COAI Highlights Regulatory Gaps for OTT Communication Services

COAI expresses its concerns with the TRAI's Recommendations on the Framework for Service Authorisations under the Telecommunications Act, 2023. Since Telecom licenses in India are contractual agreements between the Department of Telecommunications (DoT) and telecom operators, these licenses are legally binding contracts that outline rights, obligations and operational parameters to be followed by the telecom services. The DoT (representing the Government) and the telecom operator are the two signatories of the same. Therefore, the authorization process must continue to retain the contractual nature of the present licenses, as this will ensure uniformity, regulatory certainty and protection to investors who commit long-term capital to the sector. It may be pertinent to note that the TRAI’s recommendation that the Central Government should grant Service Authorization under Section 3(1) of the Telecommunications Act, 2024, instead of entering into an agreement with the entity, is without any valid justification and goes against the position of TSPs, while also undermining the current regime that has worked successfully for more than 3 decades - bringing enormous inflow of investments and growth in the sector.

This recommendation further provided an opportunity for TRAI to facilitate and reduce the burden on the industry by suggesting financial reforms as badly required by the sector. COAI had highlighted the need to include only those revenues which have been received under telecom services under various Authorizations for calculation of GR/AGR. However, this issue is unaddressed in the recommendation. 

COAI has been actively advocating for Reduction in License Fee and had suggested the present rate be reduced from 3% to 0.5-1% and abolition of the USOF (Digital Bharat Nidhi) levy which is 5% of AGR. Moreover, we had also suggested for doing away of Performance Bank Guarantee (PBG), Financial Bank Guarantee (FBG) and Bank Guarantee for Spectrum Payments (prior to 2022 auction). However, the same has not been recommended by TRAI. 

Furthermore, our concern that OTT Communication Services were excluded under the new authorization as Access Service is a great concern as this omission perpetuates an uneven competitive landscape, as the Telecom Service Providers (TSPs) continue to bear the weight of extensive compliance and security requirements. Such services are also not subject to any regulatory oversight on critical issues like spam prevention, despite their growing role as alternatives to conventional telecommunications services. OTT Communication Service Providers remain largely unregulated, raising questions not only about market fairness and regulatory consistency in the rapidly evolving digital communications sector but also about national security and customer privacy.

The Telecom Industry is also deeply troubled by the expanded scope granted to Internet Service Providers under the new authorization framework. While currently Access and National Long Distance (NLD) service providers have the exclusive right to offer leased circuits and Virtual Private Networks (VPNs) to third parties, the proposed enhancement of ISP authorization would unfairly disadvantage existing Access and NLD operators. These operators have earned their current market position through significant financial investments, including hefty entry fees and by satisfying stringent eligibility criteria.

 COAI firmly believes that the above concerns from the industry are important to be addressed, so as to ensure a healthy and robust environment for the TSPs as well as the sector, to perform going forward. COAI shall look forward to working closely with the Government for discussions and amicable resolution of the issues going forward, to ensure the required growth and motivation for this empowering sector in India.”