The Telecom Regulatory Authority of India (TRAI) issued its
recommendations on regulatory framework for ‘over-the-top’
(OTT) communications services on 14 September 2020
(Recommendations). The Recommendations have been issued pursuant to
a reference letter from Department of Telecommunications (DoT)
dated 3 March 2016 by way of which DoT had sought recommendations
of TRAI on net neutrality and other related aspects such as
economic, security and privacy issues, and regulatory framework for
OTT services, etc. Over the course of the last 4 years, TRAI has
issued different sets of recommendations addressing these aspects
and the present Recommendations lay emphasis on regulation of OTT
communication services.

Background

In the past decade, OTT services have inter alia
changed the way we communicate. In the era of advanced smartphones
and plummeting data tariffs, OTT communication services have played
a crucial role in lives of people.

OTTs and telecom service providers (TSPs) have been at
loggerheads for a considerable period of time. This is mainly
because new forms of communications offered by OTTs, which are
similar to the services provided by TSPs, have directly impacted
the revenue earned by TSPs. OTT services are much easily accessible
(there is no robust subscriber verification mechanism) and
affordable (in fact many OTT services are offered without any
charges). To add to it, OTT services utilise the underlying telecom
resources and network of TSPs. Such factors have prejudiced the
interests of TSPs at large and accordingly, governments across the
world and top telecommunications bodies have been brainstorming to
create a balance between the interests of TSPs and general public
who find it convenient to utilise OTT services. 

Key issues dealt by TRAI and ensuing deliberations

TRAI has noted suggestions of certain industry members who have
opined that services provided by OTT have “functional
substitutability” with services such as voice telephony,
messages (SMS), video calls etc. that are provided by conventional
TSPs. According to this faction, this should trigger regulatory or
licensing norms for OTTs as well. A contrarian view in this regard
is that OTTs and TSPs operate in different spheres and are not
“substitutable” per se. Rather, the OTTs are
dependent on TSPs for network access and TSPs retain
certain exclusive rights like access to spectrum, network
infrastructure and allocation of numbering resources, which sets
OTTs and TSPs apart.  

The issue of non-level playing field between the OTTs and TSPs
is another bone of contention. Few stakeholders have advocated that
given the similarity in nature of services, OTTs should be subject
to regulatory framework and compliances, as is the case with TSPs.
However, another perspective is that most OTTs work on a “zero
pricing” model unlike TSPs who charge for their services. In
any case, TSPs have benefitted from increased data usage by
customers on account of extensive usage of OTT services, and that
is sufficient to address the decline in revenue from conventional
telecom services.

TRAI has also considered aspects relating to interoperability,
lawful interception and accessibility of emergency services in
relation to OTT communication services in the following manner:

Recommendations

Based on the discussions with industry stakeholders and on an
assessment of position adopted by other countries, the following
recommendations have been issued by TRAI:

Comment

On account of overlap between communication services offered by
OTTs and TSPs, there is a worldwide debate on whether to regulate
OTTs or not. Similar to the initiatives of TRAI and DoT in India,
other jurisdictions around the world are in the process of
reviewing the framework that may be applicable to OTTs or have
already done so. Notably, many countries that are similarly placed
(economically, socially and demographically) as India have ceased
from prescribing a regulatory framework for OTT communication
service providers.

The Recommendations indicate a light touch approach by TRAI and
suggest that any regulatory intervention is unwarranted at least
for next couple of years. In fact, TRAI has commented that any
subsequent action is contingent on how law or regulatory framework
shapes up around the world. Importantly, the Recommendations have
pointed out that the extant laws and regulations are sufficient to
deal with material issues arising out of operations of OTTs.
Undoubtedly, the Recommendations would be a setback for the TSPs
that have been struggling on multiple fronts. It remains to be seen
as to how DoT will deal with the Recommendations to salvage the
telecom industry.

On the other hand, it would be incorrect to suggest that OTTs
are completely unregulated in India. Pertinently, the Central
Government has broad powers under Indian laws to take necessary
action against OTT platforms or apps in specific cases pertaining
to national security and defence of India. The only notable
privilege that OTT may enjoy at this stage is that they are not
subject to any license, registration or any compliance requirements
from a telecom regulatory perspective.

In parallel, the Government is mulling over a new set of
proposed rules and regulations in relation to intermediaries as
well as data protection and it will be interesting to see how such
changes will impact the functioning of OTTs in India in the near
future.

Originally published by Khaitan & Co, September
2020

The content of this document do not necessarily reflect the
views/position of Khaitan & Co but remain solely those of the
author(s). For any further queries or follow up please contact
Khaitan & Co at legalalerts@khaitanco.com

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