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LIVE: TRAI Open House discussion on OTT Regulation

TRAI is conducting an open house discussion on “Regulatory Framework for OTT Services” in Bangalore today. The objective of the consultation is to look into services that they are considering as being possibly ‘similar’ to those provided by telecom service providers. The consultation paper seeks to compare licensing norms and regulations applicable to TSPs and OTTs, on the ground that the certain services provided by them are substitutable with one another. The TRAI Chair has also recently voiced aloud the concern that the authority has with regard to OTTs.

Live Updates

All quotes are paraphrased.

– End of session –

1326hrs, Sunil Bajpai, TRAI; Thanks for your comments, they have been taken into account, please submit a separate submission as well so that we can study it. Thank you everyone for your participation.

1323hrs, (unnamed): Concerns of LCOs need also to be taken into account. Lots of job will be loss with the rise of OTTs. We have not been represented in the consultation paper.

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1319hrs, RS Sharma, TRAI: You as MSO and LCO have created an infrastructure. We are discussing how to deliver boradband through cable networks. This can be an extremely effective pipe because you have already solved the last-mile problem. You can deliver huge amount of content there, including OTT content. There is a discussion to be had here, and a way out. We are keen in effective delivery of broadband. This delivery through pipes, as you said, will lessen the load on the network. If you deliver through wire, that’s the best way. There is a business case now for smaller MSOs, a democratised platform. And we would like them to become platforms for delivering OTT content. We also want to solve the problem between MSO and LCOs.

1317hrs, Sunil Gupta, TRAI: Your request for a meeting on LCOs and MSOs is taken. There are existing regulations on this, but I can appreciate you may not be aware fully of how they work. We have released a paper now on how cable operators can also provide other services. Please give a formal submission.

1304hrs, Manigandan, Madurai cable service provider: Why can’t traditional cable providers be considered as OTTs? As an MSO, we are getting information from LCOs, who get the major share of revenue. (Extended question on MSOs and LCOs — not covered in entirety here)

1304hrs, Sunil Bajpai, TRAI: While markets do operate on their own, they may create effects outside the market as well, so it still may be important to regulate them.

1302hrs, Mahesh Uppal: The whole idea of regulation is to correct market failure. If markets do their jobs there is no need to regulate. With respect to OTTs, we can’t begin to argue that the market isn’t working. For us to think of regulating for things like QoS, I think we need to rethink that.

1301hrs, V Sridhar, IIITB: As OTT services are being consumed a lot, we need to focus on a few things. One is QoS. We migh need to think about quality of OTT services. The other is unsolicited communications, and also redressal mechanisms. While we don’t advocate a command and control type of regulation, these questions are important, maybe a soft touch regulation with guidelines and an authority to flag violations.

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1259hrs, Sunil Bajpai, TRAI: Other comments are now welcome.

1258hrs, Vinay Kesari, Setu: The logistics of this will be a huge challenge, but historically there have been a few examples of this.

1255hrs, RS Sharma, TRAI: Interoperability is an interesting issue. We might have to move to a model where I as a user can remove my data from one service and transfer it to another. I’d like to have more comments on this.

1252hrs, Vinay Kesari, Setu: Interoperability is a very important question here. This will be an important question now. Look at the example of UPI, it stopped one or two wallets from dominating. I’d like to pushback on the idea that the market pushes interoperability. Microsoft fought against the standardisation of the .doc format. The market may need a nudge. It will not always take care of itself.

1250hrs, Siddharth Manohar, Medianama: Interoperability is important in light of the issue of data portability, also covered in the Data Protection Bill.

1248hrs, Amrita Chaudhary, CCAOI: OTTs have different kinds of services. The barriers of switching are not large. Regulating interoperability.

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1245hrs, Sunil Bajpai, TRAI: Interoperability is also important from the point of view of future OTT applications in order to counter the network effect where consumers are not able to switch services because none of their friends are on that platform.

1242hrs, Mahesh Uppal: Interoperability between OTTs is a non-issue. The competition that we’re talking about, there are several ways to deal with this. It’s not like similar functionalities aren’t available elsewhere. Competition should not be barred. Anyone who wants to be an OTT or ISP should be able to do so. TO reduce competition to an idea of equality is not a great idea.

Next Question:

Q.4 Would inter-operability among OTT services and also inter-operatbilty of their services with TSPs services promote competition and benefit the users? What measures may be taken, if any, to promote such com- petition? Please justify your answer with reasons.

1237hrs, Reliance Jio: Consumers don’t care which way communication happens. So it is important for lawful interception to be possible in OTTs. TSPs are imposed with a lot of strict regulations on national security. Currently the same information can be communicated on both, but in OTTs without any concern about whether he will be held responsible for the communication. Therefore we recommend that it should be mandated that OTTs are brought under lawful interception, but also data localisation. Most here would agree that there is increasing role of OTT communication in terrorism and national security issues. 163 requests were made by GoI to a leading platform, and most being denied. We request again that provision under lawful interception should be reconsidered and mandated to be similar to TSPs.

1234hrs Devashish Bhattacharya, BIF: We uphold the need for privacy. Encryption is based on the demand of the consumer. The role for encryption is important. Hence it cannot be neglected. As mentioned, lawful interception is available under the IT Act. While interception is required, encryption is also important for security and privacy, as upheld by the Supreme Court.

With regard to question 6, in case OTTs are not connected to PSTN and PMLN, in case some services are permitted it will be easier, but we recommend following the EU, where there it is allowed for number based services and number independent services are looked at later.

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1231hrs, Vinay Kesari, Setu: I agree with Amrita, it’s hard to answer question 5 without encryption. I also agree that it’s not as if OTT communications are not subject to any lawful interception. It’s important to consider if there is any advantage in a call going through each different service. Is there any situation where an OTT app can be live and connected to the network, without the telephone being connected to the network? The only example is being connected to wifi without being connected to the network. Is this enough of an advantage to mandate this? If yes, it’s important to implement a minumim user base above which implementing this becomes madatory — otherwise it becomes too onerous on startups.

1228hrs, Mahesh Uppal: This question does fail to link security questions to what we are trying to discuss here. This is already being discussed in parallel. We must recognise the differences and let them run separately. I agree with Mr. Bhatia on emergency services. What the EU is doing is interesting. But right now OTT players are not even demanding to be connected to PSTN. I would suggest that we go a best effort way for question 6, and other questions on OTTs with the IT Act.

1226hrs, Amrita Chaudhary, CCAOI: There are already deliberations on question 5. But apart from lawful interception, we need to look at encryption. For a lot of government services, being able to give and get safe services are of utmost importance. We need an encryption. There might be debate, but in an example like banking, encrypted services are important. Networks are protected from cyber attacks. Encryption policy is required for the whole ecosystem.

1224hrs, Bharat Bhatia, ITU-APT: I think question 5 has been discussed well already. In question 6, I think it is about how emergency services are being upgraded in order to get information from OTT platforms. I can’t make a complaint to policy on a Whatsapp call. No service as such to make a video call to ‘100’. We need to enable them to receive information from OTT. Users need to access emergency services from OTT players. Can be through messaging, videos, it does happen to a limited extent, particularly in the case of ‘112’.

1222hrs, V Sridhar, IIITB: On question six, emergency services in USA, have been made compulsory on multiple formats. The next question is whether that it can be extended to OTTs. We can take a call on that, since OTTs are consumed at large, we may require them to comply as well. Intermediary guidelines already take care of question 5.

1213hrs, Sanjeev Varma, Reliance Jio: We believe national security and data protection are primary. In coming to lawful interceptions, this is the important question for OTTs. Some practices of OTTs should be changed. First is the data localisation of communications. Currently user data is stored across in India which doesn’t allow investigative authorities to access data. We recommend that local storage of data should be mandated. The second change is end-to-end encryption. This is done under the garb of user security. But this is often misused in activities disturbing national security. Thus this should addressed for national security. Australia has already passed a bill where investigative agencies can enforce decryption of data by OTT players. Few other provisions are to maintain records for authorities to probe in future. Traceability of users is also to be enforced, in order to tackle the issues of fake news, mob lynching, and terrorism. User identification is important, so that fake identities can be tackled. We believe that OTT and TSP are similar and used for similar purposes.

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On the issue of emergency services, we recommend that TRAI adopt the same stand as VoIP, where it is encouraged but not mandated.

Next set of questions:

Q.5 Are there issues related to lawful interception of OTT communication that are required to be resolved in the interest of national security or any other safeguards that need to be instituted? Should the responsibilities of OTT service providers and TSPs be separated? Please provide suggestions with justifications.
Q.6 Should there be provisions for emergency services to be made accessible via OTT platforms at par with the requirements prescribed for telecom service providers? Please provide suggestions with justification.

1210hrs, Bharat Bhatia, ITU-APT: I want to talk about 5G. 5G is a completely new network. When you go into 5G, there will be huge investment in IoT. There will be a huge investment into emergency services and other services. Investments will not be in the telco field, it will come irrespective of the licensing regime. We need to make sure that what we decide is relevant in the age of IoT and machine communications.

1203hrs, Vinay Kesari, Setu: My simple answer to 3 is no. Telcos are charging mainly today for data. OTTs are not in anyway negatively affecting their ability to charge for this. There is still a pricing issue, TSPs are not able to charge in order to recover their cost completely. OTTs dumping content on TSPs is a dangerous analogy. This content is initiated by the consumer, not by the OTT. It is the consumer whose appetite for content that is increasing. OTTs are not increasing this themselves. TSPs are carriers, they are not lakes. Whether telecom is a two sided market is an interesting question — issues of regulating peering and interconnection will come up. Netflix is being charged for peering in other countries.

1201hrs, Chaudhary, CCAOI; Someone mentioned that OTTs and TSPs are beneficial to both. It is not they versus us, it is about working together. Telecom wants to enhance their business. TSPs and OTTs are making investments to get users, but to demand investment because you use my service, that will affect the pricing for the consumers. Indians are a price conscious user market. Smarter plans are required for investment, you can’t pull other players along with you because you aren’t

1159hrs, Uppal: TSPs have to understand that some apps will be heavy usage, to suggest that is linked to imbalance of licensing, is inaccurate. There is no longer global debate on this. The time for this consultation is five years too late.

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1158hrs, V Sridhar, IIITB: Pricing models need to be looked at. Application based pricing is also possible as long as it is transient. Pricing models can be used to make up any losses, as long as net neutrality is not violated.

1156hrs, Karthik, Quogent Consulting: On Question 3, TSPs have been backed into a corner. They are overburdened. As to how OTTs can do something for this burden, last year Google invested in undersea cables for Japan. Google here based on expected profits, invested in the infrastructure. We saw this on a large scale with Google, we may look at the possibility of this on a smaller scale as well.

1154hrs, Abhishek Agarwal, BSNL: TSPs in India have made profit of 1% at best. Bandwidth hungry OTT applications means I have to improve my equipment to keep up demand. OTTs demanding bandwidth should be made to take on some of the investment. OTT business has grown enormously, but revenue of TSPs is going down. This includes revenue to Indian government has also reduced. All this is flowing to OTTs.

1151hrs, Sunil Gupta, TRAI: I request that people consider the issue of different types of OTT services, hungry on bandwidth, or hungry on resources, or we try to compensate for this with pricing from TSP, this will reduce consumption. This is the issue we seek to have your comments on.

1149hrs, Bharat Bhatia, ITU-APT: OTTs invest in different things from TSPs. But they are still investing nonetheless. Wifi hotspots for example, TSPs are not investing in this. All you need is a data pipe. That is not through your data network. You just need to connect to a data center. There is no question of an OTT invading the telecom service space.

1144hrs, Bhattacharya, BIF: This question of licensing imbalance to my mind is incorrect. The services are not similar. Operators have already put a lot of investment into the network. Even in 2015 they were bleeding and created a hue and cry. OTTs undoubtedly that drive data growth, it is why TSPs need to build their network. It is evolving into a symbiotic rather than an adversarial one. Pricing of data is still controlled by TSPs. If an OTT dumps data onto your network, you can still raise the price as a TSP.  TSPs can’t do it today due to hyper competition, if I may put it that way. Demand for data is still exploding. TSPs will continue to invest in the infrastructure. The other point I made in my remarks — OTTs cannot be called OTTs. They make significant inputs in infrastructure. 75 billion per annum. And that is in their interest. The two services not substitutable.

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1144hrs, (unnamed): There might in face be an understanding between an OTT and a TSP that leads to discriminatory pricing, at that must never, never be allowed.

1142hrs, Amrita Chaudhary: If I’m looking at licensing differences, we need to see the charges being paid. While some are valid, there is a need to make them more telecom friendly. It’s not someone else hurting the licensing charges, it is the existing regime that no longer works now.

1141hrs, Uppal: I see the argument, but the issue of price sensitivity in related to a new player in the market, not to OTTs.

1140, RS Sharma: The question is only whether OTT revenue is coming in the way of investment on behalf of telecom companies.

1135hrs, Mahesh Uppal: The premise here is a problem. The investment in this sector is actually huge. The operators’ debts are proof of this. All network providers today are upgrading to 4g to compete with Jio. Erroneous to say that it is hurting investment. The pressure on the telcos as documented across the board is actually affecting the pricing. Economics of this sector is being hurt, not by OTTs, but a new competitor who is playing to a different set of rules. Now for the telcos to argue that this is related to OTTs, and I don’t think they have. The second question is disappointing, because we can ask that of the entire ecosystem. Why single out OTTs? If anything, most telcos recognise that there would be no demand for their chief service — data — without OTT platforms. What will run on your network? OTTs feed demand. One OTT provider told me that a problem he faced was that if he pulled out, TSPs would lose revenue based on usage. We need to see that OTTs are apposite, they are stakeholders in the same business, seeing them as hurting investment in mistaken.

The next question to be discussed:

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Q.3 Whether regulatory or licensing imbalance is impacting infusion of investments in the telecom networks especially required from time to time for network capacity expansions and technology upgradations? If yes, how OTT service providers may participate in infusing investment in the telecom networks? Please justify your answer with reasons.

1131hrs, Mahesh Uppal: As part of the TRAI Act, the TRAI has a a responsibility for orderly growth of the sector. There is a need to recognise the changes in the sector. We are moving towards greater efficiencies. We shouldn’t go back to something retrograde. Earlier, SMS was differentiated from paging. It reflected the same debate as we are having today. SMS was not blocked in favour of benefit to paging. We should use the same lens here in substitutability.

1129hrs, Bharat Bhatia, ITU-APT: Even if we assume they provide similar services. Today if I go from one place to another, I can take a car or a taxi. But I can also fly from point A to point B. Should flying be subject to same regulation as road? No the two are different, though they service the same need. Two services need a different regulatory regime. You need one, but there is already an IT Act, privacy regulations being considered, they hopefully covered the required regulations for OTTs.

1123hrs, Vinay Kesari, Setu: Mr Gupta spoke about the scope of this consultation. I want to appreciate the specificity of this consultation. The first question speaks to the need to narrow down the consultation. The fact is that in the consumer market, three heads under which they charge consumers: data, voice, and SMS. Those are the only real telco services. Regulatory structures can confuse things. The market moves fast however, and it does not lie. Telcos today charge more for data today, nothing else. The question of substitutability is a difficult one. They are certainly not directly substitutability. A regulatory structure has to stand the test of time. Are these services tending to substitutable? The answer is yes. The fact is that SMS only is for transactional messages. Personal communication is on Whatsapp. Most telco plans today do not charge for voice. Data today is the real service of a telco. Today voice and SMS are still provided for by telcos. Today everyone is moving towards VoLTE. SMS will evolve to different IP based services. Even core telco services are going to be provided like an OTT, with a QoS component. They are tending towards substitutability. Do they need to be regulated the same though? I don’t think so. We need to reduce the regulatory burden on telcos. The service they provide has evolved. The market has moved on. We need to look at new regulatory mechanisms. Innovation cannot be killed. Question 8 has the same answer, specific conditions applicable to OTTs, no we need to look at communications as a whole irrespective of medium. Medium is tending towards data in general. We need to think about it from first principles, as opposed to existing regulatory structures.

1119hrs, Sanjeev Varma, Reliance Jio: There has been a sea shift in OTT services. They are able to innovate because of application layer. But growth has happened in communication as well, the focus of this paper. Certain OTTs are equivalent to TSPs in terms of users. We’d like to stress on the fact that functional substitutability should be looked at, and also from demand side from the consumer. As a consumer I can use an OTT as well as a TSP service. Functionally similar and demand side-substitutable services should be considered for regulation.

Coming to definition, we believe the EU definition describes communication services well. VoIP, video call, texts, and file transfer, can be considered functionally similar to TSP services. Any OTT service allowing 1to1 or 1to many communication should be considered equivalent. Going to questions 7 and 8, we recommend the same as 2015 — a minimalistic light touch regulation for OTTs, but with national security exceptions. We believe that OTTs need supportive model for growth. But data protection and national security mandatory restrictions should be same for OTTs and TSPs.

1116hrs, Karthik, Quogent Consulting: An economic reason why they shouldn’t be equated: I was involved in working with Hike earlier. And we wondered if we were going to be regulated. Surely a regulator doesn’t want to scare away competition, but local players may suffer. If we talk about regulation of communication companies, any regulation can be worked with self regulatory mechanisms. There are other mechanisms that may work.

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1105hrs, Sunil Gupta, from the TRAI panel: The questions in the paper are raised do have some grounding behind them. There is an actual issue of same service, same rules. The first question asks, which services, when OTTs provide them should be regulated. Not *all* OTT services. Yes, or no, up to you. But there are certain concerns being raised that some services having a negative effect on other services. I would like all the stakeholders on the paper under which these questions have been raised.

1106hrs, Shashikant, Keiser Systems: Many OTT platforms are presently providing the pay channels. With OTTs, they are available online. My request is that pay channels also need to be billed. We are losing revenue in this respect.

1107 Ritesh Khosla, sony pictures: I have no different arguments that earlier ones, which are persuasive. I have an analogy however, what is the method of investigation behind these questions. If there is an electricity supplier and appliances. The appliances are using the electricity, they are not competing with the provider. If the fans were to in turn to provide some electricity, will we call them competitors? To my mind, it is preposterous. Crudely, this is the case with OTT. The OTT gamut is very wide. Every product has its own definition. Some OTTs allow you to make calls, and these are argued as competing with TSPs, and this is misplaces. Rightly pointed out by Abhishek, that these questions can’t be brought up with respect to totally different regimes.

1059hrs, Abhishek Malhotra, TMT law practice: The manner in which 12 78 have been framed, we are starting with a premise that there is in fact substitutability. In the process of investigating this, if it emerges that there is a question of substitutability. But there is already a hypothesis to this effect. To questions 7 and 8, this has already been said, I only wish to say that the appropriate legislations already exist. The government earlier when called upon to answer the question on OTT regulation, they very categorically said that OTTs are i

1053hrs Mahesh Uppal: This topic has become irrelevant for the past few years. I had mentioned earlier to you that maybe we should talk about functional regulation. Now things have changed. The ISP today, is mainly an Internet provider and not a telephony provider. Telephony is largely free. Telephony is used more in rural areas — by definition these are contexts where OTTs cannot be used. Therefore the two are not substitutable here. We know that we cannot survive through OTT communications alone. These are not curically connecting communications. THey connect us to other subscribers. The TSP remains the only way to connect to people outside my subscriber set. I cannot call using OTTs in such a case. THus they are not substitutable. THere are also regulatory changes. Telecom licenses are available off the shelf. Spectrum isn’t, but I can be a telecom provider. OTTs as well, there is no entry barrier. If ten years ago there were controls on who could enter or exit, now both sides are free to enter each others’ markets. Regulation should not do something that the market itself is perfectly capable of doing. Substitutability should not arise here. We are talking about a narrow set of services from each — OTTs and TSPs. Substitutability would be changing SIM cards or OTT services.

We must see that we are using substitutability in its crudest form, without any rigour. The question of level playing field does not arise, because what is not equal cannot be equated. We are situated differently, we cannot be therefore regulated similarly. Bhatia mentioned these differences. There is a qualitative difference between communication providers using PSTN and those that do not. This is a useful distinction and allows us to build a consistent regulatory framework. I don’t think there is any question of changing these rules. We have a whole system of regulating OTTs through the IT Act. And a system of regulating TSP through the Telegraph Act. And this is a poorly argued position that these are similar because a few features are common. It is important that they are not equated. It is not to suggest however that the conditions under which TSPs operate are satisfactory. They do face barriers in terms of fees and right of way. These standards have changed internationally. All what we called licenses here have been near-automatic authorisations. The fees are solely admin costs, virtually no levy to be complied with. This needs to happen. But we should not burden another industry for this purpose. Most issues in this paper, I’m sorry to say, are not actual issues in most regulatory regimes. We must first look at our licensing regimes.

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Devashish Bhattacharya, BIF: Basically OTT services are dependant on TSP, but not the other way round. OTT seems to be a misnomer, it gives an impression that they are free rider. They are in fact drivers of demand in data consumption, especially here you can see evidence. They are also one of the key drivers of expansion of the digital infrastructure network, important for Digital India going forward. Coming to whether they should be called OTTs, we at BIF, believe that they should be called digital service providers. They are themselves responsible for infrastructure to get content to the consumer. They bring content to the edge of the network. They invest in cables, data centres, and infrastructure to do this. Analysis Mason  has come out with a report citing that infrastructure worth 75 billion per year. They are not free riders.

India is an important OTT market. Market has shot up five times in three years. Highest downloads in 2015. By 2020 it will be the top video market. Rural India makes 60% of the market and will play a huge role in OTT consumption. There is a consumer pull towards the OTT services. They are also beneficial to the telcos, driving data demand. OTTs build value for everyone in the value chain, so why are we complaining?

Substitutability if we’re discussing it, has to be both ways. We need to consider whether tech operates in the same layer — they do not. Whether the functional services are comparable — they are not, OTTs provide rich interaction services, not just communication as in TSPs. THird, you can access OTTs only on digital devices, and the telecom services can be accessed from a variety of devices. And we also need to understand how they cohabit — OTTs depend on the TSPs. OTTs can’t be offered without physical access of TSPs. TSPs control the infrastructure — OTTS cannot offer services without this. The TSP licenses also give exclusive rights — right acquire spectrum, numbering resources, interconnection rights — these are not available to OTTs. OTTs operate in a competitive market, easier consumer switching, this is not the case with TSPs. The choice of switching is much more difficult in TSPs. OTTs do not enjoy any exclusive rights — if it wants to offer similar services to TSPs needs a specific license. OTTs offer various services which may be tertiary to other services– messaging and calls may be additional to gaming, or document editing — this is not substitutable to calling service from TSPs. We are creating an impractical distinction here. My last point, OTTs provide expansive services. There is a very clear case that OTTs are distinct from TSPs. Lastly, the Telegraph Act does not apply to OTTs — they do not own or operate a telegraph. TRAI has itself defined OTT that they do not own a network or operate one. There is no case to regulate them similar to TSPs. Thus in our opinion, there is no need to regulate them under the Telegraph Act.

A main difference here is interoperability. A connection to PMLN/PSTN is not present in OTT services. A question on whether to enforce interoperability should be discussed. Those that are not are replaceable by OTTs.

1035hrs, Bharat Bhatia, ITU-APT: Most OTTs provide a different service from TSPs. If you look at the heirarchy of the network, OTT services are at a higher level, it does not go into the core of the network. You need to see services based on a number versus those which or not. OTTs use numbers once for verification. After that, there is no longer a relevance to the phone number used for authentication.

If you look at email as another example, two people continue communication and it remains as OTT. Mobile services are different for example from the older PSTN service. OTT has no control over the network. It is really like any other Internet service. Coming to substitutability, many OTTs exist today. They are at a different level and not substitutable with a mobile service. The example has already been given on how easy it is to change providers.

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1032hrs, Amrita Chaudhary, CCAOI, brings up lack of transition cost in switching service providers between OTTs and TSP, from the consumer perspective. She then brings up the issue of level playing field, stating that different services cannot be compared in this regard. Next, on regulation of OTT, she says that there are already regulations, chiefly under the IT Act, already covering OTT services. The process of policymaking on those fronts should first be concluded, going ahead here would be erroneous.

1030hrs: Bajpai lays out the relevant questions for Set 1. The first two questions to be dealt with:

Q.1 Which service(s) when provided by the OTT service provider(s) should be regarded as the same or similar to service(s)being provided by the TSPs. Please list all such OTT services with descriptions comparing it with services being provided by TSPs.
Q.2 Should substitutability be treated as the primary criterion for comparison of regulatory or licensing norms applicable to TSPs and OTT service providers? Please suggest factors or aspects, with justification, which should be considered to identify and discover the extent of substitutability.

1025hrs: Sunil Bajpai remarks that 89 comments have been received, and followed up by 12 counter comments. Set 1 of questions are set to deal with the regulatory framework for OTT services.

1025hrs: RS Sharma’s opening comments point to how issues leftover from earlier consultations were raised in the OTT consultation in 2018.


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