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The Internet and Mobile Association of India (IAMAI) on Thursday slammed the Cellular Operators Association of India (COAI) for its 'revenue sharing' demand which is "a covert attempt to dilute net neutrality in India".

The COAI has been advocating for a model where the sending party network pays (SPNP) model would allow telecom service providers to exploit internet businesses by formalising rent seeking.

"The SPNP model would be a death knell for the digital economy and the creative ecosystem which it sustains," IAMAI said.

Calls for a SPNP mechanism have re-emerged even though the demand for telecom services is entirely dependent on the ability of OTT services to attract users.

The IAMAI said that levying additional cost on OTTs, without providing any additional services, would be akin to exacting tribute.

"This would also have a chilling effect on investment and entrepreneurship on an emerging sector, where businesses typically take a few years to monetise," the association said.

Over-the-top service providers have flourished in India's current regulatory regime as they were empowered to distribute high quality content for little to no cost to users.

This, in turn, has promoted internet adoption, economic activity, and added value to the data package products sold by telecom service providers, said the IAMAI.

IT argued that installing a SPNP mechanism would effectively raise costs for users, albeit indirectly, and have the same impact as raising the cost of data itself.

"A higher cost associated with internet usage would lower overall revenues of internet businesses and may even reduce the amount of data consumers would use. This would result in a scenario where there may be no meaningful growth in the revenue of TSP, despite the massive price paid by the digital economy," the IAMAI stressed.