Why Indian Telcos Want Tech Companies To Compensate For Network Usage Spends

India is currently the second largest wireless network market in the world, and the biggest network operators, including Jio, have placed forth a very particular demand on TRAI (Telecom Regulation Authority of India). The demand is quite simple – that network-based content providers, such as OTT platforms, also bear a certain share of the network costs.

The telcos claim that this demand is just since they alone are bearing the cost of providing a certain service from which various other industries are profiting. Jio’s team further stated that with network-based content growing in quantity, this overbearing cost is difficult to manage and the sharing of costs will “level the playing field” for all.

This is not just an Indian phenomenon, similar demands have been raised in Europe and South Korea as well.

But, why has this demand come up now and how will this affect the telco market overall?

Rising Costs for Telcos

While India has a huge number of internet users, of which Jio holds more than 50% share, the average revenue earned per user is still quite low compared to other global markets. And to add to this, the top telcos in the country pooled in $19 million to buy 5G network capabilities.

The introduction of 5G will largely change the game for OTT platforms, online video game creators, and other internet-based service providers. So, these tech giants will directly profit from an investment made by the telcos. Thus, they want a cost division to be introduced in the process.

But, there are arguments against this demand as well. Firstly, the question of net neutrality is something to be addressed. Arguably, having tech companies control the airwaves could lead to the networks pushing their content over others, thereby destroying the sense of democracy that exists on the internet.

On the other hand, certain tech companies such as Netflix and Microsoft have already made internal tie-ups with Jio. So, there would be an unfair advantage in place for these tech companies who already have money invested in the process. And lastly, the fact that internet-based content exists, allows internet providers to sell more of their services.

A Futuristic Market Share

Tech companies have fired back at the suggestion of Indian telcos, claiming that if they are to pay for the network fee, then they should also retain a share of the profits. In a never-before-imagined scenario, this would mean companies such as Netflix would own a part of the internet in India.

However, Jio is still adamant that no form of net neutrality will be violated in the process, and they would actively work to ensure no form of discrimination takes part in the process regarding all parties concerned.

While this debate is still not settled, and will perhaps not be in the foreseeable future, it could ultimately change the way we as consumers use and approach the internet.