An Open Letter Answering Trai's 20 Questions on OTT Players

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An Open Letter Answering Trai's 20 Questions on OTT Players

To the Telecom Regulatory Authority of India (Trai),

We're speaking to you as customers, as people who use the networks that you regulate. Recently, you asked people to share their views on the regulation of apps in India. We went through your draft consultation paper, struggling through it all, to look at the twenty questions you are asking the people of India, and we have to say, we were a little surprised.

(Also see: Trai Seeks Views on Framework for WhatsApp, Skype, Other OTT Services)

That's because though the paper is over 100 pages, and still manages to say very little at the end. It talks about how what you call OTT services - but we, as consumers know as apps and websites - are hurting telcos and costing them money. It talks about how these are taking advantage of the network telcos paid for, without giving a "fair" cut in return.

(Also see: Net Neutrality Lost in the Confusing Language of Trai's Draft OTT Regulations)

Yes, the recently unveiled WhatsApp voice calling could cost companies like Airtel and Vodafone a little in voice revenue if it really takes off, but would also lead to increased data usage. Customers who never used data could also start using data, so it is actually beneficial to telcos, but that side of the argument is not represented in your consultation paper. The fact that telcos make advertisements like this one heavily featuring OTTs is skipped over, in order to fearmonger about healthcare, safety and privacy - things where telcos, and by extension the telecom regulator aren't really involved.

(Also see: Trai's Draft on OTT Regulations Goes Far Beyond Telecom for No Reason)

So, here are our responses to the 20 questions on OTT regulation. Hopefully, you will take note.

Question 1: Is it too early to establish a regulatory framework for OTT services, since Internet penetration is still evolving, access speeds are generally low and there is limited coverage of high-speed broadband in the country? Or, should some beginning be made now with a regulatory framework that could be adapted to changes in the future? Please comment with justifications.
No, it is not too early to create a regulatory framework. High-speed Internet access is still available to only a small number of people in India, but fair guidelines will encourage more users and make the Internet a more useful medium when they do log-on.

It is important that the regulations be focused towards the needs of the users - the Indian public - and not the needs of corporations. Without regulations in place, we have seen companies like Airtel plan special fees for VoIP services, and these same companies have said that apps like WhatsApp hurt the development of networks, simply because the telcos do not wish to compete fairly.

You [Trai] need to create rules to ensure that we, the paying customers, are not being forced to pay extra money to access services that should all be freely and readily available. Further, in its draft, you talk about how OTT services are not required to meet any minimum quality of service standards, unlike telcos.

That is a good point in theory, but as any customer can tell you, the telcos are doing a terrible job in providing even the bare minimum of service. Voice and data are both unreliable, billing is not always correct, and routinely changing billing plans and data packs make it hard for the customer to know what they're being charged for. Your focus should first be on getting the telco services in order, before looking at OTT services.

Question 2: Should the OTT players offering communication services (voice, messaging and video call services) through applications (resident either in the country or outside) be brought under the licensing regime? Please comment with justifications.
No. Where would you draw the line on communications? Should any app that includes any kind of communication with another person be regulated in this way? Many e-commerce platforms offer a live-chat function, to let you talk to a customer care representative. Should that be regulated? Most online games also allow people to chat, but are clearly not communications services. Should a forum be regulated as a non-real-time communication service? What about email, or Facebook, or Twitter? The first problem with regulating communication services is that this is too vague, and can be interpreted in any number of ways.

Secondly, these communications services are not offering replacements for the voice services that are required to meet minimum standards, but are instead supposed to be an optional means of communication. Since people don't depend on them for emergency communication, why is there a need to regulate them?

With that said, it is also worth noting that some of these services actually offer the user a better experience either in terms of the features offered, or in terms of the reliability. On days of festivals, not only do customers have to pay a premium for their text messages, these messages still don't reach their recipients for hours - is it a surprise customers prefer WhatsApp?

Question 3: Is the growth of OTT impacting the traditional revenue stream of TSPs? If so, is the increase in data revenues of the TSPs sufficient to compensate for this impact? Please comment with reasons.
There is no evidence to show that the increased use of OTT services is directly costing the telcos money. For one thing, the term OTT is too broad in itself. Is YouTube costing telcos money if it does not have any comparable service of its own? Obviously not. But what about something like WhatsApp?

There, we can see that there has been some reduction in the number of text messages. This has however been blamed entirely on OTT's but there could be a number of different reasons, including businesses moving to other systems of communication and co-ordination, and people moving away from SMS to using methods like missed calls as a mode of communication - not to mention telcos employing customer-hostile policies like charging a premium for messages on days they are most likely to use SMS.

Data usage has gone up significantly, which should ideally adequately compensate telcos, who at the same time should be offering a better product if they want to remain competitive.

The so-called OTT services are the only reason for users to pay telcos for Internet services at all. Data has been a big revenue source for telcos at a time when voice and text plateaued. However, we didn't see Airtel or Reliance being charged an access fee by Google. Why should the reverse apply?

Question 4: Should the OTT players pay for use of the TSPs network over and above data charges paid by consumers? If yes, what pricing options can be adopted? Could such options include prices based on bandwidth consumption? Can prices be used as a means of product/service differentiation? Please comment with justifications.
The OTT players should not be required to pay anything over and above the data charges paid for by customers. We are witnessing the birth of several online businesses in India, particularly focused on mobile Internet users. Data used is data used, and we customers are already paying for data use. More of us are paying every day, and we're using more data and paying more for it too.

By asking these companies to pay an "access fee", you stifle Indian innovation and stifle value creation in India. If an access fee was required to be online in India, you would have no MakeMyTrip, no Zomato and no Flipkart, and none of the value that these companies are creating in India.

If telcos are having difficulty in balancing their books - and that is a separate debate - let them raise tariff for all Internet traffic equally and see how the market reacts.

Could such options include prices based on bandwidth consumption? No, since customer is already paying more for that bandwidth!

Can prices be used as a means of product/service differentiation? No! If pricing is a means of differentiation, then only established companies with big pockets will be able to participate in the Indian online economy. If a company doesn't have the money to pay Vodafone and Airtel and Reliance and the other operators for free access, it will lose huge numbers of users. By doing this, you'll make sure that no new Indian company can come up, while cash rich international firm will still be able to compete here.

Question 5: Do you agree that imbalances exist in the regulatory environment in the operation of OTT players? If so, what should be the framework to address these issues? How can the prevailing laws and regulations be applied to OTT players (who operate in the virtual world) and compliance enforced? What could be the impact on the economy? Please comment with justifications.
The existing laws cover a wide range of subjects, and should be more than enough to meet the needs of the day. There should not be special laws that apply only on the Internet - this was the kind of thinking that led to the creation of section 66A of the Information Technology Act, which was struck down by the Supreme Court.

Adding further guidelines that protect telcos, instead of customers, will not just cost the public more money when companies like Airtel decide to roll out special charges for separate services, but will also hurt Indian innovation. It will be another layer of spending that an Indian startup has to endure, putting us on an even more unfair uphill struggle against the rest of the world. The more such regulations against the ease of building an OTT service exist, the less likely it is that a Facebook or Google could be made in India.

How can the prevailing laws and regulations be applied to OTT players (who operate in the virtual world) and compliance enforced? Yes, they can, and they should be. Just because a company is operating online doesn't mean that it no longer has to follow the laws of the land. If it is possible for you to regulate OTT players, then the rest of the laws have to apply to them as well. And if the laws don't apply, then how exactly can you regulate OTTs?

Question 6: How should the security concerns be addressed with regard to OTT players providing communication services? What security conditions such as maintaining data records, logs etc. need to be mandated for such OTT players? And, how can compliance with these conditions be ensured if the applications of such OTT players reside outside the country? Please comment with justifications.
There's a new app or service - OTT player as you call it - launched somewhere around the world every single minute. Do you really expect to mandate all these apps should maintain logs for your benefit, or for access by Indian security agencies? And if they aren't able to do that, what is your solution, ban them and restrict Indian consumers to a handful of 'whitelisted' apps? Such ideas are against the very basic nature of Internet that's built on a foundation of choice and freedom.

Yes, OTT services could be misused for illegal purposes, but unless you put a blanket ban across the entire Internet, it won't be possible to stop people from finding sites for clandestine communications. Therefore, this question is not relevant.

Question 7: How should the OTT players offering app services ensure security, safety and privacy of the consumer? How should they ensure protection of consumer interest? Please comment with justifications.
The OTT services should be held to the same standards of security, safety and privacy as any other business that operates in India. There should be no separate laws that apply to online behaviour and offline. And given that high speed Internet access is still in its infancy in India, any such laws should be applied first and foremost to offline businesses, which will impact a larger number of Indian customers.

OTT players do need to ensure that user data is treated as securely as possible, and need to ensure that our information is not misused in any way. However, the government and offline services need to be held to the same standard, and all need to be as transparent in their activities as possible.

Question 8: In what manner can the proposals for a regulatory framework for OTTs in India draw from those of ETNO, referred to in para 4.23 or the best practices summarised in para 4.29? And, what practices should be proscribed by regulatory fiat? Please comment with justifications.
The ETNO proposal is not necessarily relevant to Indian conditions - the markets and users are entirely different, and our focus should be on encouraging more users to get on the Internet, and to encourage more Indian businesses to use the Internet.

The telcos need to innovate to come up with new features that can provide more value to the customer, instead of innovating to come up with new ways to charge the customer for the same (shoddy) service that they are already providing.

Question 9: What are your views on net-neutrality in the Indian context? How should the various principles discussed in para 5.47 be dealt with? Please comment with justifications.
The principles outlined in paragraph 5.47 - that outline the importance of customer choice, transparency from the provider, requiring information to be given in easy to understand language, and to ensure that the promises made by telcos are verifiable, are all very important, and should be the focus of this discussion, not the regulation of OTT services, which by and large have been much more customer-friendly.

The OTT companies face actual competition from across the world and therefore don't need as much oversight. With our telcos on the other hand, these principles are not being addressed in any real way.

Question 10: What forms of discrimination or traffic management practices are reasonable and consistent with a pragmatic approach? What should or can be permitted? Please comment with justifications.
It is our belief that traffic management policies are by nature, anti-consumer. However, amongst these, the bandwidth caps - referred to as Fair Usage Policies in India - are the most easily understood by the customer, who can know in advance exactly what is being paid for, and adjust their spending according to their needs.

Fair Usage Policies, as described in the paper, where the speed available to a person is throttled if the usage is "excessive" is in effect a hidden bandwidth cap, and - from the way it is described - it seems the exact criteria when the usage becomes 'excessive' is not disclosed to the customer up front. That is why this is not a good option for customers.

The practice of toll boothing - where different services are offered at different prices - is also not suitable to India. The penetration of mobile broadband is still very low, and the speeds available to users are also similarly very low. Asking people to pay significantly more money to access specific sites, or degrading the quality of service will only hurt the growth of the Internet in India, which has been hugely beneficial in a number of ways.

Zero rating access - where some services are made free to access through deals between the OTTs and the telcos is equally problematic, because it will prioritise some sites over others. If you can access Facebook for free (as is the case with Internet.org, launched in partnership with Reliance), but need to pay close to Rs. 100 per month to access other social networks, then most users would prefer to stick with the free option - thus providing an unfair advantage to bigger players who can afford to sign such deals.

For a relatively low cost, an established player could cut off all chance competition for the huge number of users present in India. In this way, zero rating access could prevent the growth of new Internet businesses in India

Question 11: Should the TSPs be mandated to publish various traffic management techniques used for different OTT applications? Is this a sufficient condition to ensure transparency and a fair regulatory regime?
The telcos should be required to publish traffic management techniques, in a manner that is possible for ordinary users to clearly understand. This will help improve transparency, but as discussed in the previous answer, unless there are reasonable alternatives present, this isn't helpful to the users.

Transparency is not a sufficient condition by itself - if all the TSPs follow toll boothing practices, because they claim it results in better access speeds, then knowing the practice being followed doesn't help paying customers. What we need is for you to take steps to ensure that such moves that violate net-neutrality and are anti-consumer are not allowed.

Question 12: How should the conducive and balanced environment be created such that TSPs are able to invest in network infrastructure and CAPs are able to innovate and grow? Who should bear the network upgradation costs? Please comment with justifications.
Telcos can't price their access at an unsustainable rate and then argue that their costs are not being met because of OTT services. The increase in data access costs should be enough to pay for network upgradation over time. If the telcos were hoping to earn enough from the Indian customer to be able to grow without any risk, then they might need to rethink their strategy.

So far, customers have seen continuous degradation of quality in telco services - whether voice, text or data. This has not improved over the years, and the only innovation we see from telcos is in finding new ways to get us to pay for the same basic services. This is something that needs to change, and urgently, because for many of us, the only true value from telcos today comes via OTT services.

Question 13: Should TSPs be allowed to implement non-price based discrimination of services? If so, under what circumstances are such practices acceptable? What restrictions, if any, need to be placed so that such measures are not abused? What measures should be adopted to ensure transparency to consumers? Please comment with justifications.
The telcos should not ideally be discriminating between services. As we mentioned above, the only measure that is (somewhat) fair and understandable to the customers is data caps. "Fast lanes" of access are particularly rating, and while there can be an argument made in favour of zero ratings access, from a purely academic perspective, we would say that this is also anti-consumer and hurts the Indian Internet user.

If so, under what circumstances are such practices acceptable? No, this is not acceptable at all - non-priced discrimination is often hard to measure or understand, and can easily be used to hurt our experiences.

What restrictions, if any, need to be placed so that such measures are not abused? These measures should not be in place at all.

What measures should be adopted to ensure transparency to consumers? Non-price based discrimination should not be adopted. The networks need to improve their service, instead of continuing to try and get us to pay more for less.

Question 14: Is there a justification for allowing differential pricing for data access and OTT communication services? If so, what changes need to be brought about in the present tariff and regulatory framework for telecommunication services in the country? Please comment with justifications.
No. People should not have to pay extra to access services simply because telcos are not ready to innovate to compete anymore. There is no circumstance in which this should be justified.

Question 15: Should OTT communication service players be treated as Bulk User of Telecom Services (BuTS)? How should the framework be structured to prevent any discrimination and protect stakeholder interest? Please comment with justification.
If the customers are already paying for data access in order to visit the OTT sites - which we are - then why is there a question of BuTS at all? The telco has little justification to seek payment from the OTTs, particularly when you consider that OTT services are the only reason we're paying to access the Internet at all.

If the telcos aren't keen to pay OTTs for every customer who uses their services (since that customer might not have used data at all otherwise) then why should the reverse hold true?

How should the framework be structured to prevent any discrimination and protect stakeholder interest? These kinds of measures only serve to benefit the network without incentivising it to improve the services being offered. This is anti-consumer, and anti-entrepreneurship, in favour of filling the coffers of networks who are not willing to take risks to grow.

Question 16: What framework should be adopted to encourage India specific OTT apps? Please comment with justifications.
The free access that helps OTT apps from around the world to grow will also help Indian and India-specific applications. Just as there shouldn't be discrimination between online and offline businesses, there should also not be discrimination between Indian and other services.

Question 17: If the OTT communication service players are to be licensed, should they be categorised as ASP or CSP? If so, what should be the framework? Please comment with justifications.
We do not believe that OTT services should be licensed, but if this is to happen - and it shouldn't - it should be as ASPs (Application Service Providers). There should be no discrimination based on the type of service being offered.

Given that there are tens of thousands of apps on each platform, with many more being created every single day, a licensing regime would be impractical, and if carried out, could hugely negatively impact the experience of Indian users.

Question 18: Is there a need to regulate subscription charges for OTT communication services? Please comment with justifications.
The OTT services are being regulated by supply and demand. Unlike the telcos, which operate in a virtual monopoly through cartel like behaviour (when was the last time you saw different rates on Airtel and Vodafone?) OTT services exist in marketplaces where the customer has real choice and therefore can not get away with unfairly charging the customer. For this reason, there is no need to regulate charges for OTT communication services.

Question 19: What steps should be taken by the Government for regulation of non-communication OTT players? Please comment with justifications.
The government should not be looking to regulate any OTT players - so far, they have served customers (the Indian public, who voted for the government) better than the telcos have. You should instead be working on means to get the telcos to provide the minimum service that they are charging for, instead of enabling them to place extra charges on our bills for using the Internet and apps.

Question 20: Are there any other issues that have a bearing on the subject discussed?
Companies like Airtel and Reliance have been experimenting with toll boothing and zero-rating plans even knowing full well that this paper was being worked on. The regulator needs to show that it is independent from the companies that it is supposedly overseeing, and it is our hope that the final recommendations will reflect this. The outlines that emerge from this paper are worrying, and contain a lot of language that is pro-telco, at the cost of the consumer. The government's first interest must be the consumers, the Indian public, and we hope that the final version of this document will reflect that.

Optimistically yours,

NDTV Gadgets

Hopefully, Trai reads our entire letter - we will also be mailing them the response at advqos@trai.gov.in now. We hope our site's readers also read this letter, because it directly affects your experience on the Internet - and please share your thoughts with Trai by emailing to the above address.

With the changes that Trai's consultation paper is hinting at, you Internet bill could go up significantly. Hidden costs to online companies in the form of zero-rating plans will also hurt you as a customer because eventually these costs will come out of your pocket in one way or the other, as services either increase advertising or find other ways to monetise your experience.

We all have till April 24 to send our responses to Trai. Read our articles on the subject, and be heard, because this matters to you.

Related reading:
What Is Net Neutrality? Here's a Simple Explanation

Trai Seeks Views on Framework for WhatsApp, Skype, Other OTT Services

Net Neutrality Lost in the Confusing Language of Trai's Draft OTT Regulations

Trai's Draft on OTT Regulations Goes Far Beyond Telecom for No Reason

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Gopal Sathe Gopal Sathe is the Editor of Gadgets 360. He has covered technology for 15 years. He has written about data use and privacy, and its use in politics. He has also written extensively about the latest devices, video games, and startups in India. Write to gopal@ndtv.com or get in touch on Twitter through his handle @gopalsathe with tips. More
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