128 startup founders urge TRAI not to impose telecom licensing on OTT platforms

At least 128 startup founders have urged the TRAI to rethink any move towards over-regulation of internet services being described as OTT services, which may have discriminatory consequences.

The 128 startup founders who have written to the Telecom Regulatory Authority of India(TRAI) include Zerodha's Nithin Kamath, Paytm's Vijay Shekhar Sharma, PhonePe's Sameer Nigam, Razorpay's Harshil Mathur, Ajay Kaushal, Director, Billdesk, Nitin Saluja, founder, Chaayos, Ritesh Malik, founder, Innov8 and Rohan Verma, CEO, MapmyIndia, to name a few.

Raising their concerns over the proposed regulation by the TRAI to selectively ban over-the-top (OTT) platforms, the startups founders said they are principally against bringing such services under the same or similar regulatory framework as telecommunications service providers (TSPs).

“We believe that the premise largely relied upon in the consultation paper as well as some of the comments submitted by TSPs (internet services supposedly being direct substitutes of traditional services and thus stealing the latter's revenues and profits as well as the existence of a market failure, in which there is a lack of adequate financial incentive for large TSPs to invest in infrastructure due to the lack of compensation) is unfounded,” they argued.

TRAI in July started the process to examine the issue of regulating OTT communication apps.

Earlier this month, 11 consumer groups said the proposal would lead to overregulation and would create regulatory uncertainty in the domestic market.

The startup founders also urged TRAI to understand that the “regulatory difference between TSPs and internet applications/service providers do not requisite an intervention, especially because there are inherent structural and functional differences between the two”.

“Ours are internet services which consumers demand, and are delivered via a complex network of networks called the internet, and not value added services which are delivered by telecom operators. We host our services and pay for sending and receiving content via the Internet to our edge ISP, just like any other Internet user,” they explained.

However, a particular TSP which is offering data services to the consumer does not control the internet infrastructure in its entirety. It is dependent on several other networks to facilitate this task.

“Thus, allowing a TSP which is at one edge of the internet to charge differently for data that it does not process alone, could compromise the entire architecture of the internet itself. Were other TSPs across multiple tiers allowed to do this, then the openness of the internet as we know, would be altered,” the founders noted.

They said that the suggested form of regulatory framework, where TSPs essentially have the power to tilt the playing field to favour one website/application/service or another, will inevitably lead to discrimination, non-level playing field, entry barriers, and increased compliance burden.

Further, the suggested methods of categorising an application or services as “large traffic generators” and deciding the “fair and proportionate share/contribution” are arbitrary and lack clarity, which may lead to such decisions being taken on a case-to-case basis.

Earlier, the Broadband India Forum (BIF) also said that OTTs are adequately regulated under the existing IT Act, 2000, and other associated acts and rules.

The BIF argued that existing laws, including the IT Act and the Consumer Protection Act of 2019, sufficiently address the regulatory, economic, security, privacy, safety, and consumer grievance aspects of OTT services.

The startup founders called for the internet to be maintained as an open platform on which network providers treat all content, application, and services equally, without discrimination.