REGULATING OTT: AN EMERGING TUSSLE
This post, the Winning Entry of the 3rd RFMLR Freshers' Article Writing Competition, 2022, is authored by Pranav Aggarwal, a student of B.A. LL.B. (Hons.) at Rajiv Gandhi National University of Law, Punjab.
When we try to define the way technology, especially the internet has affected our lives, then change might be a small word for this description. The unprecedented kind of year-on-year growth in active internet users can be traced by the fact that the figure of active internet users went to increase from 16 million in 1995 to 5.4 billion in 2022. But if we observe the foundation of this growth we will see a huge network of cables and towers form not only the backbone of the flourishing telecom sector but also the catalyst of the digital revolution. On the other hand, riding on this wave, there is a set of application and tech giants that are making our digital experiences even more worthwhile. These are the emerging Over the top (OTT) services. On that note, to set the new parameters for the transforming telecom industry, the government came up with the Draft Telecommunication Bill, 2022 to replace the Indian Telegraph Act, 1885, the Indian Wireless Telegraphy Act, 1933 and the Telegraph Wires (Unlawful Possession) Act, 1950. As the bill has been just put for consultation of the all the stakeholders, there are several questions that are being put into the discourse. Herein, the present piece specifically analyzes the proposed meaning of ‘Telecommunication Services’ and the allied issues attached with its enforcement. Additionally, certain prospective solutions are being discussed to fill the emerging abyss in the telecom industry.
2.Emergence of OTT Services
The telecom industry went through a generations(G) of faster and efficient technology and this progression which began to create impact with 2G, has now reached the level of 5G which can provide a speed of even 20 Gbps. Along with these advancements, various other complex web services developed which could be easily transmitted through the already set up medium by the Telecom Service Providers (TSP). OTT services has been defined by the International Telecommunication Union as “an application accessed and delivered over the public Internet that may be a direct technical/functional substitute for traditional international telecommunication services.” For instance, when it comes to messaging and calling, WhatsApp, Telegram, Facebook, Skype, Zoom, etc. form the major chunk of these OTT communication services which unlike the TSPs, provide much efficient consumer-friendly services at almost no cost. These services have already deeply penetrated in the virtual lives of the common people which can be reflected by the fact that 56% of the global data traffic on telcos' network is from leading OTTs. This, on the other hand, could mean that such enterprises have enormous data whose misuse has been evident in cases like Cambridge Analytica, and is highlighted by documentaries like Social Dilemma. Therefore, from the point of view of the government, safeguarding citizens from such privacy breaches and regulating these expanding OTT platforms top their priorities.
3.The Draft Bill and the Reforms Introduced
To provide a solution for the above mentioned problems, the Draft Indian Telecommunication Bill, 2022 has been formulated with plethora of new regulations. Whether, under Section 24, it is introducing statutory foundation for government control over suspension of these services or making KYC compulsory for the users under Section 34, this bill aims to provide absolutely new stream of regulations. Prima facie, these regulations seems to be more concentrated in the hands of the central government who now has more say in the working of the telecom industry than the regulatory body i.e. Telecom Regulatory Authority of India. Not only this, but various new definitions have also been formulated which are mentioned in Chapter 2 of this bill. Among these, the widest meaning has been given to the term ‘Telecommunication Services’ under Section 2(21) of the Draft Bill. From satellite based services, in-flight and maritime connectivity services to OTT communication services, the definition has included every possible actor directly or indirectly related to the telecom sector. Even after that, the government has left some space to include any other actor through notification that may come in the future on its discretion.
From the pool of the mentioned services, the inclusion of OTT services reflects the long-standing demand of TSPs to bring these services under the government’s licensing practices and regulatory framework with an intent to keep a check over their conduct, ensure compliance to relevant norms and preventing any under the table practices. However, such changes have brought up significant questions, i.e., what will be the real impact of such regulations on the flourishing OTT industry, will it initiate an unwarranted tussle between the OTT platforms and TSPs, or will it be beneficial for the telecom sector as a whole?
4.Regulating OTT Services
From the side of the TSPs, the arguments tend to revolve around the relative investment and returns that TSPs incurs and receive in comparison to OTT platforms. The return on phenomenal amount of licensing fees for the spectrum along with the cost incurred to build and maintain such huge tower and cable infrastructure can’t be compared to OTT’s return which easily reach to customers through TSPs and WIFI operators. Not only this, the OTT platforms have created a set of parallel networks of services such as messaging and calling on the existing network of TSPs at almost no subscription fees at all while directly affecting TSPs businesses.
The TSPs have been a proponent of the principle of ‘same services, same rules’ which the Draft Bill implements by including every kind of telecom service within a single definition as provided in Section 2(21). However, considering OTT platforms and TSPs as same services is flawed in itself. For instance, how can we equate movie streaming facility of Netflix with calling services of Airtel. Evidently, different sets of regulations are required to deal with such entities. For example, Information Technology Act, 2000 and the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 was bought to deal with certain digital platforms. Bringing another layer of regulations on the OTT platforms will highly affect their functioning and revenue. If WhatsApp, for example, tries to implement these regulations, it might have to change its whole design. The reason for the same lies in the end-to-end encryption wherein it doesn’t leave gap for interception by a third part which the current bill demand under the Section 24(2)(a).
Centre of Internet and Society (CIS), while commenting on the bill, argued that unlike what was mentioned in the explanatory note of the bill, no other country has given such wide meaning to telecommunication services and even TRAI recommended against licensing such wide ranging services. The arguments, however, ignore a rationale that the absence of such a phenomenon anywhere else doesn’t make it entirely flawed because every territory has a different set of variables which might need a different solution. Although TRAI’s recommendation do hold enough authority on such issues, these suggestions were made in 2020 and the reach of OTT services have highly grown especially due to pandemic.
When it comes to the effect of regulations on smaller entities, a paper on regulation and small business clearly reflected that the burden attached with compliance and structural changes required is much higher on small businesses where regulations impose the same requirements regardless of firm size. This bill also ignores the differences in size of the digital entities or OTT platforms which might make the entry and expansion of any such service providers quite capital intensive and lead to monopolistic practices of the existing players. This will further lead to breach of their Right to Freedom to Trade under Article 19(1)(g) due to the statutory barrier for the players to carry out the businesses.
5.Recommendations and Suggestions
The author does not deny the need for regulating such huge digital entities. Such entities do require reasonable surveillance for the protection of general public who might not understand the delicacies of the virtual world. However, to what extent they need to be regulated and what will be ‘reasonable’ in this scenario is a question of academic discourse and research which cannot be postponed any further due to the ever-increasing advancements in this sector.
As far the current bill is concerned, it does require significant changes which should be directed towards the TRP standard i.e., Targeted, Relevant and Precise. A statute must be inclusive of the varied characteristics of different entities and should aim to provide a framework suitable to their conditions and requirement. From the side of the government, it must ensure to avoid unnecessary indulgence with the working and data of these digital platforms to avoid any kind of possible breach of user’s privacy and to let these institutions function independently. As a nation, we consciously tried to move out of the ‘License Permit Raj’ since 1991 and introducing such kind of licensing might bring that regime again.
Last but not the least, till the government comes up with a sound solution, the ongoing financial tussle between the two players can be taken up internally and the large players in both the arenas can make sure that none of the entities enjoy undue financial advantage and some fiscal space is left for the small players to emerge and grow.
Currently in India, there is an opportunity for $14.46 Billion in telecom sector and with 5G accelerating our internet speed, our aspiration for innovative and efficient technology is also accelerating ahead which will surely expand this sector further. However, any tussle within this sector or with the government might prove to be counterproductive. Evidently, the inter dependency between OTT platforms and TSPs is really high and hence, the collective and collaborative functioning of both the players forms the propellant of India’s digital economy. As far as the Draft Bill is concerned, the definition under Section 2(21) should be reconsidered and drafted with a clear cut differentiation between OTTs and TSPs. Additionally, an economic categorisation can be introduced within the said definition to save the interests of the small and new telecom players vis-à-vis the telecom giants. Hence, the draft bill must be a framework meticulously carved by all the stakeholders so that it reflects the business as well as the user’s aspirations with social and economic welfare at its core.