Telecom operators in India call for internet companies to contribute network costs

Indian telecom operators, including major players like Jio, Airtel, and Vodafone-Idea, are proposing that internet companies should share the expenses of using their networks. This initiative is aimed at levelling the competitive landscape and enhancing the profitability of telecom operators, given the relatively low average revenue per user in India’s wireless market.

Jio, as the largest telecom operator in India, has put forth a suggestion that internet companies should contribute to telecom network costs based on factors like their data usage, financial turnover, and user base. Both Airtel and Vodafone-Idea, other significant players in the industry, have expressed their support for Jio’s recommendation.

The operators argue that requiring internet companies to bear the costs of network usage will promote equity and equilibrium within the industry. They assert that the low average revenue per user in India’s wireless market necessitates additional financial support to sustain and enhance telecom infrastructure.

On the other hand, critics, including Nikhil Pahwa from Medianama, as well as tech companies represented by the Asia Internet Coalition, raise significant concerns about the proposal to make internet companies contribute to telecom network costs. They argue that this move could potentially violate net neutrality principles and have detrimental effects on innovation and consumers.

These critics point out that internet companies have already made substantial contributions to telco revenues through their services. Shifting the responsibility for network usage costs onto them may hinder innovation and negatively impact consumers. Additionally, there are concerns that imposing compensation requirements could reduce investments in technology and content development.

Why does it matter?

It is worth noting that telecom operators in South Korea and Europe are also making similar recommendations, aiming to have internet companies contribute to the costs of using their networks. They argue that collaboration and financial contributions from big tech companies are necessary to fund the development of 5G and 6G networks, particularly as the demand for bandwidth-intensive applications like video streaming and online gaming continues to grow.