In Short:
Indian telecom operators are struggling with revenue growth despite increased data use, leading to debates over a “fair share” charge from large traffic generators (LTGs) like OTT services (e.g., Netflix, Amazon). Officials argue that while telcos need funds for infrastructure and 5G investments, smaller firms should be exempt to encourage innovation. The industry is calling for government support to address these challenges.
NEW DELHI: The ongoing debate regarding fair compensation from large traffic generators (LTGs) has gained prominence as Indian telecom operators are reporting limited revenue growth, despite rising data consumption on their networks. This insight was shared by a senior official from the Department of Telecommunications (DoT) during the India Mobile Congress (IMC) 2024, which is set to conclude today.
Revenue Concerns and Innovations
Manish Sinha, Member (Finance) of the DoT, noted, “There are issues like the fair share with OTT [Over-The-Top service providers]. This largely arises from the inadequacy of revenue from the growth of data consumption itself. If a significant innovation occurs and there is a surge in revenue growth, perhaps our telecom operator colleagues will overlook the contributions of OTTs in terms of advertising revenue.”
Sinha emphasized the importance of exploring alternative revenue streams to recover investments made for expanding 4G networks and deploying 5G networks. He stated, “Organizations typically seek alternative revenue avenues to derive returns if they are not generating sufficient income on their own,” highlighting the necessity for innovation and the development of new use cases for 5G networks at this critical juncture.
Fair-Share Charge Discussions
Recently, conversations surrounding a fair-share charge in India have intensified, with the telecom industry advocating for a necessary contribution from OTT service providers in maintaining mobile network infrastructure and ensuring sustainable investments in 5G and future technologies. The Cellular Operators Association of India (COAI) previously indicated that nearly 80% of the data traffic managed by telecom operators is generated by a limited number of OTT service providers, who, despite charging consumers, do not contribute revenue shares.
Despite this, the lobby group maintains that Indian startups, micro, small, and medium enterprises (MSMEs), as well as smaller OTT firms, should be exempt from such charges to encourage ongoing innovation.
Notable OTT service providers include Amazon, Netflix, Hotstar, and Disney+.
Call for Governmental Intervention
Both the London-based GSMA and the Delhi-based COAI, which represent major telecom players like Reliance Jio, Bharti Airtel, and Vodafone Idea, have been outspoken on this matter, seeking necessary governmental and regulatory action. In a previous interview with ETTelecom, Julian Gorman, Head of Asia Pacific at GSMA, stated, “India is in an ideal position to spearhead the fair share debate and discussions. There needs to be a higher level of discourse on how we envision creating the infrastructure to support the future vision of Digital India and other digital nations.”
