Experts View

Updated COAI statement on ‘Misleading view of Fair Share impacting Net Neutrality’

“There are some misleading and speculative views being circulated by certain quarters, with an intention to misguide and confuse the people regarding the proposal of ‘Fair-Share’ contribution to be paid by Large Traffic Generators (LTGs) responsible for generating over 70% of the total internet traffic, using the networks of the TSPs to deliver their services, but making no contribution to Telecom Service Providers (TSPs) for the development, upkeep and sustenance of robust and quality telecom networks across the country, that is required for catering to the huge traffic being loaded on the networks and the steadily growing data demands.

These entities, by alleging a ‘supposed’ threat to Net Neutrality, are attempting to mislead a public debate on a complicated issue, without substantiating how Fair Share would violate net neutrality or hamper innovation. In reality, Net Neutrality has nothing to do with the ‘fair share’ initiative.

In fact, all of the concerns being raised – such as favouring one website/application/service, pricing differentiation etc. – are devoid of facts and are speculative scenarios designed to mislead the public. It is important to note and highlight that, the European Commission has also agreed that Fair Share does not violate the Open Internet and Net Neutrality principles.

We are also cognizant of the fact that not all OTTs are equal. Large Traffic Generators (LTGs) are only a handful of companies who generate disproportionately high traffic. Our proposal for providing exemptions to startups, MSMEs and small enterprises within the OTT ecosystem from payment of fair share charge, as clearly mentioned in our submission to TRAI, not only establishes a supportive framework for nurturing startups, but also ensures that smaller players enjoy the advantages of improved network quality.

The Indian telcos are bound by their license conditions to ensure Net Neutrality, and will continue to do so. COAI affirms that the proposed fair share charge does not affect access to an open and free Internet. The content and services for consumers would remain fully accessible with no traffic management/differentiation. Further, there will be no throttling, no blocking and no paid prioritization for any service/application. The price for the traffic paid by end users will not change depending on whether the traffic generator is subject to fair share payments or not.

Payment relationships between content providers and telecom operators have always existed – there is nothing in any net neutrality regulation to suggest otherwise. There is no violation of net neutrality if a peering charge is applied at an interconnection point between two networks to compensate for an imbalance of data traffic. This charge is applied in relation to the volume of the traffic and not for certain data from certain OTT. Such interconnection peering charge has no influence on the access of end customers to any content.

It should be stressed that the underlying objective of the Net Neutrality is to ensure unfettered access to the internet for end-users. This objective is undermined by the lack of investment capacity on the part of TSPs. An obligation to negotiate with operators on a uniform, fair and adequate contribution would actually help alleviate this challenge. Fair Share approach would incentivize a more efficient handling of data without impairing customer experience.

It has been alleged that levying additional cost on OTTs would be akin to double charging of customers. LTGs have advocated that network investment gap can be bridged by increasing the prices for the end users. This is completely unjustified as LTGs are trying to sidestep the fact that they equally use the network to deliver their services. The internet is a two sided market as it brings together the buyer and the seller. Both sides benefit in this market and it is unfair and unjustified for LTGs to seek to push all the costs on the consumers while they benefit from the networks without contributing for the services received. This model is unsustainable since telcos have to maintain the pace of the investment to respond to the growing demands for data and creation of digital infrastructure to cater to the volumetric traffic of the LTGs. If LTGs also contribute for the delivery of their content, not only would there be better and more affordable networks, but also a larger potential customer base for content.

There is a near consensus among TSPs globally that a fair contribution should be made by the biggest drivers of the data growth and to evolve to a two-sided market. Many Internet services are also based on two-sided market business models, where they get paid by users and businesses at the same time. For instance: App Stores charge both the app developers and buyers/users of apps; media markets where firms sell content to the audience (the ‘eyeballs’) and advertising space to advertisers; ecommerce and ride sharing apps which sell their services to buyers (users) and sellers (businesses and drivers).

It is also argued that OTTs do not generate traffic, but it is rather the end users whose demand leads to traffic. This is a flawed argument since the network is equally used by the OTTs to deliver their services. Further, OTTs decide, without user control and knowledge, the traffic volumes delivered as well as on compression techniques, i.e., transmitting in standard definition, high definition or ultra-high definition and how to proceed in case of network congestion by reducing the quality of the streaming. Features such as auto-play, continuous-play or advertising are also not requested by end users but automatically provisioned in these services, which result in significant traffic volumes.

The fair share charge represents a just compensation mechanism to be paid by the LTGS to TSPs, driven by the goal of ensuring the sustainability of telecom networks and creating a harmonious and just framework that secures the industry’s well-being over the long term. These large traffic generators are only a handful of companies contributing to over 70% of total internet traffic today. By defining a clear and a transparent threshold based on objective criteria, only the largest traffic generators will be within the scope of fair share, and it will not harm innovation or adversely impact startups or SMEs.

By equitably distributing resources among the stakeholders, fair share initiative seeks to catalyze infrastructure growth, spur innovation, and ensure universal access to high-quality telecom services. A fair contribution by the LTGs who are using/benefitting from the network to deliver their services will also relieve the pressure on consumer prices for communication services as the only way to meet the enormous investment needs of the sector. This approach would benefit both the industry and consumers, while propelling economic and technological advancement.

Payment of fair share fee by LTGs to TSPs will eventually enhance customer satisfaction, as end-users will benefit via enjoy better network quality and improved services. Customer satisfaction being paramount for both OTT providers and TSPs, the fair share charge will help enhance customer experience by fostering a healthy digital ecosystem. Promoting the sustainability of networks will expedite the attainment of our nation’s connectivity goals, which will not only serve the broader societal interest, but will also enable OTT players to offer innovative services to a more expansive market.”

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