In India, the debate over regulating OTT communication apps such as WhatsApp, Telegram and Google Meet has heated up in recent months, with telecom companies such as Jio, Airtel and Vodafone arguing that OTT apps depend on telecom infrastructure and should therefore be regulated under the Telecommunications Act, 2023.
Meanwhile, groups such as the Broadband India Forum (BIF), National Association of Software and Services Companies of India (NASSCOM) and the Internet and Mobile Association of India (IAMAI) argue that OTT is already covered under the Information Technology Act 2000. In fact, last year, the then Telecom Minister Ashwini Vaishnav had also clarified that OTT apps are covered under the IT Act and not the Telecom Act.
Nevertheless, to ensure a “level playing field”, telcos are demanding that OTT services be regulated on an equal footing with them, meaning that OTTs should be subject to the same licensing and taxation regimes as telcos.
The Telecom Regulatory Authority of India (TRAI) is currently in active discussions on regulating OTT telecom services after releasing a consultation paper on the framework for service licenses to be granted under the Telecom Act in July, and as discussions continue, it held a public discussion meeting on August 21. The authority is expected to release its recommendations within the next two to three weeks, sources familiar with the matter told Storyboard18.
The debate itself is quite heated. On the one hand, these apps offer similar services to traditional telecommunications companies, so it seems logical to apply the same rules to them, especially when it comes to security and data protection. On the other hand, regulating them like telcos could stifle the innovation and flexibility that makes these apps so popular and raise costs for users, says Payal Roy Choudhuri, marketing director at Data Dynamics.
The issue has taken on added urgency with WhatsApp's vast user base in India coming under scrutiny for its data-sharing practices, especially under India's new Digital Personal Data Protection (DPDP) Act 2023.
However, she adds that OTT platforms and traditional telcos are not playing by the same rules.
“Telecom companies rely on expensive spectrum, while OTT apps use the internet's infrastructure, which operates under an entirely different set of rules. Trying to fit these digital platforms into a telecom-centric framework is likely to create unnecessary legal and operational headaches without actually improving user protections,” she points out.
According to the Telecommunications Act, which was put forward for public feedback, “telecommunications” is defined as “the transmission, dissemination or reception of messages by wire, wireless, optical or any other electromagnetic system, whether or not such messages are rearranged, computed or otherwise processed by any means in the course of their transmission, dissemination or reception,” and a plain interpretation of this would mean that OTT apps would not fall within its scope, experts said.
However, at a recent open house, the Cellular Operators Association of India (COAI) pointed out that since OTT platforms are defined as “access services” under the new law, they should ideally be brought under a licensing framework and require authorization. “Bringing OTT communication services under the authorization/license regime will ensure fair competition, remove potential biases and promote a level playing field within the telecom industry,” the association said.
It also said operators are bound to comply with the Telecommunications Commercial Communications Customer Priority Regulations 2010 and are investing heavily in building systems to prevent nuisance communications as required by the regulator's rules.
In addition, telecommunications companies have had to invest heavily in building infrastructure for lawful interception and surveillance.
“Despite these investments, unregulated application-based communication services are rampant, completely bypassing this equipment, posing a major security threat to the nation,” it added.
The COAI further noted that, unlike telecommunications carriers, OTT service providers are not obligated to adhere to QoS or security regulations, giving them an advantage over compliance mechanisms and “essentially undermining any regulatory efforts to ensure these security paradigms.”
At the same time, Alpana Srivastava, partner at Desai & Diwanji law firm, noted that the legal implications of regulating OTT services under the Telecommunications Act, 2023, are not entirely clear. The Act gives the government greater powers to intercept communications and control telecommunications services, which could impact how OTT platforms operate.
The law primarily targets traditional telecommunications services and networks, while OTT services remain within the ambit of existing IT regulations. “OTT also highlights that telecom operators operate only at the network layer, whereas OTTs only work at the application layer,” she points out.
Moreover, this creates an interesting development given the Indian Department of Telecommunications (DoT)'s position that it does not intend to regulate OTT services under the Telecom Act, 2023.
“The Ministry of Transport has clearly stated that the exclusion of OTT services from the scope of the Act was a deliberate decision, made to avoid regulatory duplication and to clearly distinguish between traditional telecommunication services and OTT services. In fact, the term OTT is not defined in the Act and the only way to bring OTT services under the Act's umbrella is to expand the definition of 'message' and 'telecommunication' in Article 2 of the Act,” said Abhay Chattopadi, Partner, Economic Law Department.
It is important to note that there have been no major updates to TRAI's consultation paper on regulatory mechanism for OTT communications and selective banning as of August 2024. The process is still ongoing and TRAI is likely considering comments and counterarguments submitted by various stakeholders on various key points such as scope of regulation, licensing requirements, quality of service standards, interoperability, consumer protection, taxation, and norms for selective banning.