Finally, Indian startups got their due while fighting with Google’s alleged big tech bullying. The government’s support and solidarity from the entire startup community played a vital role in getting Indian apps restored on the Google play store.
COAI, the Cellular Operators Association of India, has now taken on the baton. In its latest tweet, the COAI fired at “LTG”s, the large traffic generators of the internet, for not contributing to the rising network infrastructure costs.
It says LTGs like Google throw “stifled innovation” argument on the fair share demand of telcos but they conveniently kick Indian apps out of their playstore using their monopoly.
Well, what’s the whole “fair share” debate about, in the first place?
To start with, COAI is a trade association that represents the interests of the telecommunications industry. To be precise, COAI speaks for telecom biggies like Jio, Bharti Airtel and Vodafone Idea. They are up against big tech/OTT/CAP – content application providers.
Simply put, telecom companies want Google, Netflix, Meta, Amazon and the likes to pay for the internet infrastructure costs. Why so? Because they use the networks built by telecom companies to reach their audience and make money. No one can deny this: we all watch Netflix and scroll through Instagram hours together on our Airtel/Jio wifi!
Telecom companies call it network usage fees – or “fair share” fees.
The COAI released a white paper last month, which pegged FY12 to FY23 capex at Rs 6.93 lakh crores (we have added all the yearly figures as shown in their line charts). This capex, in turn, enabled telcos to meet exploding data demand across the country.
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The COAI also estimates that the data demand will only rise in the age of 5G and 6G. These search/OTT/Content apps’ hunger for bandwidth will get bigger and consumption – higher. Per records, data consumption now stands at 18 GB per subscriber per month. It was merely 2 GB/subscriber/month in 2017.
Also, internet traffic data from six Big Tech firms (Alphabet, Meta, Netflix, Apple, Amazon, Microsoft) accounted for more than 56% of all global internet traffic services in 2021, according to telecoms.com data.
In short, the telecom industry does not want to foot the bill alone. They want LTGs to contribute “Fair” share – say n% of total internet infrastructure cost. Some baseline cost they are okay to bear. They say they are not asking big tech to subsidise smaller internet companies but only to pay for their share of the traffic.
Around the world, same story.
Some significant objections to this approach are:
- Net neutrality: Why should big tech pay and some xyz.com with say 5% traffic share shouldn’t? (A classic example would be SBI internet banking or Economic times/ moneycontrol websites.) Afterall, xyz.com also uses the same network infrastructure to reach masses, but they can freeload under this system. Not everyone else except 4-5 LTGs are MSMEs/Start-ups to be lenient with.
- Double dipping: Telcos are already charging subscribers right? Why charge internet companies/content providers again? If you check financial records, they are charging customers pretty neatly and customers are paying up. Check your own wifi and mobile bills.
- What if more content application providers/big tech like Instagram come up and traffic is equally split? Fair share arrangements will go for a toss. Meta will have to pay their fair share but say Moj/Josh won’t have to pay!
- Big tech companies are already investing. Think cloud and data centre investments announced by Google and Meta…they are literally investing billions of dollars for this infrastructure. So we can’t really say they are freeloaders. They are building up the internet value chain too.
Here is a detailed chart with very conservative estimates:
- More traffic automatically means more demand for data service which telcos own. So why complain against something which is driving demand for your own business?
- It is not even the case that telecom companies are struggling. Just see the stocks of Bharti Airtel/Jio.
- Elsewhere, the German regulator already did a feasibility study and rejected the proposal of fair share regulation.
So, what is the Indian government saying?
The government wants the market to solve the problem by itself without regulations. Just yesterday, Sanjiv Shankar, Joint Secretary of the Ministry of Information and Broadcasting said, “As far as India is concerned, I don’t see personally that there is a huge necessity or urgency for sharing of cost for infrastructure.”
He also said, “If there were a need for cost sharing in the future, it should be best left to the market to be determined rather than any audit based process because that will be very cumbersome and very difficult to adjudicate when there are litigations.”
Telcos want regulation or at least a commercial resolution. They cannot cut network access to a handful of apps/websites. But they can continue to lobby.
Given the above background, we can foresee that the tug-of-war will continue for the time being. Can the telecom companies really overpower big tech/OTTs/CAPs – That will be interesting to observe here onwards!
Note: This post is for educational purposes. Not advice.
