On 9th August 2017, the Telecom Regulatory Authority of India (“TRAI”) released a consultation paper on Privacy, Security, and Ownership of Data in the Telecom Sector (“Consultation Paper”) as a step towards developing a robust data protection framework to safeguard consumer interest in the telecom sector. TRAI is expected to release its final recommendations on the subject soon.[1]
The questions raised in the Consultation Paper indicate that TRAI is considering expanding the scope of its jurisdiction to include new stakeholders from the “digital ecosystem” such as “content and application service providers, device manufacturers, operating systems, browsers, etc.”[2] This is not the first time that TRAI has attempted to include “digital” stakeholders under its ambit. Previously, it has attempted to regulate “value added services”, “application services” and “over-the-top-services”. However, as we will see through the course of this post, each attempt has been riddled with ill-defined jargon and has lead to a lack of clarity on the exact services that TRAI is trying to regulate.
This post aims to decode TRAI’s efforts to regulate the “digital ecosystem” by examining each step taken by TRAI in this direction.
May 2008: TRAI attempts to regulate “value added service providers”
TRAI’s first attempt at expanding its jurisdiction (beyond traditional voice communications services) came with its consultation paper on the “Growth of Value Added Services and Regulatory Issues” (“VAS Paper”).[3] Seemingly, TRAI’s attempts to regulate VAS were driven by the need to enable fairer revenue sharing arrangements between Telecom Service Providers (“TSPs”) and Value Added Service Providers (“VASPs”).
This paper characterized any service that added value to basic voice-based tele services (including SMS, MMS, music, entertainment, mobile commerce and GPRS services) as VAS. The paper also identified telecom operators, content aggregators/value added service providers, content owners and device/handset manufacturers as the key stakeholders in the VAS value chain.
At the time of this paper’s release, content aggregators/enablers, i.e., VASPs, were neither regulated nor licensed and mainly acted as channel partners of the telecom operators. As per TRAI, the VASPs were of the opinion that the revenue sharing arrangement between them and telecom operators needed to be regulated as they were not compensated properly.
In order to safeguard the VASPs interests, TRAI decided to include VASPs under the telecom regulatory framework to ensure a “level playing field […] between content providers/aggregators and telecom operators.” To this end, the VAS Paper requested stakeholders to respond with inputs on whether content aggregating service providers (VASPs) needed to be brought under the telecommunications licensing regime. Thus, TRAI’s first attempt at expanding its jurisdiction was aimed at creating a level playing field and enabling fairer revenue sharing arrangements for VASPs.
February 2009: TRAI decides against regulating VASPs
Nearly a year after the release of the VAS Paper, TRAI completely changed its stance on the need for regulating VASPs. The reason for this shift was because TRAI observed that most stakeholders were not in favour of regulating VASPs, since regulation would not resolve the inequities between VASPs and telecom operators.[4]
Acting on the comments received to the VAS Paper, TRAI decided that the problem of revenue sharing between VASPs and TSPs should be dealt with through commercial negotiations between the parties, without TRAI’s interference.[5] In order to address the VASPs concerns of an unequal playing field without resorting to regulation, TRAI made it incumbent on Telecom Access Service Providers to provide fair access to telecom infrastructure to VASPs.[6] This was considered to be the “least intrusive and minimal regulatory framework” that would address the VASPs concerns without requiring a separate category of license for VASPs.
July 2011: TRAI re-opens discussions on regulation of VASPs
In July 2011, TRAI decided to re-examine the issue of regulating VASPs, by releasing a consultation paper on “Mobile Value Added Services” (“MVAS Paper”). This marks the first time that TRAI had resorted to ill-defined terminology while referring to new stakeholders – there was no attempt to clarify the exact difference between “Mobile Value Added Services” and “Value Added Services”. As a result, it is difficult to determine whether VASPs under the MVAS Paper were any different from the VASPs under the VAS Paper.
There having been no material changes in the VAS ecosystem between 2009-2011[7], it is unclear as to why TRAI decided to raise the issue of regulating VASPs yet again. As was the case with the 2008 VAS Paper, the MVAS paper raised the question of whether VASPs needed to be brought under the telecom licensing regime.[8] The rationale for regulating VASPs remained the same as well – addressing the inequities in the revenue sharing arrangements between VASPs and telecom operators.[9] In their responses to the MVAS Paper, stakeholders continued to maintain that there was no need for a separate license for VASPs and that, on the contrary licensing VASPs would harm innovation and growth in the telecommunications sector.[10]
Thus, the MVAS Paper did not cover any new ground on the issue of regulating VASPs. Unsurprisingly, there was no follow up paper by TRAI this time around, and the issue seemed to die with the MVAS Paper.
May 2012: Same VAS, different name – VAS rechristened as “Application Services”
Following its second failed attempt to regulate VASPs, TRAI decided that VAS had “evolved” and needed to be redefined as Application Services (“AS”), which were characterized as a broader category of services covering “all the current and future applications that can be provided over telecom networks.”[11]
In its “Recommendations on Application Services” (“AS Paper”), TRAI recommended that AS be formally defined as “enhanced services, in the nature of non-core services, which either add value to the basic tele-services or can be provided as standalone application services through telecommunication networks.”[12] Any entity that connected directly with a TSP for the provision of content/application services was considered an AS under this definition.[13] The only limitation to this extremely broad definition was that AS, which required direct connection with a TSP, would not include “over-the-top” services (“OTTs”) which delivered services using an open internet connection without directly involving TSPs.
Once again, TRAI attempted to bring VASPs under its licensing regime by recasting them as “Application Service Providers” (“ASPs”). However, this time around, TRAI did not bother with a Consultation Paper seeking stakeholder comments, and directly recommended that ASPs be covered under the telecom licensing regime.[14] The exact terms and conditions of the licenses for ASPs were not discussed at this stage.
March 2015: TRAI goes “over-the-top”
Despite having stated that it would only regulate ASPs and not OTTs in 2012, TRAI released a Consultation Paper on a “Regulatory Framework for Over-the-top Services” (“OTT Paper”) in March 2015. The narrative for regulating OTTs remained the same as with the TRAI’s previous attempts at extending its jurisdiction – TRAI stated that the growth of OTTs providing services comparable to those provided by TSPs had led to a loss of revenues for TSPs since OTTs were unlicensed, and so had an unfair advantage over TSPs. The only difference with this narrative was that it was the TSPs who were losing revenues this time around.
To further complicate the discussion, no exact definition for OTTs was mentioned in the paper. At this stage, it appears that OTTs refer to all “applications and services which are accessible over the internet and ride on operators networks offering internet access services.”[15] The paper concluded with the suggestion that OTTs could be classified as ASPs – something which it had guarded against in its 2012 AS Paper, precisely because it wanted to avoid confusing two equally ill-defined categories.
August 2017: TRAI goes beyond OTTs
Ten years after its first attempt at regulating VASPs, TRAI has moved far beyond its initial mandate of regulating new players to enable fairer revenue sharing arrangements between players. In its latest Consultation Paper on data protection, it has asked stakeholders to suggest mechanisms to address data protection issues raised by “content and application service providers, device manufacturers, operating systems, browsers, etc.” Unsurprisingly, no attempt has been made to define the exact scope of the services/manufacturers sought to be covered. TRAI has also specifically asked stakeholders to respond with suggestions on whether there is a need for greater parity in the data protection norms applicable to TSPs and other “communication service providers” (yet another new term that has not been defined) offering “comparable services”.
As we await TRAI’s final recommendations, we have two main observations: First, there is a worrying trend of vague and ill-defined terminology being used when referring to new technology. Second, TRAI’s consultation papers provide no clarity on why TRAI has consistently sought to regulate VAS (albeit by recasting its nomenclature) even though stakeholder responses have consistently indicated that VASPs need no regulation. Both these issues spell disaster for regulatory certainty in the telecommunications sector and signal the need for a new approach to technological developments. We hope the new recommendations will attempt to resolve these issues and not exacerbate them further.
[This post has been authored by Tuhina Joshi, Associate, TRA, and Sumit Mishra, a fifth year undergraduate student from National Law University, Odisha, with inputs from Nehaa Chaudhari, Public Policy Lead, TRA.]
[1] TRAI to finalise recommendation on data privacy, security in telecom sector by the end of April: Chairman RS Sharma, The New Indian Express, 22 April 2018, available at http://www.newindianexpress.com/business/2018/apr/22/trai-to-finalise-recommendation-on-data-privacy-security-in-telecom-sector-by-the-end-of-april-cha-1804872.html (Last accessed on 11 July 2018).
[2] Refer Question 9, Chapter V, TRAI Consultation Paper on Privacy, Security, and Ownership of Data in the Telecom Sector, 9 August, 2017 available at: https://www.trai.gov.in/sites/default/files/Consultation_Paper%20_on_Privacy_Security_ownership_of_data_09082017.pdf (Last accessed on 11 July 2018).
[3] TRAI, Consultation Paper on Growth of Value Added Services and Regulatory Issues, 28 May 2008, available at https://trai.gov.in/sites/default/files/cpaper28may08.pdf (Last accessed on 11 July 2018).
[4] ¶ 3.10.2, TRAI Recommendations on Growth of Value Added Services and Regulatory Issues, 13 Feb, 2009, available at: https://trai.gov.in/sites/default/files/recom13feb09.pdf (Last accessed on 11 July 2018)
[5] ¶ 3.15.12, TRAI Recommendations on Growth of Value Added Services and Regulatory Issues, 13 Feb, 2009, available at: https://trai.gov.in/sites/default/files/recom13feb09.pdf (Last accessed on 11 July 2018).
[6] ¶ 2.1.3, TRAI Recommendations on Growth of Value Added Services and Regulatory Issues, 13 Feb, 2009, available at: https://trai.gov.in/sites/default/files/recom13feb09.pdf (Last accessed on 11 July 2018).
[7] ¶ 15, Page 5, TRAI Consultation Paper on Mobile Value Added Services, 21 July, 2011, available at: https://trai.gov.in/sites/default/files/1-main.pdf (Last accessed on 11 July 2018).
[8] Refer Question 3.2, Chapter III,TRAI Consultation Paper on Mobile Value Added Services, 21 July, 2011, available at: https://trai.gov.in/sites/default/files/1-main.pdf (Last accessed on 11 July 2018).
[9] Page 36, TRAI, Consultation Paper on Mobile Value Added Services, 21 July, 2011, available at: https://trai.gov.in/sites/default/files/1-main.pdf (Last accessed on 11 July 2018).
[10] ¶ 5.3.4, IAMAI comments to TRAI on Proposals for Regulation of Internet Applications and Platforms, 1 October, 2014, available at: http://www.iamai.in/sites/default/files/regulatory_consultations/IAMAI%20comments%20to%20TRAI%20on%20OTT%20Regulation%20-%20Final%20-%2001%2010%202014.pdf (Last accessed on 11 July 2018).
[11] ¶ 1.18, TRAI Recommendations on Application Services, 14 May, 2012, available at: https://trai.gov.in/sites/default/files/12May_Recommendation_on_AS_14May2012.pdf. (Last accessed on 11 July 2018).
[12] ¶ 1.20, Page 15, TRAI Recommendations on Application Services, 14 May, 2012, available at: https://trai.gov.in/sites/default/files/12May_Recommendation_on_AS_14May2012.pdf (Last accessed on 11 July 2018). (Last accessed on 11 July 2018).
[13]¶ 1.27, Page 18, TRAI Recommendations on Application Services, 14 May, 2012, available at: https://trai.gov.in/sites/default/files/12May_Recommendation_on_AS_14May2012.pdf (Last accessed on 11 July 2018).
[14] ¶ 2.27, TRAI Recommendations on Application Services, 14 May, 2012, available at: https://trai.gov.in/sites/default/files/12May_Recommendation_on_AS_14May2012.pdf (Last accessed on 11 July 2018).
[15] ¶ 2, TRAI Consultation Paper On Regulatory Framework for Over-the-top (OTT) services, 27 March 2015, available at: https://trai.gov.in/sites/default/files/OTT-CP-27032015.pdf (Last accessed on 11 July 2018).
