Moves to regulate OTT services and selective ban on regulators draw flak

Industry bodies, civil society organizations and consumer groups have come together to express concerns around the Telecom Regulatory Authority of India’s (TRAI) consultation paper on the regulatory framework for over-the-top (OTT) communication services, and the selective banning of OTT services.

Broadband India Forum (BIF) emphasises on the success of OTTs in boosting the country’s app economy and asserts that OTTs are adequately regulated under the existing IT Act, 2000, and other associated Acts and rules. BIF’s recommendation stems from the belief that the current regulatory landscape has fostered a healthy app economy growth in India, marked by one of the world’s highest annual app download rates. Additionally, any attempt to introduce new regulatory frameworks could disrupt the existing competitive landscape and compromise consumer benefits and innovation.

Talking to Bizz Buzz, BIF President T.V. Ramachandran said, “OTTs have significantly enhanced accessibility to digital tools and amenities, enriching lives and empowering individuals by boosting productivity and socio-economic standing. This has resulted in massive economic spill-over effects, contributing to the nation’s prosperity. We hope that the regulator and the government will allow market forces to operate freely, incentivising growth and progress in this vital sector. TSPs can compete freely and OTTs should not face restrictions in favour of TSPs.”

Around 11 consumer groups, including the Consumer Unity & Trust Society (CUTS), Consumer Guidance Society, Consumer Guild, have said that the proposal on selective banning coupled with regulating carriage and content would lead to overregulation and would create regulatory uncertainty in the Indian market. Amol Kulkarni and Shiksha Srivastava of CUTS, in their submission, said, “The proposed framework for selective banning of OTT applications and services will be a case of overregulation, and will have unintended consequences of quelling innovation.”

One of the concerns cited by these organisations is that OTT service providers are already regulated under the IT Act 2000, which will be replaced by the upcoming Digital India Act (DIA). Therefore, such consultations should form part of Digital India Act and any other additional consultations by regulators like TRAI will also lead to overlap of regulatory structure.

“Such a consultation on selective banning should form a part of the consultations over the DIA. Moreover, the technicality of how the same can be undertaken also remains unclear,” CUTS said, adding that if the process, including the appropriate authority to monitor such selective banning is not clearly laid down, it will result in regulatory uncertainty and further overregulation.

“How the OTT apps are selected, the reason behind such selection and under what scenario will the ban be implemented, are all information which should be made available to the public. This should be done by way of a written public order, which should clearly lay down the rationale of the decision,” they said.

Meanwhile, The Dialogue maintained that “Internet and telecommunication services cannot be equated together given that they are distinguishable on structural, functional and technical levels. A licensing regime, while organised, could stifle innovation by imposing high compliance costs, thereby impeding the growth of start-ups. Given the rapid evolution of OTT services, a static regulatory regime could severely hamper progress in this dynamic field.”

Imposing a network usage fee would severely impact the operational costs of OTT services and pose a potential threat to net neutrality principles. Additionally, consumers will have to bear the brunt of this fee as it would be passed on to them. OTT services have become integral in today’s digital world, supporting activities like remote work, education, and business. Suggesting a selective ban on these platforms can cause considerable disruption and raise various technical, legal, and ethical concerns.

Asia Internet Coalition (AIC), in its submission, has also raised concerns around net neutrality and consumer well-being in the long run as a result of mandated collaborative framework between OTT service providers and licensed TSPs that may lead to the creation of a system where TSPs can demand compensation from OTT service providers in the form of revenue sharing or network usage fees. Further TSPs may also create revenue sharing exemptions for their own OTT services (especially given that most TSPs have ventured into the OTT space as well). This can lead to concerns under both the principle of net neutrality, as well as competition law. Any further regulation would harm market competition in the digital services industry.