India, the world’s second-largest wireless market, is at the center of a new debate. Leading telecom operators in the country, including Reliance Jio and Airtel, are advocating for internet companies, particularly over-the-top (OTT) services like Netflix and Prime, to contribute financially for utilizing their networks. But is this proposal feasible, or does it risk compromising the principles of net neutrality?
Paying for Network Usage
Reliance Jio, with its massive subscriber base exceeding 450 million, has taken a significant step by suggesting to the Telecom Regulatory Authority of India (TRAI) that internet companies should be required to contribute to telecom network costs based on factors like the traffic they generate, their turnover, and the number of users they serve. In essence, Jio is advocating for these OTT providers to pay their fair share.
Jio’s argument is that such a move will establish a level playing field in the digital ecosystem. They contend that there is a growing global consensus among telecom operators that internet companies should financially participate in building and maintaining the network infrastructure that facilitates their services.
Remarkably, other major telecom players in India, including Airtel and Vodafone-Idea, align with Jio’s perspective on this matter.
Airtel, in addition to supporting Jio’s proposal, suggests that the burden of network usage costs should fall primarily on the largest users of the internet infrastructure. This approach would allow smaller startups to thrive without the burden of substantial financial contributions.
Telecoms Seeking Margin Enhancement
India, despite being one of the world’s largest wireless markets, faces a challenge when it comes to average revenue per user (ARPU). With an ARPU of approximately $2 per month, India ranks among the lowest-earning countries in this category.
Last year, India’s top three telecom operators collectively paid a staggering $19 billion for the use of 5G airwaves. Now, they are seeking regulatory intervention to bolster their profit margins.
These comments from the telecom giants were made in response to a consultation paper issued by the Telecom Regulatory Authority of India.
The complex relationship between telecom operators and tech giants is worth noting. Telecom networks in India serve as crucial distribution partners for tech firms, with collaborations and partnerships being common. For instance, Jio recently joined forces with Netflix to bundle the streaming service with its pay-as-you-go plans. Jio also has a significant partnership with Microsoft for cloud data centers and business offerings. Google and Meta have made substantial investments in Indian telcos like Jio and Airtel.
Net Neutrality Concerns
However, critics, including prominent voices like Nikhil Pahwa from Medianama, caution that implementing the telecoms’ recommendations could raise serious concerns about net neutrality. The fear is that such a move could potentially violate the principles of net neutrality, which aim to ensure equal and unrestricted access to the internet for all users.
Pahwa has a history of raising awareness about potential net neutrality violations, having played a crucial role in opposing Meta’s Free Basics initiative in India nearly a decade ago.
As the debate over making OTTs pay for data usage in India intensifies, the telecom industry, regulatory authorities, and tech companies will need to navigate this complex terrain while preserving the fundamental principles of a free and open internet.
