Should Google/Facebook pay to operators like Airtel, Idea, Vodafone

OTT

India has today 13 different telecom operators and more than 100 Internet Service Providers (ISPs).This competition has lead to benefit of the consumer in two ways

1.Improved Quality of service (You have to agree on that :p )

2.Reduction in tariff.

The impact of these two on operators is that they have to put more CAPEX (Capital expenditure)on infrastructure and lesser ARPU (Average revenue per user) .
On the other hand due to the second stage evolution of Internet  (Yes the best is still far away ) mobile users who check their phones every 5 minutes(As per stats 42% users do that) have lead to the traffic of OTT (Over The Top ) players like Google & Facebook ,which now contribute to about 40% of the total internet traffic of Mobility operators and ISPs. The main source of revenue of these OTT players is  by online advertisements. Increase in popularity of these sites has lead to drastic increase in revenue for these players. Now , how could this increase , miss the eye of Telecom operators who are looking for every alternate option of revenue possible.
Telecom operators claim that due to the fairer service provided by them , the websites like Facebook and Google can be browsed  swiftly and also leads to increased user loyalty . Also telecom operators have to pay for the internet pipe to reach the data centers (source) of these websites. Thus operators have a good contribution in increase in traffic of these websites and hence WE WANT THE MONEY !!!

Counteract from OTT players say that the increase in traffic on their websites  also leads  to increase in traffic for mobility users and thus a source of increased revenue for them. OTT players have also provided caching servers ( GGC for Google and Akamai cdn for Facebook & Microsoft ) at the operator’s premises for improved customer experience as well as bandwidth saving for Operators required to reach the data centers of the websites.
But looks like the operators are still hungry for more to an extent that one of the operators in France (Fresh) even blocked Google ads in its network for sometime.

Keeping a neutral view for both the parties , the OTT players which have the maximum share of traffic in the internet should try to understand that the Telecom operators have to double their internet bandwidth capacities every year so that the users can view Yo Yo Honey Singh on Youtube without any buffering . Players like Google ,Yahoo and Microsoft could come ahead with flexible private peering agreement and caching solutions so that Telecom operators have to spend comparatively less for CAPEX on increasing bandwidth.

Telecom service providers should understand that laying of interconnect charges or traffic volume charges will discourage new Websites/Application developers to come up in market in fear of more operating costs (for paying the telecom operators) and thus the Internet traffic growth may stagnant ,if not dip in long run.

Its a Catch22 situation and no one can win . So lets be friends

Some related stories:

  • In China Baidu is the top search engine service provider and also comes in top 10 websites (http://www.alexa.com/siteinfo/baidu.com) of the world, owing to censorship related issues. Not much impact on the “Internet search” traffic was there when Chinese govt had blocked Google.com and related sites in the country.ISP would definitely want a domestic webservice.
  • Indian Telecom operators have suffered a dip of nearly 15% dip in SMS traffic owing to packet data applications such as Whatsapp,Line and WeChat.
  • 10% of the social networking users said they are ready to move from the existing platform to new provided the same speed and flexibility.(hinting India social networking sites)
  • Google has helps in delivering the internet content to the ISPs by peering as well as caching solutions at their doorstep. https://peering.google.com/about/ggc.html
  • Facebook and Microsoft use Akamai as a content delivery network (CDN) for delivery of most of the content to ISPs location .Akamai is free of cost for ISPs except for the power and space cost.
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