In Business Model, Internet Access, Mobile

Internet-enabled products and services continue to raise questions about how contestants in any market “should” be regulated or taxed, showing that the principle of “network neutrality” can be applied in a wider range of circumstances than perhaps originally envisioned, for better or worse.

In India, service providers warn they might have to raise prices up to six times if new regulations treating Internet voice and messaging the same as carrier-provided voice and messaging are not adopted.

In other words, mobile operators want “over the top” competitors held to the same rules and standards as carrier voice in areas related to taxation and other fees paid by carrier voice suppliers.

The new rules governing voice and messaging come at a crucial time, as network neutrality rules also are being considered. Both sets of rules–regulations on OTT and carrier voice and messaging, will have big impact.

In fact, network neutrality essentially plays a role in the positioning of the arguments made by mobile operators about “treating all apps equally.” In a bit of a twist, Indian mobile operators argue treating OTT and carrier voice and messaging under different rules is a violation of the net neutrality principle.

Net neutrality ultimately will raise capital investment requirements for mobile Internet access suppliers and possibly make unlawful some business models. Equal treatment of like services, on the other hand, will make it possible for mobile operators to compete more effectively with OTT alternatives because all play by the same rules.

By prohibiting traffic shaping, net neutrality forces ISPs to rely on “brute force” bandwidth upgrades.

To the extent that net neutrality forbids zero rating, the rules also limit demand growth, and hence supply pressures.

OTT app providers, on the other hand, would see their costs of doing business rise by quite some amount, and those costs likely would be recovered from customers.

It is easy enough to predict that if most of the cost advantage of OTT voice and messaging is erased, the value of OTT apps will be reduced and consumption of carrier voice and messaging could grow, while OTT share shrinks.

Start typing and press Enter to search