New TRAI net neutrality paper is a breath of fresh air after the last one

TRAI Chairman RS Sharma

The latest consultation paper by the Telecom Regulatory Authority of India on telecom providers charging different prices for browsing different websites — the so-called differential pricing of data — comes across as a breath of fresh air after the last one, issued under former chairman Rahul Khullar.

While Khullar started with the assumption that net neutrality was not mandated by the existing law, the new paper starts by saying that ‘transparent and non-discriminatory pricing’ of telecom services is required by the law.

In other words, a telecom operator like Bharti Airtel or Vodafone cannot charge Rs 200 per GB for browsing the Times of India and only Rs 10 per GB for browsing Hindustan Times.

The last consultation paper by the TRAI was primarily concerned about operators’ profits, with the Authority expressing its worry that rising data use could hurt Indian operators’ profits.

This had led to unprecedented protests by Internet users in India, ending in an avalanche of a million emails to the regulator.

This time the authority — under new chief RS Sharma — has kept itself away from discussions about whether operators will make more money or less money because of data, and focused largely on a single point mentioned in the previous net neutrality paper — the question of ‘free Internet’ for the poor.

Indeed, free Internet for the poor is a pet theme of Facebook, the second biggest data-traffic generator in India (after Youtube.)

Facebook founder Mark Zuckerberg has impressed upon the current government the need to provide free Internet to economically backward sections of the people, and the TRAI paper is essentially an attempt to see if this service can be allowed, and if so, under what conditions.

However, while Facebook may rejoice that its ‘Free Basics’ program is the subject of a regulatory consultation process, the new paper is unlikely to bring much cheer to the telecom companies because their main concern — profitability — has not found a place in TRAI’s discussion yet. In addition, their key demand — allowing ‘Zero Rating’ plans, has also not been treated sympathetically in the paper.

‘Zero Rating’ is a scheme under which the telecom operator takes money from the owners of websites in return for facilitating free and easy access by its customers to these websites. The website and app owners pay for ensuring smooth and cheap access to their websites and services.

Operators argue that such ‘Zero Rating’ schemes are already prevalent in voice services in the form of toll-free numbers.

However, unlike in case of voice — where there is only the price dimension — there are two dimensions to a data service — price and speed (bandwidth). While giving free access to 10 or 20 websites and apps may not hurt the whole of the Internet, giving preferential access  in terms of bandwidth will in a spectrum starved country like India.

The analogy with toll-free calling facility fails for this reason, as the provision of a toll-free number to your neighbor will not affect the quality of quality of voice calls that you are able to make, unlike in data.

This is a concern in competitive areas like e-commerce, where companies are looking for new ways to prevent their competitors from carrying out their business. An online shopping app could buy preferential access to a telecom companies’ customers, and if the rival’s app hangs or becomes slow as a result, the buyer of the preferential access can easily recover the money from increased sales.

This is especially a concern in a country like India where the experience on mobile Internet tends to far less than satisfactory. If and when operators are allowed to prioritize the traffic to and from the websites that are part of their toll-free service, the rest of the Internet will become almost inaccessible due to the proportionate reduction in bandwidth.

In other words, Amazon’s app may take ten times more to load compared to a rival who is in the Zero Rating program. To compete, Amazon will have no option but to pay the telecom operator to ensure that its app does not ‘hang’. While Amazon may be able to do so, this will prevent the emergence of smaller start-ups in online retailing as they are unlikely to be able to afford the kind of budgets that big, established players bring to the table.

This, essentially is the danger that the TRAI has highlighted in its consultation paper without using terms such as net neutrality.

In fact, the TRAI did not even go down into bandwidth issues. It flagged the concern purely from a pricing stand-point.

“Differential tariffs arguably disadvantage small content providers who may not be able to participate in such schemes,” the consultation paper points out. “Such providers may have difficulty in attracting users, if there exist substitutes for free. This may thus, create entry barriers and non-level playing field for these players stifling innovation.”

“In addition,” said the TRAI, “one can also argue that differential tariffs can be used as a tool by the telecom service providers to incentivize or disincentive access to different contents available on the internet by varying the price of access, upward or downward. Theoretically this might entail providing certain content for free while making other content prohibitively expensive for subscribers to access. Allowing service providers to perform what effectively amounts to a gate keeping function might potentially empower TSPs to select certain content providers and disadvantage others, thereby adversely affecting public interest,” it added.

The consultation paper also wondered whether telecom companies will end up buying or building their own apps, news websites, video services and search companies, and drive their customers into using these services by making them free or nearly free, while making competing services unaffordable.

“Telecom service providers may start promoting their own websites, apps and service platforms by giving lower rates for accessing them… This may be perceived to be an anticompetitive move that stifles innovation and competition, leaving absolute power in the hands of the telecom service providers,” it said.

However, said the regulator, since the telecom operators and social networks were very keen on helping the poor by offering free data, some way must be found to allow them to do so.

“One approach might be to delink free internet access from specific content, and instead limit it by volume or time,” it said.

Facebook, for example, offers free data only if it is for browsing their own or their partners’ websites. However, said TRAI, telecom and social networking companies could think of removing such a restriction and instead offer only a limited amount of data for the consumer to use as he wishes.

Aircel Cellular has already launched such a scheme. If a new subscriber uses the ‘first recharge coupon’ or FRC of Rs 144, he or she would get free Internet for 90 days.  The speed or bandwidth of this service will be capped at 64 kbps (2G speed).

TRAI also came up with certain suggestions.

“For instance, a telecom service provider could provide initial data consumption for free, without limiting it to any particular content. Current examples of this approach include allowing free browsing or discounted tariffs for specified time windows, or giving away a certain amount of data daily for free,” it pointed out.

TRAI also suggested that if a website like Facebook wanted to help poor people, it could reimburse those who visit the website in terms of talk time or money. The websites can in turn recover that money from the advertising revenue generated by these visitors.

“The other approach of promoting access through the Internet could be initiated by the content providers wherein they could reimburse the cost of browsing or download to the customers directly irrespective of which telecom provider he or she has used to visit the website. Coupons, direct money transfers or other methods and technologies can be employed to reward the users for their visits to these websites. The direct money transfer approach has been adopted in some initiatives that offer mobile credit to all consumers, in exchange for viewing advertisements,” TRAI said.