Dr. Rahul Khullar
Chairman
Telecom Regulatory Authority of India (TRAI)

Sir,

I have read the consultation paper on Regulatory Framework for Over-the-top (OTT) services released the 27 March 2015. The Chapter 7: Issues for Consultation listed 20 issues. The following are my suggestion on those issues:

Question 1: Is it too early to establish a regulatory framework for OTT services, since internet penetration is still evolving, access speeds are generally low and there is limited coverage of high-speed broadband in the country? Or, should some beginning be made now with a regulatory framework that could be adapted to changes in the future? Please comment with justifications.

Answer: Yes, regulation upholding net neutrality is necessary now. India has estimated 213,000,000 internet users. From them, 173,000,000 are mobile internet users. In that been noted in the paper in Para 4.26 that Netherlands implemented net neutrality rules in 2011, Netherland's population is 16,800,000. Even though the broadband penetration is low, many new users are coming online through mobiles. Local ISPs are not finding the sector profitable due to severe last-mile issues and high cost of gateway access. According to the Recommendations On Review of Internet Services paper published by TRAI on 10 May 2007, it was noted that many Grade B and Grade C were suffering from low user base and returning their licenses. Many users also prefer wireless services, as they do not consume too much data and prefer less downtime. Until these issues are solved, growth of mobile internet users will outpace broadband users. It is the duty of the government to protect this already large number of consumers.

Question 2: Should the OTT players offering communication services (voice, messaging and video call services) through applications (resident either in the country or outside) be brought under the licensing regime? Please comment with justifications.

Answer: No, it will be devastating to India's small but rising startup sector. A licensing regime will essentially kill all Indian OTT players leaving only the big ones based outside India and a few Indian players which have sufficient capital, like Hike. As a result, there will be little competition in the sector, and no new and innovative venture will appear in India in this sector.

Question 3: Is the growth of OTT impacting the traditional revenue stream of TSPs? If so, is the increase in data revenues of the TSPs sufficient to compensate for this impact? Please comment with reasons.

Answer: Yes, OTT may be impacting the traditional revenue stream. But, the key word is "traditional". TSPs need to change with times and learn to diversify. For example, Airtel has already launched its own OTT service called Hike. The government's duty is to protect the consumers, not the traditional revenue stream of TSPs. It is not the duty of government to protect TSPs every time a new change occurs in technology which disrupts their revenue model. In February 2015, Airtel reported a 74% increase in revenue in data resulting in receipts of INR 2,114 crore. OTTs are primarily feeding this rise in profits.

Question 4: Should the OTT players pay for use of the TSPs network over and above data charges paid by consumers? If yes, what pricing options can be adopted? Could such options include prices based on bandwidth consumption? Can prices be used as a means of product/service differentiation? Please comment with justifications.

Answer: No, making OTT players pay will kill off all, but the large players. Most startups seeking to expand their user base will unable to cope and die in early stages. The people will be also tied to those OTTs services that are paying; reducing competition and stagnating innovation.

Question 5: Do you agree that imbalances exist in the regulatory environment in the operation of OTT players? If so, what should be the framework to address these issues? How can the prevailing laws and regulations be applied to OTT players (who operate in the virtual world) and compliance enforced? What could be the impact on the economy? Please comment with justifications.

Answer: India has no privacy or data protection law. The basis of any regulatory framework in any country is on such laws. But, none exist in India. The prevailing laws date to pre-internet era and need to be updated. Even Information Technology Act, 2000 is enable to cope will the current scenario. The need of moment is to make privacy and data protection laws.

Question 6: How should the security concerns be addressed with regard to OTT players providing communication services? What security conditions such as maintaining data records, logs etc. need to be mandated for such OTT players? And, how can compliance with these conditions be ensured if the applications of such OTT players reside outside the country? Please comment with justifications.

Answer: India has no privacy or data protection law. The need of moment is to made privacy and data protection laws. Making regulations now would result in the rights of the user being ignored, because there is no proper definition of data security. India need's is an equivalent of European Union's Directive 95/46/EC or General Data Protection Regulation (GDPR).

Question 7: How should the OTT players offering app services ensure security, safety and privacy of the consumer? How should they ensure protection of consumer interest? Please comment with justifications.

Answer: OTT players and TSPs should comply with the equivalent of General Data Protection Regulation (GDPR), until proper laws have been framed. But, startups in beta-trial and hobbyists running instances of open-source frameworks should be exempted, until they reach a certain number of users.

Question 8: In what manner can the proposals for a regulatory framework for OTTs in India draw from those of ETNO, referred to in para 4.23 or the best practices summarised in para 4.29? And, what practices should be proscribed by regulatory fiat? Please comment with justifications.

The ETNO proposal has been heavily criticised as being customer-unfriendly. India should draw nothing from the ETNO proposal. ETNO essentially proposed a tiered-internet, which would force each website or app firms to negotiation a contract. The top tier would be get priority and the un-tiered data will be throttled. All smaller websites and apps will thus be reduced to operate on the slowest tier. This would essentially kill off most startups.

Question 9: What are your views on net-neutrality in the Indian context? How should the various principles discussed in para 5.47 be dealt with? Please comment with justifications.

I fully support a free and neutral internet as proposed by Barbara Van Schewick. Free speech is of utmost importance in India, which is a democracy. Net Neutrality is important as it will promote innovation and put the choice in the user's hands. The TSPs should not allowed to decide what the user can view and how much they should pay for it. As proposed by Van Schewick, TSPs should only be allowed to decide the baseline service packages and should not be allowed to discriminate between content providers.

Question 10: What forms of discrimination or traffic management practices are reasonable and consistent with a pragmatic approach? What should or can be permitted? Please comment with justifications.

No form of discrimination or traffic management practice should be allowed. In an ideal market, competing TSPs would simply targeting and provide to different customer groups. But, in India, TSPs are displaying cartel-like behaviour. One anti-customer scheme is immediately adopted by all others. So in this scenario, it is important to protect the customer.

Question 11: Should the TSPs be mandated to publish various traffic management techniques used for different OTT applications? Is this a sufficient condition to ensure transparency and a fair regulatory regime?

No TSPs should not be allowed to use discriminatory traffic management techniques. They should be periodically investigated to ensure that they are not indulging in such practices. TSPs found violating this should be penalised.

Question 12: How should the conducive and balanced environment be created such that TSPs are able to invest in network infrastructure and CAPs are able to innovate and grow? Who should bear the network upgradation costs? Please comment with justifications.

TSPs are already setting their own data tariffs. They may adjust them to ensure profitability. TSPs may encourage to users to consume more data and use more apps to ensure profitability. Some TSPs are already developing their own OTT apps. The TSPs should not be allowed to exhort money from OTT apps firms. OTT app firms should only have to pay their own ISPs, not the ISPs of end-users. Because otherwise app firms with the deepest pockets will reach the users, not the apps which are the most user friendly or innovative. Thus, killing off most startups.

Question 13: Should TSPs be allowed to implement non-price based discrimination of services? If so, under what circumstances are such practices acceptable? What restrictions, if any, need to be placed so that such measures are not abused? What measures should be adopted to ensure transparency to consumers? Please comment with justifications.

No, TSPs should not be allowed to implement non-price based discrimination of services. TSPs and ISPs like Airtel and BSNL have found to throttle certain types of traffic like BitTorrent, according to a 2012 M-Lab report. TRAI should establish a framework to penalise such offenders.

Question 14: Is there a justification for allowing differential pricing for data access and OTT communication services? If so, what changes need to be brought about in the present tariff and regulatory framework for telecommunication services in the country? Please comment with justifications.

No, there is no justification. It has been explained already.

Question 15: Should OTT communication service players be treated as Bulk User of Telecom Services (BuTS)? How should the framework be structured to prevent any discrimination and protect stakeholder interest? Please comment with justification.

As I have said previously, OTT firms should negotiation their contract with their and only their ISPs, not the ISPs or TSPs of the end user. The decision of the pricing schemes followed should be between the OTT firm and their ISP, on one end. And on the other end, the end user should be able to access any content without discrimination or interference from his TSP. Justifications have already been made several times.

Question 16: What framework should be adopted to encourage India-specific OTT apps? Please comment with justifications.

Ensuring net neutrality, penalising violating TSPs and better quality of service will encourage India-specific apps. In India, cellular data is expensive and cable/fiber have last-mile connectivity problems. More private players should be encouraged to enter the Wifi and Wimax market, by providing incentives like lower license fees and cheaper lease-lines from public sector firms, like BSNL.

Question 17: If the OTT communication service players are to be licensed, should they be categorised as ASP or CSP? If so, what should be the framework? Please comment with justifications.

No, all OTT apps should not be forced to license. It is not possible to force everyone who runs an email or IRC server to license. Other more tech-savvy users may choose to run their own instances of open source messaging frameworks for their friends, or college tech clubs. Only large and for-profit OTT apps should be licensed, if at all. They should be licensed as ASP (Application Service Providers). The users and advertisers using the medium produce the content, not the app firms.

Question 18: Is there a need to regulate subscription charges for OTT communication services? Please comment with justifications.

No, it is up to the user to decide if they would use a free app or a paid app. The competition in the app market is rich, unlike among TSPs, the user has many choices.

Question 19: What steps should be taken by the Government for regulation of non-communication OTT players? Please comment with justifications.

No steps are necessary. Many non-communication OTT players, like Netflix and Steam, or their equivalent do not exist in India or are not popular. This is due to the low quality of services. Any regulation now will hamper the sector's growth.

Question 20: Question 20: Are there any other issues that have a bearing on the subject discussed?

No.

Sincerely,

Amit Kumar Sarangi