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Should apps be regulated or licensed? Trai likely to bring out consultation paper next week

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App makers said move to regulate them will only stifle innovation.
App makers said move to regulate them will only stifle innovation.

The telecom regulator is likely to bring out a new consultation paper on the hotly debated topic of whether apps, including those offering communication services such as WhatsApp or Skype, should be regulated or licensed.

The paper, which could be put out as early as next week, may widen the scope of the consultation to non-calling apps such as Netflix and Amazon and ask stakeholders whether they need to be regulated, a person aware of the developments said. Companies offering apps that run on data services provided by telcos are known as over the top (OTT) players.

“The paper is also likely to also seek industry views on whether there should be revenue share between OTT players and service providers,” the person said. “There will also be the element of non-calling apps, like say Netflix or others, whether there is any need for regulating them.”

Should apps be regulated or licensed? Trai likely to bring out consultation paper next week

This will be the second time that the Telecom Regulatory Authority of India will seek views on regulating OTT players. Trai raised the issue of apps providing calling and message services without licences and their effect on revenue streams of telcos in a paper in March 2015.

However, that paper also included the element of regulations on net neutrality, which took on a larger dimension and eventually a separate consultation paper on the subject was issued a year later. Trai finally came out with recommendations on net neutrality in November 2017, backing a free and open internet, and said OTT would be dealt with separately.

The latest OTT paper is likely to rekindle the debate on whether OTT communication apps should be regulated and made to share revenue since they use the telecom network to offer services.

Such apps allow calls to be made for free or at much lower rates than carriers, eating into their revenue pie, and the consumer mostly pays only for data consumed. Voice accounts for about 80% of a telco’s revenue, although that is falling now. Telcos want these apps to pay the same levies that they do, such as licence fee and spectrum charges, besides requiring them to follow rules on security, lawful interception and quality of service.

The increasing use of data, however, may have compensated for the loss in voice revenue, a senior Trai official told ET earlier, saying that the moot point of difference between the two warring sides may no longer be relevant. However, telcos insist that OTT apps should be bound by the same rules that govern telecom operators because WhatsApp and Viber offer the same calling services that they do. Alternatively, if the apps are not regulated, then telcos should be given the same benefit.

“We believe both OTT players and TSPs should be treated on an equal footing. Our preference is for both to be kept out of any licensing regime. However, if the OTT players are being excused, then the same should apply to us as well,” said Rajan Mathews, director general of Cellular Operators Association of India. “If they’re not, then they should be put under the same obligations of taxation, legal enforcement, and data privacy issues.”

App makers said move to regulate them will only stifle innovation. Shubho Ray, president of Internet and Mobile Association of India, which represents app companies including Amazon, Flipkart, and MakeMyTrip, said the demand for revenue sharing was unjust because the consumer paid telcos for the data consumed while using the apps.

“It is also wrong to assume that we operate without regulation,” Ray added, saying apps, be it calling or otherwise, were regulated far more strictly under IT Act, where 90 provisions were penal in nature and only one provided a safe harbour.



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