“TELCOS WISH TO CLING TO OLD, LEGACY, AND OBSOLETE SYSTEM OF SPNP,” BIF says in its Counter Comments to TRAI

New Delhi, 03 October 2023: In its counter comments on the TRAI Consultation Paper regarding “Regulatory Mechanism for Over-The-Top (OTT) Communication Services, and Selective Banning of OTT Services,” Broadband India Forum (BIF), a leading policy and regulatory think tank, has stated that “Telcos wish to cling to an old, legacy, and obsolescent system of ‘Sending Party Network Pays (SPNP),’ prevalent during the voice telephony era of the 1990s,” when they ask for Network Usage Fees to be paid by the OTTs for carrying the large traffic generated by the former.

BIF has stated, “it must be recalled that the ‘sending-party-network-pays (SPNP)’ principle was inherent in the old voice telephony system of the 1990s. In that system, due to the imbalance of traffic between large and small telephone operators, large wholesale payments were made to those telecom operators with a larger customer base. Applying that legacy system to the open and free internet, which works differently, is akin to placing a bullock cart before a motor car and expecting it to pull. The internet operates differently: users not only want to communicate with one another but also want to be always online to connect to content, applications, and services. This is the reason why internet traffic is typically unbalanced between content and application providers and internet access providers, with inbound traffic from the former to the latter in normal circumstances likely to surpass the outbound traffic from the customers of the telcos seeking the content. Given this as the principle, the ‘sending-party-network-pay’ principle, from a bygone era, is not applicable in the internet era.

The solitary example of South Korea cited in the case of SPNP is known to have been one with poor outcomes, with the involved parties (SKT & Netflix) mutually agreeing recently to withdraw the agreement between them. We understand also that several small players have had to exit the country due to disadvantage to them from the law. Hence, the reference to this is lame and has no basis at all.

BIF has also stated that the recent telco claim to mandate OTTs to pay for network usage fees and the Government’s intent to impose telecom licensing frameworks on OTTs would lead to a violation of the Net Neutrality principles and guidelines of 2016. This would bestow telcos with the powers to tilt the level playing field to favor one OTT or another, thereby leading to discrimination, curbing innovation, and adversely impacting the startup ecosystem.

Allaying concerns of Telcos over lawful interception and security, BIF has highlighted that since OTTs are already regulated under the IT Act 2000 and other associated laws, additional regulations under the Telecom Law are not required.

BIF President, Mr. T V Ramachandran said, “OTTs (content and applications over the internet) have been empowering individuals by boosting productivity and socio-economic standing in addition to having massive economic spillover effects on the nation’s prosperity. Overregulation of the OTTs would be counterproductive, as this will lead to a higher cost to customers and reduce consumer choice. Besides, it would also adversely impact innovation, lead to discrimination, adversely impact smaller entities and startups, and lead to a violation of Net Neutrality guidelines.”