News Heading : Trai likely to float discussion paper on OTT players like Whatsapp
Post Date : 2014-04-16
News Source : The Economic Times
News By :
News Details :
NEW DELHI: India's telecom regulator is considering taking a deep look into over-the-top companies, or providers of apps like WhatsApp and Viber that telecom operators say take a free ride on their network and eat into their revenue.
The Telecom Regulatory Authority of India (Trai) may come up with a discussion paper on these players, a senior official at the regulator said. According to this official, the plan is to gain a holistic view of the apps providers, who are becoming increasingly popular by running on telecom bandwidth but are not connected to the telecom industry, which Trai regulates.
"We want to understand what direction it will take in the future, what are the concerns of telecom operators and consumers, and if there are any security threats," the official told ET.
But any move to put restrictions on them is unlikely. The government had said in the past that it wasn't looking at regulating these Internetbased services, though mobile phone operators have been pressing for that. Mobile companies, including Bharti AirtelBSE 1.36 %, Vodafone India and Idea CellularBSE 0.85 %, want apps providers to pay a connectivity charge to them. While these apps are affecting their revenue - for instance, instant messaging apps have taken a hit on their revenue from text messaging - the only gain is from higher data usage by subscribers. But the companies say this higher revenue is not enough to offset spending on improving their network to meet increasing demand for data services.
"A free-rider problem isn't good news for any industry because it curtails, in the long term, the ability of the industry to invest," a top executive of a leading Indian carrier told ET, asking not to be named. "The return on the capital employed in the Indian telecom industry is not great. Therefore, we can't afford free riders. Every participant in the ecosystem needs to contribute to keep that ecosystem healthy," the executive added. In fact, telecom operators globally have been seeking to levy a fee on overthe-top companies as increasing apps usage is hurting their revenue from voice and messaging services, while also putting pressure on their networks. Not investing in data networks is not an option for telecom companies at a time when customer demand for such services is growing fast. According to Fitch Ratings, retaining a share of the telecom value chain to avoid becoming a "dumb pipe" for over-the-top operators is a challenge that all operators will face.
Operators should work closely with over-the-top players and device vendors to create services that go beyond traditional communications, leverage operator strengths, are device agnostic, and can be sold to their consumers as subscription packages, says Neha Dharia, a consumer telecoms analyst at research firm Ovum. A recent white paper from Mobile Squared, a telecom research firm, and Tyntec, an intermediary between operators and apps providers, said India is among the top five smartphone-based over-the-top markets, which is led by China and includes the US, Brazil and Germany. These countries account for 67% of global user base. Indian telecom operators have already seen the first signs of revenue cannibalization by apps. According to Ovum, telecos' potential loss in SMS revenue is estimated at $781 million (Rs 4,700 crore at current exchange rate) in 2012. The loss may rise to $3.1 billion by 2016, it predicts.