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OTT vs Telcos….Choose your pick…

Telcos and OTTs are fighting because each feels the other is only successful thanks to their contribution.

Telecom companies claim OTTs need to pay them and OTTs are saying the same thing. Here’s why.

A brand new battle is brewing in India, with telecom companies on one side and OTT services on the other side.

But why are these two once-friendly entities fighting?

All thanks to the government’s draft telecom bill

Dost Dost na raha….

The new draft telecom bill launched by the government states that over-the-top communication apps need to get licenses. Umm, why?

These apps, basically WhatsApp, Telegram, Zoom (and maybe even Netflix, Amazon Prime and Disney+ Hotstar, though that isn’t clear yet), do the same things as telecom companies: help us call, text and chat with our friends.

So, they should also fall under the category of a telecom service.

Now, this logically makes sense.

But a lot of OTT companies protested against this move for multiple reasons:

  • The high compliance would kill innovation for smaller companies in this space.
  • OTT apps were governed by the Ministry of Electronics and IT, so it didn’t make sense that they would be answerable to yet another ministry for licensing.

But the main reason behind their protest? They don’t want to shell out extra money (who wants to?).

But telecom companies continue to insist that OTTs should also have licenses.

And they have taken this fight one step further. How?

By demanding that OTT companies should pay telecom companies. Huh?


Story mein naya twist ???

Yes, in a new letter to the Department of Telecom, the Cellular Operators Association of India ,the apex body for telecom companies, has demanded that OTT companies should pay usage charges to telecom companies.

But why?

Their logic: without telecom companies, these OTT services would have no customers, no revenue.

In FY21-22 alone, telecom companies spent nearly Rs.17627 Cr  in license fee and Rs.7073 Cr for spectrum usage: the infrastructure needed for a network connection.

Meanwhile, OTT companies got customers and revenue without spending a penny! Unfair, isn’t it?

What’s worse, due to the growing popularity of OTT services, data consumption in our country has increased. So, these telecom companies have to spend thousands of crores to keep upgrading infrastructure so our internet doesn’t lag.

And these costs are only going to get higher as 5G will increase our data usage.

So, telecom companies want compensation.

Especially as these OTT apps have now reduced their usage.

Isn’t it a fair  ask?

Not to the Broadband India Forum (BIF), an institution that represents tech companies.

The BIF basically played an UNO reverse card and said that it is telecom companies who should be paying OTTs..Yes, you heard it correctly.

Their logic: Who would even use a telecom service if OTT apps didn’t exist! They claim OTTs drive 70% of telecom usage

So, if anyone should be paying, it is the telecom companies.

Now, weirdly enough they are both right, they both need each other to drive traffic. And they had both figured this out a long time back… giving birth to OTT bundles.

You must have noticed that a lot of telecom companies now offer OTT subscriptions along with their plans.

That’s because it helps both these players.

With more OTT subscriptions, telecom companies can acquire more users. And the same goes for OTT services.

In fact, Disney+ Hotstar reportedly lost 15-30%  of its subscribers because Jio took it off its OTT bundles.

So, with increasing competition, both OTTs and telcos need each other.

Though joining hands would be ideal, the two sides are currently arm wrestling.

Who will win? And who will have to give in?

We’ll have to wait and watch.

No matter what happens, we have a clear winner: Jio. After all, it has a telecom service and an OTT service. 

Well as they say, it aint over till it is over….

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