to have either completely misunderstood or misrepresented the action involved. They appear to have forgotten that it is their own subscribers/customers who have deployed the OTTs and caused the data traffic for which they have also paid the set charges to the operators concerned. If the OTT platforms had not been available to their customers, the latter may not even have elected to remain on their mobile networks. It should be noted that the OTT platforms are either consciously downloaded by the customers or provided as pre-installed apps when the phone is bought. By no stretch of imagination can one claim that the OTTs have themselves gatecrashed into the network and are themselves directly consuming the data traffic. Unfortunately, the mobile group continues to persist in making the baseless and untenable allegation that OTTs are freeloading their data traffic onto the networks.
The above is not the only case of misrepresentation. In its response to the TRAI consultation paper of July on Regulatory Mechanism for OTTs, the mobile group has stated that OTT services have led to an erosion of revenues for the telcos. This is a blatant falsehood. The truth is exactly the opposite and it is there for all to see on page-12 of TRAI’s Consultation Paper itself, where they provide a clear comparison of the ARPU (average revenue per user) against various heads for the QE June 2013 (i.e., before OTTs started in any significant manner) against the same for QE December 2022. In that, it is seen that the revenue from data usage in June 2013 was only Rs. 10.02 or 8.10 percent whereas by December 2022 it had shot up to Rs. 125.05 or 85.10 percent, i.e., a humongous 1250-percent rise! Obviously, the OTTs have helped to boost the data revenue remarkably and enabled the networks to survive and stay afloat. Even the total net ARPU of the operators grew from Rs. 111.45 to Rs. 141.14 despite the challenging market forces. Truly, the mobile operators should be grateful to their customers and the OTTs for helping them maintain a growing business.
The third gross misrepresentation in the OTT matter is in the matter of financial compensation demanded from OTTs through a network fee or revenue share. This is tantamount to imposing a sending-party-network-pays (SPNP) principle, which was relevant only for the old and obsolescent voice telephony system and not applicable for the Internet. The Internet works in a different way. Net users chiefly wish to connect to applications and services, not just voice communication. The mobile lobby seeks to justify by pointing to the sole global precedent of South Korea, which is the only country – we repeat, the only country – which has experimented with SPNP, i.e., network fees from OTTs. However, a solitary swallow does not make for a summer and even this solitary example is a glaringly failed example. The mobile lobby fails to reveal that:
- According to Prof. KS Park, founder of www.opennetkorea.org, increase in the cost of broadband has caused some companies, such as Facebook and Netflix, to suspend or degrade the services in South Korea.
- As the WIK-Consult report (bit.ly/ 47CEEQh) shows, South Korea’s action led to the dramatic price hike, less diverse content, and slower Internet, coupled with decline in investment in the sector.
- It forced many small content and app providers to exit the South Korean market.
- A dozen civil society organizations, including Net Korea (in South Korea), Access Now, and European Digital Rights (EDRi), have called on the government of Korea to repeal the new Content Providers’ Traffic Stabilization Law and the SPNP law.
- The above points clearly establish that the Korean law is heavily against the interests of small and medium enterprises, many of whom have exited the country due to the adverse environment. India can ill afford a repeat of this since we have a key dependence on startups, innovation, and MSMEs for the digital economy.
Such suppression of vital evidence by the Mobigroup is to be thoroughly deprecated.
The mobile lobby also misleads when it fails to divulge that Europe, the originator of the idea, has itself rejected the proposal of network fee. BEREC, the Bureau of European Regulators, which had examined the matter in depth, held that the telco traffic is due to the customers of the telcos and not to the OTTs and that there is no concrete evidence to hold streaming services accountable for free riding.
BEREC also concluded that deviating from the current principles might be of significant harm to the Internet ecosystem as ISPs could exploit the termination monopoly in a similar manner to traditional telephone termination monopoly. Moreover, as per BEREC, the SPNP system could endanger the principle of net neutrality and lead to market distortion by putting smaller and medium-sized ISPs to a disadvantage despite the fact that such players often account for a considerable amount of the network rollout. In fact, one of the most serious adverse effects of SPNP is the violation of the fundamental principles of net neutrality which disallows discriminatory treatment as well as pricing of any content on the public Internet. This has also been voiced and cautioned by the IT Ministry.
The mobile group has not also revealed the fact that most of the EU nations (about 19 out of 27) have rejected the telcos’ proposition of sharing of network costs by OTTs and they have upheld the findings of the BEREC report.
We, therefore, have least half a dozen cases of serious misrepresentation, misinformation and suppression of crucial evidence as cited above. One could go on to expose more of this false information. In essence, it is most disappointing to note the continuous barrage of misinformation and distorted facts that is emanating from the group. This is obviously meant to prejudice the public opinion and harm the interests of OTT players, who are contributing significantly to the digital economy. For example, during the pandemic, we would have been seriously impacted as a nation if it had not been for the great messianic role played by the plethora of OTTs that kept healthcare, education, work, logistics, and social intercourse vibrant and happening. Without OTTs and their content, the telecom pipes would have been empty and unused. Hence OTTs and telecom both need each other and should go forward in a peaceful and productive coexistence. This is what ITU, BEREC, DoT, and TRAI have repeatedly advised over the past ten years.
In fact, if 70–80 percent of the data traffic and consequent revenues are owing to OTTs being used by the telcos’ customers, then, logically, it is the OTTs who should rightfully demand suitable revenue share or payment from the telcos. The OTTs are, of course, in their maturity, desisting from any such negative, irresponsible, and immature approach.
OTTs are contributing abundantly to the Indian Digital Economy. App Annie Report (2023) concluded India is the leading country in app downloads with over 32 billion downloads in 2022 and exponentially rising since. Recently, three eminent professors from IIM-Ahmedabad researched the subject and per their findings in a report titled “Economic Value of App Economy in India, by 2030″, the spending on apps is likely to be around USD 800 billion. Given that the Indian economy is likely to be around USD 6600 billion, the app spend is likely to be around 12 percent of the economy. They further estimate that the growth in the app economy is around 32 percent, more than four times the GDP growth.
The public needs to be cautioned about the continuing flood of misleading propaganda about OTTs, which could seriously harm our digital economy. As George Bernard Shaw wisely advised, Beware of false knowledge; it is more dangerous than ignorance.