By Dr. Jaijit Bhattacharya
In shaping the trajectory of India’s digital landscape, collaboration emerges as a key factor
India’s digital landscape is booming. From bustling online marketplaces to ubiquitous video streaming, the internet has become an essential part of our lives. But behind the scenes, a silent crisis threatens the very foundation of this digital revolution: the financial sustainability of the telecom sector. Telecom Service Providers (TSPs), the companies that build and maintain the physical infrastructure – the towers, fiber cables, and spectrum – face a growing disparity in revenue sharing with the Over-the-Top (OTT) platforms like Netflix, YouTube, and Disney+ Hotstar that thrive on this infrastructure.
Imagine a highway clogged with cars. This highway represents the internet, carrying information at breakneck speeds. To keep the traffic flowing smoothly, constant maintenance and expansion are necessary. Traditionally, toll booths collect revenue from users to fund upkeep. In the digital world, the analogy breaks down. OTT platforms, the equivalent of high-traffic trucks on the highway, generate massive amounts of data, placing immense strain on the network. Yet, unlike toll roads, OTTs contribute little to maintaining the infrastructure they heavily rely on.
TSPs, on the other hand, are stuck in a double bind. They invest heavily in acquiring valuable spectrum licenses and building robust networks. However, fierce competition among themselves leads to wafer-thin margins and price wars. This fierce competition has resulted in India boasting some of the cheapest internet data plans globally – a positive development for consumers, but a financial strain for TSPs struggling to recoup their investments. Meanwhile, the OTT industry in India is on a meteoric rise, with revenues projected to double by 2027. This growth story comes at a cost. The ever-increasing data consumption by OTT platforms puts immense pressure on the existing network infrastructure.
This imbalance creates a precarious situation. To stay afloat, TSPs may be forced to choose between compromising network quality – leading to slower speeds and buffering – or raising tariffs for all subscribers, including those who don’t use data-intensive OTT services.
This scenario would not only impact user experience but also hinder the government’s ambitious “Digital India” vision, which hinges on affordable and ubiquitous internet access for all.
A Solution: Fair Share Contribution for a Level Playing Field
The solution lies in a concept called “fair share contribution” from Large Traffic Generating Platforms (LTGs). Some might raise concerns about net neutrality, but it’s important to take a closer look at India’s ‘Prohibition of Discriminatory tariffs for Data Services Regulations 2016’, which reveals a key distinction. The 2016 regulation focuses on preventing content-based price differentiation. The proposed fair share contribution model operates differently. It doesn’t involve charging users more for accessing specific content. Instead, it focuses on data usage. Platforms that generate massive data traffic contribute proportionally to maintaining the network they heavily rely on.
This contribution could come in various forms, such as direct financial payments to TSPs or collaborative partnerships to optimize data usage. The key principle is proportionality – only those platforms that significantly burden the network contribute to its upkeep and expansion. This ensures a level playing field for smaller players and protects the open internet we all value .
South Korea offers a compelling case study. Faced with a similar situation, South Korea implemented a system where LTGs like Netflix contribute to network costs. This has fostered a collaborative environment where both TSPs and OTT platforms thrive.
Beyond Economics: Building a Robust Digital Ecosystem
The debate surrounding fair share contribution transcends mere economics. It’s about fostering a robust Indian digital ecosystem. Currently, most major OTT platforms are foreign companies. By advocating for fair share contribution, we ensure a level playing field where Indian TSPs, the backbone of the digital revolution, have the resources to compete and innovate.
In shaping the trajectory of India’s digital landscape, collaboration emerges as a key factor. TSPs, OTT platforms, and the government must work together to create a sustainable model that benefits all stakeholders.
A thoughtfully implemented fair share model can ensure continued growth for the OTT industry while safeguarding the health of the telecom sector.The responsibility for crafting this fair-share model lies significantly with the government. By establishing clear guidelines and regulations, it can ensure a balanced approach that benefits both TSPs and OTTs. This will foster a vibrant digital ecosystem that fuels India’s journey towards a self-reliant and sustainable digital future.
This article first appeared in Business World,
https://www.businessworld.in/article/Future-Of-India-s-Digital-Landscape/18-03-2024-513787/