Indian telcos’ long fight to regulate WhatsApp

Telecom operators have long fought for messaging services like WhatsApp to be regulated. With the government’s new telecom bill, they may be closer to achieving that goal than ever before. But regulating messaging apps may have worrying consequences for users.

Here is a brief history of telecom operators’ battle against online messaging and calling apps.

When services like Viber and WhatsApp launched in the early 2010s, Indian telecom operators tried to fight their growing influence. Back then, calls and SMS were still a major source of revenue for telcos. Sending messages and doing online calls would eat into their revenue, telcos worried, as it worked out far cheaper to do so over the internet the telcos provided than through regular calling and SMS — which is today practically free for all telcos.

In 2014, the telcos fired their first warning shot against services like Viber (WhatsApp calls were not available at the time). Airtel announced that it would start charging extra for calls placed online by detecting the protocol online calls used — VoIP — when users placed calls on mobile data.

The announcement was alarming, as it was a violation of Net Neutrality, the principle that all data that flows on the internet should be treated equally by internet providers. The Telecom Regulatory Authority of India acted soon, ordering Airtel to back down until it held a public consultation on whether messaging apps should be regulated at all.

That consultation received disproportionate attention from civil society and consumers, snowballing into a mass movement to protect Net Neutrality. Very quickly, though, the primary adversary in the movement turned out to be not telcos, but Facebook, which launched a marketing blitz against this interpretation of Net Neutrality. Facebook worried that its Free Basics service, which provides free access to a portion of the internet, would face trouble if strict Net Neutrality rules came into force.

As such, the mass movement around Net Neutrality had to focus not on telcos, which started the battle, but on Facebook, which invested an enormous amount of money into the battle. TRAI eventually banned zero-rating in February 2016, which allowed a product like Free Basics to operate, handing Facebook a humiliating defeat that The Guardian called its “biggest setback” at the time.

But TRAI didn’t just ban zero rating; it banned any discriminatory pricing of data, essentially prohibiting telecom operators from taxing internet voice traffic.

Same service, same rules

One of the biggest concerns that telecom operators have voiced about messaging and calling apps is this: telcos have to clear a high bar of licensing and regulation, whereas messaging and calling apps can just run over the internet without clearing any such hurdles. That argument — which telcos call ‘same service, same rules’ — has been a centerpiece of telecom operators’ arguments for bringing in a licensing framework for messaging and calling apps.

But the argument has a key flaw: messaging apps do not control access to the internet; they merely ride over it. The Broadband India Forum pointed this out in a filing with TRAI, saying: “Arguments by certain [telcos] calling for ‘same service same rules’ are misconceived given the inherent structural differences between telecommunications service providers and OTT players – such as access to spectrum, ability to interconnect with [public telephone networks], use of numbering resources etc.”

“A consumer cannot even get to OTT services without first purchasing internet access service from a network operator. In contrast, OTT services do not control the underlying broadband internet access points,” BIF pointed out.

But this entire debate risked falling into irrelevance when later in 2016, Reliance Jio launched, offering free calling and SMS services, with incredibly cheap data prices. RIL’s entry into the telecom industry led to consolidation, cost cutting, and transformed the sector’s economics in ways that dwarfed the possible impact of messaging apps.

However, telecom operators persisted. Telecom operators advanced the ‘same service, same rules’ argument in 2017, 2018, 2019, and 2021. In a regulatory filing that has not been made public, telcos have advanced that argument in 2022 as well, the Economic Times reported. Oddly, telcos rarely argued that their own industry must be deregulated to bring about this parity, as opposed to messaging apps being held to their standard.

But this year, it appears that telcos’ repeated argument may have had some effect. The draft Indian Telecommunications Bill, 2022, released over the weekend for consultation, explicitly includes messaging apps (classified as “OTT”, not to be confused with streaming services) in the government’s regulatory purview, opening the door for a licensing framework to be created for WhatsApp and other apps like it.

Parag Kar, Vice President of Government Affairs, India and South Asia at Qualcomm, argued that the previous Telegraph Act already gave the government sufficient powers to regulate messaging apps. “The current Telegraph Act of 1885 is expansive (covers all kinds of services under the sun), and it also empowers the Central Government to license these services at terms and in consideration as it deems it,” Kar wrote, adding that the bill didn’t define what “communications services” meant.

It is unclear if the government will pursue a licensing framework for messaging services, but its record seems to indicate that it won’t rule out regulating the space. With the IT Rules 2021, the government required messaging apps to provide “traceability” of forwarded messages, which may undermine encryption and privacy protections provided by these platforms. WhatsApp sued the Indian government last year to prevent this provision from going into force. That lawsuit is ongoing.

As far as telcos are concerned, though, it is unclear if they stand to gain at all in a post-Jio world from messaging apps having a licensing framework. If they don’t have much to gain, it’s worth wondering why they have pushed for a hollow victory with potential downside and not much upside.