Context:
In July of this year, the Telecom Regulatory Authority of India (TRAI) initiated a comprehensive consultation at the government’s request regarding the need for and potential mechanisms for regulating Over-The-Top (OTT) services. This action has generated significant controversy in the realm of net neutrality. Net neutrality is the principle that Internet access providers must treat all internet traffic equally. It ensures that all data is treated without discrimination by Internet service providers (ISPs), promoting an even playing field on the Internet.
Relevance:
GS3- IT, Computers
Mains Question:
Upholding the principles of net neutrality is essential to foster a conducive environment for innovation, competition, and consumer welfare, especially in India. Analyse in the context of ongoing tussle between the telecom sector and Over-The-Top platforms. (15 marks, 250 words).
Complaints of the Telecom Sector Against OTT Platforms:
- For more than a decade, telecommunications companies have faced revenue challenges in traditional sectors like voice calls and Short Message Service (SMS) due to the competition posed by often free OTT services.
- Simultaneously, these companies have invested heavily in infrastructure upgrades to handle increased data traffic without experiencing a proportionate revenue increase.
- Additionally, they argue that OTT services are not subject to the same taxation and licensing fees, creating an uneven playing field.
- On the other side, the telecom companies insist that content providers like Netflix, Amazon Prime, and Disney+ Hotstar should share the costs of bandwidth.
- They claim that streaming platforms benefit from the infrastructure built and maintained by telecom companies, framing them as “free riders.”
The Other Side of the Coin:
- Telecom companies provide access to the Internet, but they do not own it. Consumers purchase data plans to access services. OTT platforms generate demand for internet access by offering desired services, and they pay for content delivery networks (CDNs) to enhance internet capacity.
- Telecom companies, in turn, provide connectivity to the internet and charge subscribers. If they cannot cover their costs, they can increase prices to maintain and upgrade their infrastructure.
- A fair market requires the full accounting of costs and benefits in the exchange price. Attempting to seek cross-subsidies instead of fully accounting for costs could warrant scrutiny from the Competition Commission.
- OTT services and internet access exist in distinct markets, offering different benefits to consumers. Therefore, separating costs between these two markets is logical.
- Telcos’ attempt to charge both consumers and content providers is not only greedy but also threatens net neutrality.
- If OTT platforms acquiesce to telcos’ demands, the costs would likely be passed down to subscribers through increased subscription fees or reduced service quality for platforms unable or unwilling to pay the toll. This outcome would harm consumers who rely on OTT services for entertainment, education, and professional purposes.
- The arguments by telcos’ is fundamentally flawed and sets a dangerous precedent that undermines the principle of net neutrality.
Conclusion:
TRAI’s regulation on the prohibition of discriminatory tariffs for data services, released on February 8, 2016, was based on net neutrality. It forced the withdrawal of Facebook’s Free Basics platform in India and influenced other countries to adopt net neutrality. Recognizing the long-term consequences of conceding to telecom companies’ short-sighted demands is crucial for all stakeholders, as upholding net neutrality is essential to fostering innovation, competition, and consumer welfare in the digital era, particularly in countries like India where the Internet serves as the carrier of Digital Public Infrastructure (DPI).
