India Telecom industry body Cellular Operators Association of India (COAI) has reiterated that over-the-top (OTT) players should pay telcos for using their network. The payment can be done directly to the telecom firms on mutually agreed terms and in case a mutual agreement is not reached, an appropriate licensing and regulatory framework should be formed which governs the contribution of OTT players towards creation of network infrastructure.
The association has highlighted that globally, the desirability of OTTs making a “fair contribution” to network costs of telecom firms has gained momentum. For instance, the European Commission (EU) is advocating for formalizing due legislation for OTT players to share the network investment burden of the telecom players in a proportionate manner.
The EU continues to express concern that there are big tech companies who generate a lot of data traffic but do not invest towards building infrastructure. The governments of France, Italy and Spain sent a joint paper to the European commission in August 2022, requesting for the swift development of a legislative proposal in this regard. Similar sentiments have been expressed by representatives of the US regulator FCC and in Australia, a world-first law was passed in Feb 2022, aimed at making tech giants pay for news content on their digital platforms, COAI said.
“We wish to submit that any entity which creates a property or infrastructure by investing funds, is entitled to take usage charges (rent /lease charges, etc.) from the user of that property or infrastructure who uses the same for commercial purposes,” COAI said in a letter to India’s Telecom Secretary K Rajaraman.
Further, the association stressed that the government needs to provide a legal framework and empowerment for enabling such entity to charge any user that uses its service/infrastructure on a reasonable basis. The telecom body had demanded the same thing while submitting its comments on the draft telecom bill to the Department of Telecommunications (DoT), which is currently working on a revised draft of the bill. The COAI has suggested a few methods that can be used for making such payments. As per COAI, OTT players can pay telecom firms by way of an equivalent of “usage charge” for the actual traffic carried by these OTTs on telcos’ network which can be easily measured. The usage charge is to be mutually agreed between the telecom firms and OTT players and paid directly to the telcos. The definition of the “usage charge” may be clearly mentioned in the Telecom Bill itself.
“If a mutual agreement is not reached, then an appropriate licensing and regulatory framework should be in place which governs the contribution of OTT players towards creation of network infrastructure,” COAI said. Please refer to this video for more details on the proposed Telecom Bill.
In February, four major European telcos are demanding legislation at European Union level to force the platforms, aka Big Tech, over-the-top (OTT) providers or hyperscalers, to pay their fair share of network investments. Timotheus Höttges, CEO of Deutsche Telekom (DT), Stéphane Richard, outgoing chairman and CEO of Orange, José María Álvarez-Pallete, chairman and CEO of Telefónica and Nick Read, CEO of Vodafone, penned a joint statement saying the current situation is simply not sustainable.
Citing the Sandvine Global Internet Phenomena Report from January 2022, they point out that video streaming, gaming and social media “originated by a few digital content platforms” accounts for over 70% of all traffic running over the networks.
“The investment burden must be shared in a more proportionate way,” the four CEOs insist. “Digital platforms are profiting from hyper scaling business models at little cost while network operators shoulder the required investments in connectivity. At the same time our retail markets are in perpetual decline in terms of profitability.”
They also warn that Europe risks falling behind other regions of the world if it does not take steps now, “ultimately degrading the quality of experience for all consumers.”
While the CEOs of DT, Orange, Telefónica and Vodafone have taken heart from recent commitments by the European Commission to ensure that all market players make a “fair and proportionate contribution” to infrastructure costs, they want legislators “to introduce rules at EU level to make this principle a reality.”
“The clock is ticking loudly, particularly given the huge investments still required to achieve the connectivity targets for 2030 set by the European Commission in its Communication on the European Digital Decade. Without an equitable solution, we will not get there,” the statement concluded.