OTT — Can it be licensed?

What are the regulatory bottlenecks that prevent it from licensing?

OTT vs Telecom

In order to find an answer to this question we first need to understand how OTT works and how it is different from a normal telecom service. OTT rides on top of the data service offered by telecom service providers. It is almost like riding a wave driven/regulated by ocean currents. OTT has neither control over the structure of the wave nor can it regulate its speed. It is just at its mercy, and its ability to carry information is totally dependent on it. If the wave runs slow, so does the OTT voice, and he can do nothing to speed it up or alter its character.

On the other hand, the telecom operator is in full control of the wave. It can increase its speed, direction as well as thickness. Hence, at times when the voice service that the telecom operator offers gets impaired due to the quality of the wave (in the lift, basement, etc), then it (the telecom operator) has the power to kill the OTT voice just to make way for its own. This means at times of crisis, the OTT voice is at the mercy of the telecom operator, as he will and can do whatever it takes to preserve the fidelity of his service at the cost of that of the OTT player.

OTT Licensed

Let's say DoT decides to license the OTT service at par with the telecom player, then how can it (DoT) enable the OTT player to take control over the underline network on which the OTT voice is running? It simply can’t. The network below is run by the telecom player — he owns the spectrum, the equipment, and all other adjuncts, needed to control the wave on which all services (including his own) are running.

The other problem is more severe — how will DoT decide whose voice will get priority (Telecom vs OTT) at the time of crisis (when network resources are running thin)? And that too when both of them (Telecom & OTT) are licensed at par? The answer is simple — it has to be the telecom player. He controls the network and all equipment and not the OTT player. Hence, if the OTT player has no control of the network (which decides the quality of the wave) then how can it be licensed at par with the telecom player?

OTT’s Network

Now the question that can come to the reader’s mind is what prevents an OTT player to buy all resources (spectrum, equipment, etc) and take control of the wave on which it runs. Yes, it is possible theoretically, but there are three issues —

1. If an OTT player becomes a telecom player and controls his own wave, then he needs to allow (or invite) other OTT players (who have chosen not to buy all such assets) to use the idle resources for the purpose of expanding his own revenue stream. If can’t afford to keep the network idle. It will not be financially prudent for him to do so. And those OTT players running on the networks (on leftover capacity) will face a similar situation that the OTT players are facing today.
2. It would not be prudent for the government to also allow the network resources to stay idle, as it will be against the public interest. Spectrum is scarce, and if not optimally used can be damaging to the nation’s economic interests and will dampen India’s growth and prosperity. It is like asking Uber or Ola to build their own highway and prevent others from using it, even when 90% of the time the highway lies idle.
3. With the telecom space becoming mature, it will be practically impossible for an OTT player to enter the market at this point in time. Most airwaves in all lucrative bands have been sold and occupied, and not much is left for grabs. Also, it is not in the interest of the government to allow all the OTT players to enter the space with their own spectrum and equipment. It will drive the space nuts. It will not just be economically prudent, but also destroy the aesthetics of the skyline of our cities — with towers peeping all over the space.

Possibilities

Hence it is clear from the discussion that the OTT players can’t be licensed at par with the telecom players. But what other possibilities exist for regulating them? There are some, but not without challenges. a) Legal interception — This can be a possibility, but for it to happen the OTT player has to provide a backdoor entry to the legal agencies to break into the data stream. This will destroy the end-to-end encryption, which most of the OTT players claim now has the “zero knowledge” status. But will it help? In my view, it will serve very little purpose, as it does not prevent a hardcore criminal (or a miscreant) from sending a well-encrypted document over the OTT network, or from using a peer-to-peer encrypted proprietary app over the OTT layer for communicating. b) Mandatory KYC — This will make the system less seamless, in case more conditions are imposed for enabling users into the platform. Also, it will serve very little purpose to prevent the real miscreant from undertaking mischief. We all know that even today ransom calls are made using SIMs on top of a well-regulated telecom network that is registered in a foreign country. No one can prevent this from happening over the OTT networks.

Level Playing Field

But what about the debate of a level playing field between the telecom and OTT apps? As discussed above, both telecom and OTT players have differently placed control and capabilities. Hence the question of mapping them to a level playing field does not arise. In my view, the powers of the telecom players were unfairly curtailed by the NN rules. These now need to be restored. In today’s world of 5G, this has become more relevant than ever before. Many of the services that 5G enables will need the telecom players to use their network fine-tuning capabilities for enabling them. These services (like remote surgery, autonomous cars, etc) can no longer run on the basis of best effort. These will require strong support from the network and therefore will violate the NN rules in the current form — which therefore the rules need to be realigned. Doing so will enable the telecom operators to monetize their network better and will be in the overall interest of the nation.

Way Forward

It is clear from the above discussion that regulating OTT in the same line is not just imprudent, but also totally unnecessary and inefficient. Also, it actually serves no real purpose — especially the one that is to prevent misuse of the network from undertaking illegal activities. As technology has evolved to such a level that workarounds will be easy to develop and use. And over these workarounds, the regulator cannot exercise any control. The regulator cannot prevent a user to jailbreak an iPhone — which empowers the user to unshackle himself from the control of the IOS system, thereby completely bypassing the regulatory process by uploading user-developed peer-to-peer apps. Hence, user interest can no longer be protected using the conventional regulatory approach. More reliance has to be on accessing the metadata and using it to nail down the criminals. Also, the ground level of surveillance has to increase to improve the effectiveness of such systems. The focus needs to be on educating the users so that they are more vigilant while using the systems and do not fall into the traps of those who are trying to fish the system.

Also, with 5G, there is also a need to empower telecom players so that they can leverage their networks much more effectively than before. This can be done by modulating the NN rules and making them more flexible and forward-looking. Doing so will allow telecom players to monetize their investments better. And the cash flowing out of these opportunities can be invested back to improve the quality of the network. This will be a win-win for all — the telecom players, OTT players, and the consumers.

(Views expressed are my own and do not reflect that of my employer)

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