Revenue share demands by internet-telcos like rent-seeking: IAMAI

The Internet and Mobile Association of India (IAMAI) has said telecom companies’ demands for revenue-sharing mechanisms between internet companies and telecom service providers (TSPs) “smack of rent-seeking”, and would discourage growth for OTT-based companies .

According to IAMAI, by requiring major OTT service providers to pay TSPs for data used by consumers, telecom players would essentially be charging twice for the same service as they already charge consumers for data.

“In any case, ‘growing data traffic’ only consists of data consumed by consumers and that they have already purchased from telecom companies. Therefore, the ‘strain’ on TSPs’ infrastructure occurs when they sell data to consumers beyond their infrastructure capacity, a fact that is conveniently ignored,” IAMAI said in a statement.

The association said demands to impose revenue-sharing mechanisms between internet companies and TSPs “smack of rent-seeking.”

IAMAI raised the demands of the Cellular Operators Association of India (COAI) and the Indian Council for Research on International Economic Relations (ICRIER) in this regard.

IAMAI noted that COAI has called for regulatory intervention to ensure that ‘the largest traffic initiators’ pay a ‘fair share fee’ to telecom companies to take into account capital investments made to accommodate rising data traffic.

“Similarly, ICRIER has called for the imposition of a ‘broadband infrastructure levy’ to be applied to three percent of the Indian operations of ‘significant’ OTT service providers, under ‘specialized contracts’ between service providers and network operators,” the report said .

IAMAI strongly opposed demands to bring OTT service providers under regulation usually reserved for telecom companies, arguing that such requirements fail to recognize that telecom service providers are subject to a special regulatory and licensing regime by virtue of the control they exercise over valuable national assets sources such as spectrum.

“Therefore, introducing a telecom regulatory regime for OTT service providers would be an act of over-regulation,” the report said.

Over-the-top service or OTT providers have offered high-quality content at little to no cost to users. This, in turn, has driven the rapid growth of data consumption and economic activity in India.

“Mandating revenue sharing mechanisms between OTTs and TSPs would effectively reverse this phenomenon by discouraging growth for OTT-based businesses, for whom a volume-based revenue sharing mechanism would be a glass ceiling for continued growth and could prove to be a barrier to entry for startups. ,” it said.