Are OTT App and Content Terminating Charges Coming?

India’s Telecommunications Regulatory Authority of India is asking serious questions about the regulatory framework for over-the-top applications, questions that are bound to become more pointed as 4K TV becomes more common for streaming.

And the questions suggest TRAI seriously is considering a broader application of traditional traffic termination frameworks, especially the charge for landing traffic on a receiving network.

As part of a public inquiry, TRAI is asking whether a regulatory framework for OTT services is needed now, or is a decision that can be deferred. That would be a rather necessary precondition for considering application of terminating traffic rules to OTT providers.

TRAI also is asking whether OTT players offering communication services (voice, messaging and video call services) through applications (resident either in the country or outside) should be brought under the existing licensing regime. Though, in principle, TRAI could remove regulatory burdens from incumbent suppliers, giving them the freedom now enjoyed by OTT apps, that seems unlikely.  

Though it is a contentious question, TRAI asks whether OTT competitors are affecting communications service provider revenue streams. If so, “is the increase in data revenues of the telecommunication service providers sufficient to compensate for this impact?

Among the contentious questions also is the matter of whether OTT app suppliers should “pay for use of the telecom service provider’s network, over and above data charges paid by consumers. “If yes, what pricing options can be adopted? Could such options include prices based on bandwidth consumption?” TRAI asks.

The answers to those questions will determine, in part, whether TRAI acts to “level the playing field” or change business models in ways that compensate access providers for OTT app provider imposed network costs.

The consultation might lead to hugely-important changes in regulatory regime that increase access service provider revenues and impose new costs for OTT app providers.

Among the other important implications, TRAI could move to shift revenue shares within the Internet ecosystem, supporting access provider revenue streams to some extent, while essentially raising OTT app provider costs of doing business.

TRAI asks whether “imbalances exist in the regulatory environment,” and if so, “can the prevailing laws and regulations be applied to OTT players.”

Any such rules would not necessarily shift revenue directly, but would raise OTT provider costs, indirectly protecting incumbent services because price differentials between OTT and incumbent services would narrow.  

In India, TRAI asks for input on whether termination charges should be applied to OTT app providers. That would be a huge change from current practice.

In such a new framework, sending networks (content providers, OTT services and other application providers) would pay compensation for delivering traffic to the terminating networks.