Draft Indian Telecom Bill, 2022 | photo credit: Kamal Narang
inclusion of over the top or OTT (communications services) within the scope of Draft Indian Telecom Bill, 2022 Recently unveiled for public comments, it’s a feature that has drawn a lot of attention and comment. what does this mean? And why is this a big deal? Is this a concern only for telecom and technology companies? Or does it have larger implications that concern the average citizen? Also, how will it affect the digital ecosystem in India?
The main rationale behind its inclusion is the principle of “same service, same rule”. Superficially, it seems logical that communication services, whether provided by telecom companies or by OTTs, should be treated equally. However, this is completely wrong. Equal service means that as a user, I should be able to substitute one for the other at will. But any OTT provider, including those providing communication services like WhatsApp, Zoom, email etc., cannot reach a customer without the intermediation and services of a telecom service provider. But its converse is not true. Absence of OTT is not a hindrance for telcos to provide their services. OTT communication services are applications or value-added communication services that rely on basic communication services provided by telcos. The latter is in the domain of carriage and the former is in the domain of group and applications such as video communication, encryption, etc.
So why are telcos pushing for the inclusion of OTT communication services within the new Telecom Bill? Quite simply, it is the desire to maintain the arbitrage that exists between voice and data tariffs. In OTT services Telco gets less data and not higher voice/SMS tariffs. That arbitration is doomed anyway and will be extinguished sooner than later. It is now more important to shoot than to bring in a complicated interpretation of the law.
Heavy-Handed Versus Light-Touch Regulation
In contrast, there are compelling arguments as to why OTT communication services should be kept out of the purview of the Telecom Law regulating terrestrial carriage. OTT communication services are already covered under the existing IT Act and will likely remain so under the proposed Digital India Act. Whether it is encryption, data storage, interception or cooperation with law enforcement, OTT can and is regulated – but not licensed or pre-authorised.
So why the hue and cry if OTT communication services are moved away from the purview of the IT Act to the Telecom Act? Simply put, the proposed Telecom Bill and the existing Telegraph Act are based on the principle that the provision of telecom services is the sole prerogative of the government except where private entities are permitted – read licensed or authorised. On the other hand, the IT Act, which regulates the use of technology, is based on the exact opposite premise: everything is permitted except that which is specifically and expressly prohibited and subject to any mandatory requirements being met. should go. A similar principle operates with respect to content, which is regulated by the Ministry of Information and Broadcasting, Prasar Bharati and the Censor Board. It is precisely this wide latitude in technology/applications and materials that enables and encourages creativity, innovation, new products and venture capital funding.
More worryingly, the flow of venture capital funding to OTT will be severely discouraged. It is almost impossible to differentiate an OTT communication service from another OTT platform as every OTT platform like Flipkart, Ola, MakeMyTrip involves an element of messaging. How does one differentiate between an OTT communication service provider and any other OTT platform or service that includes communication services? It is an impossible task. Only lawyers would celebrate the legal quagmire that would result from any such attempt.
What if only the communication component of OTT is regulated? This would be equally problematic because requiring a license or authorization for an element that is an inherent part of the platform’s activity would be tantamount to controlling the entire activity. Licensing is a contradiction in terms of innovation.
Yet another factor is that the Telecom Bill will only affect India-based OTT players. Those working from abroad will not be affected. This will severely handicap Indian service providers compared to their foreign competitors. Do we want this? It is not accidental that the special prerogative of the government is limited to affordances which are limited by geographical boundaries.
Regulate OTT communication services
The bottom line is that including OTT communication service providers under the purview of the Telecom Bill is a very flawed idea that could seriously compromise the energy, innovation and funding that characterize India’s startup ecosystem today. Hardly any other country has compared OTT communication services to basic telecom services. Instead, the government would be advised to incorporate whatever controls are deemed necessary in the soon-to-be-introduced Digital India Act.
Rentla is the chairman of the Chandrasekhar Center for the Digital Future, a former IT and Telecom secretary and former president of the National Association of Software and Service Companies (NASSCOM).
Two words of advice on OTT and the draft Telecom Bill
Draft Indian Telecom Bill, 2022 | photo credit: Kamal Narang
inclusion of over the top or OTT (communications services) within the scope of Draft Indian Telecom Bill, 2022 Recently unveiled for public comments, it’s a feature that has drawn a lot of attention and comment. what does this mean? And why is this a big deal? Is this a concern only for telecom and technology companies? Or does it have larger implications that concern the average citizen? Also, how will it affect the digital ecosystem in India?
The main rationale behind its inclusion is the principle of “same service, same rule”. Superficially, it seems logical that communication services, whether provided by telecom companies or by OTTs, should be treated equally. However, this is completely wrong. Equal service means that as a user, I should be able to substitute one for the other at will. But any OTT provider, including those providing communication services like WhatsApp, Zoom, email etc., cannot reach a customer without the intermediation and services of a telecom service provider. But its converse is not true. Absence of OTT is not a hindrance for telcos to provide their services. OTT communication services are applications or value-added communication services that rely on basic communication services provided by telcos. The latter is in the domain of carriage and the former is in the domain of group and applications such as video communication, encryption, etc.
So why are telcos pushing for the inclusion of OTT communication services within the new Telecom Bill? Quite simply, it is the desire to maintain the arbitrage that exists between voice and data tariffs. In OTT services Telco gets less data and not higher voice/SMS tariffs. That arbitration is doomed anyway and will be extinguished sooner than later. It is now more important to shoot than to bring in a complicated interpretation of the law.
Heavy-Handed Versus Light-Touch Regulation
In contrast, there are compelling arguments as to why OTT communication services should be kept out of the purview of the Telecom Law regulating terrestrial carriage. OTT communication services are already covered under the existing IT Act and will likely remain so under the proposed Digital India Act. Whether it is encryption, data storage, interception or cooperation with law enforcement, OTT can and is regulated – but not licensed or pre-authorised.
So why the hue and cry if OTT communication services are moved away from the purview of the IT Act to the Telecom Act? Simply put, the proposed Telecom Bill and the existing Telegraph Act are based on the principle that the provision of telecom services is the sole prerogative of the government except where private entities are permitted – read licensed or authorised. On the other hand, the IT Act, which regulates the use of technology, is based on the exact opposite premise: everything is permitted except that which is specifically and expressly prohibited and subject to any mandatory requirements being met. should go. A similar principle operates with respect to content, which is regulated by the Ministry of Information and Broadcasting, Prasar Bharati and the Censor Board. It is precisely this wide latitude in technology/applications and materials that enables and encourages creativity, innovation, new products and venture capital funding.
More worryingly, the flow of venture capital funding to OTT will be severely discouraged. It is almost impossible to differentiate an OTT communication service from another OTT platform as every OTT platform like Flipkart, Ola, MakeMyTrip involves an element of messaging. How does one differentiate between an OTT communication service provider and any other OTT platform or service that includes communication services? It is an impossible task. Only lawyers would celebrate the legal quagmire that would result from any such attempt.
What if only the communication component of OTT is regulated? This would be equally problematic because requiring a license or authorization for an element that is an inherent part of the platform’s activity would be tantamount to controlling the entire activity. Licensing is a contradiction in terms of innovation.
Yet another factor is that the Telecom Bill will only affect India-based OTT players. Those working from abroad will not be affected. This will severely handicap Indian service providers compared to their foreign competitors. Do we want this? It is not accidental that the special prerogative of the government is limited to affordances which are limited by geographical boundaries.
Regulate OTT communication services
The bottom line is that including OTT communication service providers under the purview of the Telecom Bill is a very flawed idea that could seriously compromise the energy, innovation and funding that characterize India’s startup ecosystem today. Hardly any other country has compared OTT communication services to basic telecom services. Instead, the government would be advised to incorporate whatever controls are deemed necessary in the soon-to-be-introduced Digital India Act.
Rentla is the chairman of the Chandrasekhar Center for the Digital Future, a former IT and Telecom secretary and former president of the National Association of Software and Service Companies (NASSCOM).