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Telecom regulator resists as telcos seek regulation of Internet apps

Khullar declined to comment on the matter, saying it is “not appropriate to anticipate a decision”.

Written by Arun Mohan Sukumar | New Delhi |
August 18, 2014 12:38:06 am

Even as telecom companies lobby actively for Trai’s intervention to stem a sharp fall in mobile revenues due to the increasing popularity of Internet-based voice and texting apps, its chairperson Rahul Khullar told The Indian Express that he is “not keen” on proposing regulations.

However, the Telecom Regulatory Authority of India (Trai) has conceded to a “consultation paper” on regulating apps. “The consultation paper will test the ground to see how grave the problem is,” Khullar said, adding that it will only be released after preliminary discussions with all stakeholders. He also acknowledged that telcos have a “valid” concern regarding loss of revenue.

In a confidential white paper prepared earlier this year, the telecom industry had warned that a “perfect storm” of declining mobile revenues and increasing operator costs was imminent, as more users turned to products like Skype, Facebook messenger and Whatsapp. The Indian Express has access to the white paper prepared by the Cellular Operators Association of India (COAI), the industry representative.

A COAI representative said the white paper was solely for “internal circulation”, and was not submitted either to the Department of Telecommunications (DoT) or Trai.

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It estimates that “Indian telecom operators may lose $3.1 billion in SMS revenues by 2016 due to the emergence of social messaging apps”. The paper suggests operators can respond in four ways — blocking these apps if regulators let them, adjusting their pricing to make apps less attractive, either by charging more for rival services that run on their networks or by making their own cheaper, or partnering with third-party apps.

The Trai Act allows the regulator to recommend measures to facilitate growth and competition in the telecom sector. But it can also lay down standards relating to the quality of service to be provided by telcos. The COAI white paper suggests this is a major issue regarding apps, “as the network is choked with high bandwidth services” and operators are “struggling to add capacity”.

Trai has not taken a stance on the principle of ‘network neutrality’, and it is not clear how the regulator will respond to instances where an Internet service provider has sped up or slowed down service from a particular app.

Recommendations issued by Trai in 2012 on “application services” suggested the issue of Net neutrality will be dealt with as and when required. That paper nevertheless acknowledged that telcos may give “low priority” to applications as regards those with whom they have revenue-sharing agreements.

Khullar declined to comment on the matter, saying it is “not appropriate to anticipate a decision”.

Besides loss in revenue, another major concern expressed by telecom companies is network security. A DoT circular issued in 2011 requires that content providers “allow the inspection of their hardware, software, design, development and manufacturing facility” by telcos, DoT or “designated agencies”. Asked how this would be possible between an Indian telecom company and a foreign app creator with minimal presence in the country, a Trai official referred to the instance where Blackberry was forced to locate some of its servers to India based on government regulations.

“Blocking is always an option,” he said, laughing, and added that he was sure that the Indian market for apps would be “big enough” for them to set shop here.

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