For a win-win alliance in telecom

Remarkable advances in Information and Communication Technologies have enabled economic development and societal benefits alike to rich and poor, young and old, urban and rural folk. The anniversary of the signing of the first International Telegraph Convention and the creation of the International Telecommunication Union is celebrated on May 17 as World Telecommunication and Information Society Day (WTISD). The theme this year is Telecommunications and ICTs: Drivers of innovation.

Today, the world of communication, dominated by large carriers and network gear makers, is populated by nimble over the top (OTT) players. Innovation in OTT services have brought in much consumer surplus with imaginative services being offered at near-zero prices.

This also has generated a lot of debate on net neutrality and other associated issues not only between telecom carriers and OTT service providers, but also amongst the larger public. While the nonfacility-based, relatively unregulated OTT services, with no geographical constraints ride over the facility-based, geographically constrained, regulated telecom carriers’ networks, it is time to think about synergies.

Google’s Project Fi is one such attempt that aims to connect users seamlessly and intelligently across partner networks: mobile 3G/4G networks of operators and free/extremely low-priced Wi Fi hot zones. Those who travel to other countries know best how their international roaming charges can be reduced to a minimum if this gets deployed. This is a win-win for both mobile operators (who can now offload traffic and hence save precious spectrum capacity) and the Wi Fi access providers who can have a revenue-sharing arrangement with the mobile operator for offloaded traffic and hence earn revenue proportionately. And the consumer gets improved experience of seamless mobility, potentially at lower cost!

Another example is internet.org, an open consortium created by Facebook that aims to provide a basket of OTT services in collaboration with carriers. Though such vertical integration poses a possible threat to net neutrality principles, if deployed correctly, it can leverage the synergies between telcos and OTT firms to provide innovative information and associated services.

While OTT firms have been innovating on products and services that ride over the ubiquitous Internet Protocol, Network Equipment Manufacturers in association with operators have been innovating on technologies that have increased spectral efficiency, access speed, reliability, and quality of service of networks. Data transmission speeds have increased from hundreds of kilobits/sec in 2G networks to gigabits/sec in 5G networks.

Presently, telcos face a threat from OTTs. Their frustration is manifested through the possible ban of OTT services. A case in point is the carrier level ad-blocking software being deployed by some European carriers to ban OTTs’ mobile advertisements. However, the two parties complement each other. One cannot exist without the other. It must be remembered that most of the OTT services can be successfully adopted only if the underlying telecom networks have enough capacity and guaranteed quality of service. Further, OTTs are counting on the telcos to continuously improve their network technologies and capabilities so that newer, more innovative services can be created. Hence, the need for a more productive collaboration to reap the benefits of innovation. It is time regulators and policymakers recognised these close relationships.

The advantage that OTT firms have is that they can potentially scale up massively due to the absence of geographical constraints. No wonder OTT firms such as Whatsapp, Skype and Truecaller are banking on countries such as India for scaling up, given that smartphone shipment to and adoption in India is close to about 30 million additions per quarter! If country regulations place restrictions on the offerings of OTT firms, the corresponding services cannot scale up sufficiently.

On the other hand, telcos are so tightly bound by regulations and policy enforcements along with limited resources (especially that of spectrum for mobile services) that they have become economically fragile, especially in India. To balance the two, we need innovation — not only in technologies, but in regulation and policy. Antitrust laws should be made much more sophisticated than in the past.

It is also important that OTT firms and telcos collaborate to make their symbiotic relationship much more meaningful. Stop bickering. Innovate!

The writers are professors at the International Institute of Information Technology, Bengaluru

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