Proposed US bill to charge fees from large apps should be adopted in India, says COAI

Telecom operators want the government to adopt a bill, similar to a proposal in the US Congress, that would make large internet apps contribute to infrastructure costs to help lower broadband costs for consumers, a senior industry official said.

A bill sponsored by US Senators Markwayne Mullin, Mark Kelly and Mike Crapo in US Congress last month aimed at lowering broadband costs for consumers proposed a direction to telecom regulator Federal Communications Commission (FCC) to mandate social media platforms, streaming services apps, cloud computing service providers like WhatsApp, YouTube, Netflix, Google etc to contribute to universal fund that is used for building networks.

The proposed bill named, Lowering Broadband Costs for Consumers Act of 2023, has classified social media platforms, streaming service, over-the-top messaging service, video gaming service, videoconferencing service, e-commerce platform, search engines under edge services providers.

Telecom industry body Cellular Operators Association of India (COAI) said that the proposed bill in the US vindicates the stand taken by service providers in India.

"We are very happy that whatever is given as a provision proposed in this bill, vindicates our stance. It is not only the telecom service providers who are there, it is edge computing, who are providing content services. Edge computing entities and telecom service providers, or as they call it, broadband providers, both have been clearly defined. This needs to be done in the Indian ecosystem as well," COAI, Director General, SP Kochhar told PTI.

The bill proposes to levy charges only on those entities that generate more than 3 per cent of the estimated quantity of broadband data transmitted in the United States and more than USD 5 billion in annual revenue.

Kochhar said telecom operators in India want only large traffic generators, which are a handful of foreign companies, to contribute to the infrastructure cost and similar provisions have been proposed in the US Congress.

"In the US they are suggesting 3 per cent of network traffic load and we've gone to the extent of saying maybe 8 per cent. We are very clear in our mind that we are targeting only the large traffic generators (LTGs), who are riding on our networks. We are not targeting the MSMEs, start-ups or any small players," Kochhar said.

When asked if charging LTGs will increase the cost of service for consumers, Kocchar said that apps are already operating various business models which include advertisement-based free service or lower priced service for customers or fully paid subscription.

He said that telecom operators in India need average revenue per user of ₹500 to meet their current infrastructure cost and future requirement.

"If the ARPU reaches ₹500 without increasing a single penny on to the consumer by just sharing the infrastructure cost with LTGs, I don't think anybody will create hierarchy and increase consumer prices either," Kocchar said.

Union telecom minister Ashwini Vaishnaw in October said that the government wants India's telecom service to remain the most affordable in the entire world.

At present ARPU in India is in the range of ₹140-200 compared to the global average of ₹600-850 and about ₹580 in China. Bharti Airtel and Reliance Jio are the only two out of four mobile service providers that have rolled out 5G services and their combined investment in 5G network is estimated to be around ₹3 lakh crore including the cost of spectrum.

Both companies have not yet been able to monetise 5G data.

Kochhar said that around 80 per cent of traffic on telecom networks is generated by a handful of LTGs.

"If the government in India adopts a bill similar to the one proposed in the US then entities will be in a position to disclose the exact traffic load on the network and thereafter discussion can be mutually discussed about the reasonable infrastructure cost that entities can share," Kocchar said.

Industry bodies representing internet players, on the other hand, have opposed the move of charging a fee from apps as they believe it will hurt smaller players, start-up ecosystems as well as violate net neutrality principle that aims to enhance access of broadband services at affordable cost for consumers.

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