COAI Reaffirms Stance on OTT Services Paying for Network Usage

COAI, the Cellular Operators Association of India, has restated its member Telecom Service Providers’ (TSPs) position in the ongoing debate about whether Over-The-Top (OTT) services should pay for the use of telecom networks. LT Gen (Dr.) SP Kochhar, Director General of COAI, emphasized that prominent OTT players should contribute through usage charges or levies, as it is a fundamental industry principle for businesses using infrastructure owned by others.

Currently, this principle has not been applied to OTTs versus TSPs in India. OTTs were not traditionally part of the telecom industry, but have gained importance in recent years. With the ongoing transformation in the industry, Kochhar stressed the urgent need for a decision on this matter.

Kochhar countered OTTs’ arguments that TSPs make significant revenues from traditional services by highlighting the minimal Average Revenue Per User (ARPU) from Business-to-Consumer (B2C) services, particularly voice services, for Indian telcos. In addition, he explained that TSPs do not benefit from revenue generated by Business-to-Business (B2B) data consumption by OTT players. Instead, TSPs suffer from network congestion and customer experience issues.

Kochhar also emphasized that TSPs are compelled to make substantial infrastructure investments to cope with the growing data consumption driven by major OTT players. He highlighted that voice services do not require high-capacity networks. However, with the introduction of 5G technology and its data-intensive applications, the situation is expected to worsen in the coming months.

Globally, countries like South Korea have recognized these challenges and implemented policies to create a level playing field for the industry. In Korea, OTT players are required to pay for network usage, and revenue from spectrum auctions must 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 allocated exclusively to develop networks in underserved areas.

COAI’s stance on OTTs’ fair share is not intended to harm small and medium-sized businesses (SMBs) or small players. COAI’s concern primarily revolves around major players who generate significant data traffic and revenue from advertisements but are not transparent about their data usage and revenue figures. Kochhar stressed the importance of transparency and cooperation to establish a sustainable ecosystem.

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