COAI renews demand for revenue share between telcos and large traffic generator apps

Delhi: Telecom industry body COAI renewed its demand for revenue share between telcos and large traffic generator apps like Netflix and Instagram, saying telecom operators would need additional fund to upgrade infrastructure to meet the increasing demand for bandwidth.

In a letter to telecom secretary Neeraj Mittal, Cellular Operators Association of India (COAI), said it is imperative that the Indian government takes critical note of the issue facing the telecom sector at this juncture and help create "an apt precedent for the world.”

The telecom industry body also said that substantial investments are required to be made by telcos for GPU (graphic processing unit)-based high-speed servers to support demand of AI-based applications as well as high definition video streaming by several apps that are also referred as larger traffic generators (LTGs).

Large traffic generator apps include YouTube, Facebook, WhatsApp, Netflix, etc.

LTGs, it suggested, need to share their revenue with telcos for building networks which could help in giving better experience to their users.

However, the demand has been opposed by various advocacy groups and industry bodies like Broadband India Forum, which said the revenue sharing would throttle innovation and adversely impact startup ecosystems.

Without naming Google, the COAI letter also said: "Certain LTGs and their advocates have been suggesting that a fair share contribution would adversely impact the startups ecosystem in the country. Ironically, recent developments indicate to the contrary as the financially-motivated approach of the LTGs surfaced when an app store provider (a global LTG) was found removing startups and smaller India-made applications and players from its online property, quoting reasons of non-payment." 

Google on March 1, 2024, began removing apps of 10 companies in India, including matrimony apps such as Bharat Matrimony and job search app Naukri, in a dispute over service fee payments in one of the company's fastest-growing markets.

Meanwhile, the government has asked Google and Indian apps to work on the issue and try to resolve it by June end.

COAI Director General, S P Kochhar, in his letter also referred to the Lowering Broadband Costs for Consumers Act of 2023 of the US, which proposed revenue share fee on apps that account for more than 3% of the total annual traffic in the US and earn more than USD 5 billion.

The industry body also cited progress with regard to revenue sharing between telcos and LTGs in the European Union, Brazil and South Korea.

Kochhar further said, newer technologies will also bring about newer demands, such as video optimization on OTT streaming platforms, whereby many different versions of a video with different resolutions and other technical characteristics are saved and loaded in the network.

"The advent of AI brings forth the need to incorporate Graphic Processing Units (GPUs) into the systems for computing and processing data. These made-to-order equipment will have to be acquired by TSPs through advance payments, with 12-18 months lag in delivery. Such heavy investments need to be planned appropriately by the TSPs, and the fair share contributions would help bring forth some balance in the cash outflows," Kochhar added.