Indian telecom giants demand tech firms cough up for network usage

Indian telecom operators, the second largest in the wireless market, have recommended that internet companies compensate for using their networks. They argue that this would level the playing field and ensure fair distribution of costs. Jio, India’s largest telecom operator, suggested that internet companies contribute based on their traffic, turnover, and number of users. Airtel and Vodafone-Idea, two other major telecom players, agree with this proposal. The telecom operators believe that such compensation from internet companies would support network development and guarantee a stable internet infrastructure in the country.

India is one of the largest wireless markets globally, but its average revenue per user is relatively low. Telecom operators face immense costs in using 5G airwaves and hope that the regulator will intervene to improve their margins. They argue that requiring internet companies to share the network costs will enable smaller startups to thrive. However, critics warn that this could breach the principles of net neutrality. Ten years ago, concerns over violations of net neutrality led the regulator to ban Meta’s Free Basics initiative in India. Tech companies and industry associations oppose the proposal, fearing reduced investments in innovation and increased burden on consumers.

Interestingly, there is a complex relationship between telecom operators and tech giants in India. Telecom networks in the country serve as key distribution partners for tech firms. For example, Jio recently partnered with Netflix to bundle its streaming service with telecom plans. Jio also collaborates with Microsoft to establish cloud data centers in India. Google and Meta are important investors in Jio, collectively investing billions. Google has also invested in Airtel. These partnerships and investments emphasize the interconnectedness of the telecom and tech industries but also raise concerns about potential conflicts of interest.

Telecom companies in India argue that their recommendations do not violate net neutrality principles. They propose a flexible approach that allows telecom service providers to increase their infrastructure investments and help internet companies benefit accordingly. This, they believe, would ensure the affordability and accessibility of the public internet for all. The telecom operators underscore the growing demand for network capacity due to increasing traffic, especially with the advent of 5G and eventual transition to 6G. They emphasize the need for big technology companies to contribute financially, as their bandwidth-heavy applications heavily rely on robust network infrastructure.

It’s worth noting that this push from Indian telecom operators is not unique. Similar recommendations are being made by network operators and other bodies in countries such as South Korea and various European nations. The stakeholders argue that internet companies should bear some network costs because the traffic on telecom networks continues to grow exponentially. Without contributions from businesses and content providers, funding for the massive infrastructure required to support this traffic surge may be insufficient. Consequently, advocating for financial participation from big technology companies becomes crucial to ensure the successful rollout of advanced networks like 5G and future 6G.

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