The Internet and Mobile Association of India (IAMAI) responded to the Telecom Regulatory Authority of India’s (TRAI) proposal on the selective banning of OTT or internet services on Thursday, saying such demands for imposing revenue-sharing mechanisms between Internet companies and telecom service providers (TSPs) “smack of rent-seeking.”

According to IAMAI members, requiring the “largest” OTT service providers to pay TSPs for data used by consumers would effectively charge TSPs twice for the same service – as they already charge consumers for data.

In any case, “surging data traffic” refers to data that consumers have already purchased from telecom companies. As a result, the “strain” on TSP infrastructure occurs when they sell data to consumers beyond their infrastructural capacity – a fact that has been conveniently ignored”, according to the IAMAI, IANS reported.

The IAMAI also flagged demands made by the Cellular Operators Association of India (COAI) and the Indian Council for Research on International Economic Relations (ICRIER).

The COAI has called for regulatory intervention to ensure “largest traffic originators” pay a “fair share charge” to telecom companies to account for capital investments made by the latter to “accommodate surging data traffic”.

Similarly, the ICRIER has proposed imposing a ‘Broadband Infrastructure Levy’ on 3% of “significant” OTT service providers’ operations in India, based on “specialized contracts” between service providers and network operators.

The IAMAI highlighted that such demands fail to recognize that telecom service providers are subject to a special regulatory and licensing regime by the control that they exercise over valuable national resources such as spectrum.

“Therefore, the introduction of a telecom regulatory regime for OTT service providers would be an act of over-regulation,” said the industry body. Over-the-top service providers have provided high-quality content for little-to-no cost to users. This, in turn, has spurred the rapid growth of data consumption and economic activity in India.

“Mandating revenue-sharing mechanisms between OTTs and TSPs would effectively reverse this phenomenon by disincentivizing growth for OTT-based businesses, for whom a volume-based revenue sharing mechanism would be a glass ceiling for continuing growth and may prove to be an entry barrier for startups,” the IAMAI noted.

Earlier this week, at least 128 startup founders urged the TRAI to rethink any move towards over-regulation of internet services being described as OTT services, which may have discriminatory consequences. the TRAI, in July, started the process to examine the issue of regulating OTT communication apps.

Earlier this month, 11 consumer groups said the proposal would lead to overregulation and would create regulatory uncertainty in the domestic market.