In the latest escalation, the Indian telcos namely Reliance-Jio, Bharti Airtel & Vodafone-Idea have once again insisted the telecom minister grant them a fair share of the revenue garnered by the Over-The-Top (OTT) players. 

The Meeting 

The meeting held on Monday received the participation of the top executives of India’s telecom industry with the communications minister, Jyotiraditya Scindia. It was attended by Jio’s chairman Akash Ambani & MD, Pankaj Pawar, Bharti’s Vice-chairman Rajan Mittal, and Vodafone-Idea’s Akshaya Moondra, among others. 

It was arranged as part of receiving updates from the industry. 

Matters discussed 

Among the matters discussed, a major emphasis was laid on ensuring fair revenue share from OTT as well as the concerns of the industry regarding Satelite Spectrum so that a level-playing field is ensured and no company gets leverage over the other while a proper framework regarding further charges and services is established. 

Other important matters discussed in the meeting include issues around GST and also input tax credits, to count the few pain points of the industry. 

Demands Regarding Satelite Spectrum 

The telcos urged the minister to ensure a level playing field even if the government is planning to move ahead with spectrum allocations and not auctions, specifically, while ensuring equal and fair treatment to all the companies as they aim to provide the same services across the geography. 

However, the minister has already articulated the government’s stance to allocate the satellite spectrums and not go for Auction, as suggested by Reliance-Jio. 

Fair-Share Debate 

While the debate around the fair-share thing has been going on for a very long time, the DoT has not decided anything on the same, so far.  However, telcos around the world have been voicing their opinion regarding receiving a fair share of the revenue garnered by large OTTs. 

The debate surrounding this is also coupled with a precedent set by South Korea wherein the courts have facilitated a revenue share agreement between Netflix, a large traffic generator in the country, and SK Telecom, after a three-year legal battle. 

The rationale behind the same 

OTT players across the world utilize the telcos’ infra to deliver content to their audiences while not contributing enough for the same. The issue has become a boiling pot in major economies like the US, EU, Brazil, and South Korea.    

Proposal 

A booming internet industry facilitated by rapid telecom expansion in India has pushed for the debate. The telcos had earlier proposed to implement a dynamic toll to compensate the telcos for their losses while ensuring a fair contribution of the Large OTTs into the telecom infra. 

Counter-arguments  

The OTTs claim that unlike Telcos they are internet-based applications that do not own or operate traditional telecom infrastructure. Unlike telcos, they do not have exclusive rights, such as access to numbering resources or the ability to establish infrastructure through right-of-way. However, OTT providers argue that they make substantial investments in telecom infrastructure, contribute significantly to telcos' revenue, and drive demand for broadband services.

Sustainability of Parameters. 

“We’ll need to add 50 million customers every year to recoup the revenue loss faced by telcos, where are the customers going to come from? And to what extent will telcos keep on raising tariffs?" S.P. Kochhar, director general of COAI, said, attributing the revenue loss at ₹10,000 crore to the exchequer by way of license fees and taxes. He noted that there was a need to discuss the quantum of fair share as passing the cost on to consumers by way of raising tariffs was not sustainable. 

Challenges 

While the telecom industry remains adamant about receiving a fair share of the revenue generated by the OTT players, there seems to be lingering chances of tariff hikes by the OTTs resulting in a burden over the end-consumer.