India can set precedent on fair-share levy on OTT platforms: GSMA’s Gorman

Telecom service providers want big OTT players such as Netflix and Amazon Prime Video that generate large data traffic to pay a mutually-decided fair charge to create and maintain digital telecom infrastructure.

“India could play a significant role in setting a precedent that works both for OTT players and telcos. There’s no one-size-fits-all solution, but the debate needs to ensure that investment in infrastructure keeps pace with the demands of the digital economy,” Gorman said.

The fair share debate

The debate around fair share between telecom service providers and OTT platforms has intensified globally. In India, a market characterized by rapid growth and increasing data consumption, this issue has taken centre stage.

Fair share refers to telcos demanding a share of revenues of OTT players to be invested into telcos’ networks on the grounds that OTT players are large traffic generators that utilise a big chunk of telecom bandwidth but invest nothing. Telecom firms are the ones investing billions into the network without getting any investment from OTT players.

The debate has also intensified in other parts of the world, like the US and Europe. An example has been set in South Korea with such a revenue-sharing agreement between Netflix, a large traffic generator in the country, and SK Telecom, after a three-year legal battle.

In the recently-concluded India Mobile Congress, domestic telecom operators represented by the Cellular Operators Association of India (COAI) said that discussions needed to veer towards solutions where raising consumers tariffs alone would not suffice.

“We’ll need to add 50 million customers every year to recoup the revenue loss faced by telcos, where are the customers going to come from? And to what extent will telcos keep on raising tariffs?” S.P. Kochhar, director general of COAI, said, attributing the revenue loss at ₹10,000 crore to the exchequer by way of license fees and taxes. He noted that there was a need to discuss the quantum of fair share as passing the cost on to consumers by way of raising tariffs was not sustainable.

OTT players have maintained that there was no case for them to invest in telecom networks. They argue that telcos get additional subscribers from OTT customers, making money in the process.

The balanced approach

Gorman emphasized the need for a balanced approach to address the concerns raised by telecom operators. He highlighted that while India has made significant strides in its digital journey, the burden of infrastructure investment primarily falls on telcos, while OTT players, often generating substantial traffic, do not contribute proportionally.

“The discussions around fair share are evolving,” he said. “We’re actively engaging with stakeholders, including OTT players, to explore how everyone can contribute to building and maintaining the digital infrastructure. India has the potential to set a precedent that works for both sides.”

While voluntary collaboration is preferred, Gorman acknowledged that regulatory intervention might be necessary in certain cases. “Each market has its nuances,” he explained. “The debate needs to ensure that investment in infrastructure keeps pace with the demands of the digital economy.”

The recent telecom law in India, which excludes OTT players, poses a challenge for telecom companies. Gorman stressed the importance of a balanced ecosystem where all stakeholders contribute fairly. “Telcos need sustainable investment to deliver the next generation of networks,” he said.

As for tariff hikes, Gorman emphasized the need for a balance between improving telcos’ revenue and affordability for consumers. “The focus should be on long-term strategies that enhance both the quality of service and the telcos’ ability to invest in future infrastructure,” he said.