COAI affirms stand on fair usage charges between OTTs and TSPs


In the ongoing debate surrounding whether Over-The-Top (OTT) services should pay Telecom Service Providers (TSPs) for network usage, COAI reaffirmed its member TSPs’ stance, emphasizing that prominent OTT players should compensate for utilizing telecom networks.

Addressing the media today, Lt Gen (Dr.) SP Kochhar, DG of COAI, stated that it is a fundamental industry principle that any business using infrastructure owned by others should contribute through usage charges or levies. However, this principle has not been applied in the case of OTTs versus TSPs in India. This situation has arisen because OTTs were traditionally not part of the telecom industry but have gained prominence in recent years. Kochhar stressed that with the ongoing transformation in the industry, the need for a decision on this matter is now more pressing than ever.

Kochhar countered OTTs’ arguments that TSPs are making huge revenues from traditional services by pointing out that TSPs’ ARPU from B2C services, primarily voice, is minimal, especially considering that Indian telcos’ ARPUs are among the lowest globally. Moreover, he argued that in the case of Business-to-Business (B2B) data consumption by OTT players, TSPs do not gain any such revenue, but worse, they suffer due to network congestion and customer experience issues.

Kochhar also highlighted that telcos are compelled to make substantial investments to cope with the humongous data consumption driven by major OTT players. If this were not the case, TSPs would not need such extensive infrastructure investments since voice services do not demand such high-capacity networks. With 5G technology introducing numerous data-intensive applications, the situation is expected to worsen in the coming months.

The COAI DG also cited a real business scenario in rural investments, explaining that telcos investing in rural networks find it impossible to realize the capex savings because the ARPU vs capex in this scenario is just “going south.”

Globally, countries like South Korea have recognized these challenges for telcos and implemented policies to create a level playing field for the industry. In Korea, OTT players are obligated to pay for network usage, and the government mandates that revenue from spectrum auctions be spent solely on telecom network enhancement. Similar agreements exist in Europe, where TSPs and OTTs engage in mutual agreements, with government intervention in case of disputes. In the U.S., charges collected from TSPs and OTT providers are exclusively allocated to develop networks in underserved areas that telcos find economically non-viable.

Kochhar clarified that COAI’s stance on OTTs’ fair share is not intended to harm SMBs or small players. The concern of member TSPs primarily revolves around major players who generate substantial data traffic and revenue from advertisements, yet are not transparent about their data usage and revenue figures. Kochhar stressed the need for transparency and cooperation to establish a sustainable ecosystem.

Regarding the net neutrality debate, COAI DG emphasized that the fair share policy would not impede net neutrality principles, and COAI’s member telcos are committed to adhering to net neutrality standards. He clarified that net neutrality pertains to the unbiased treatment of content and is separate from the B2B fair share charges to be paid by OTTs to TSPs.