COAI’s demand for revenue sharing by OTTs for using telecom infrastructure is “a covert attempt” to dilute net neutrality in India and will sound a “death knell” for the digital ecosystem, the Internet and Mobile Association of India (IAMAI) said on Thursday. The comment assumes significance as telecom operators’ body COAI has been making a plea for OTT (over-the-top) players to directly compensate telcos for data traffic they are driving onto the networks.
IAMAI, however, argues that the call for a sending-party-network-pays (SPNP) mechanism has re-emerged even though the demand for telecom services entirely hinges on the ability of OTT services to attract users.
IAMAI, in a statement, said bodies such as the Cellular Operators’ Association of India have been advocating for a model where the sending party network pays (SPNP), which would allow telecom service providers to exploit internet businesses by formalizing rent-seeking
A ‘revenue sharing’ mechanism, said IAMAI, is an “underhanded attempt” to violate net neutrality. The SPNP model would also be a “death knell” for the digital economy and the creative ecosystem which it sustains, IAMAI said. It pointed out that levying additional costs on OTTs, without providing any additional services, would be akin to the exacting tribute. This would also have a chilling effect on investment and entrepreneurship in an emerging sector, where businesses typically take a few years to monetize,”
In its arguments, IAMAI said an SPNP mechanism would effectively reverse this phenomenon by disincentivizing growth for OTT-based businesses “for whom a volume-based revenue sharing mechanism would be a glass ceiling for continuing growth and may even act as a barrier to entry for new startups”. According to IAMAI, it would also be adding a cost to accessing free or cheap content, which would inevitably be transferred to the consumer, effectively raising the cost of internet usage,
A higher cost associated with internet usage would lower the overall revenues of internet businesses and may even reduce the amount of data consumers would use, This would result in a scenario where there may be no meaningful growth in the revenue of telcos, despite the massive price paid by the digital economy.
