The issue of net neutrality came into the limelight with the Telecom Regula­­tory Authority of India’s (TRAI) con­sul­tation paper, “Regulatory Framework for Over-the-Top (OTT) Services”, re­leas­ed in March 2015. According to TRAI, the objective of the consultation paper was to solicit views on the growing uptake of OTT services bringing disruptive changes to traditional revenue models and on whether changes were required in the existing regulatory framework. The paper led to a strong debate on net neutrality, which intensified with Bharti Airtel launching its Zero-Rating plan. Of late, the issue has gathered steam with TRAI asking Reliance Communications – which is the sole telecom partner of Free Basics (earlier in the country – to put the Free Basics service on hold till the regulator establishes that it does not violate the principles of net neutrality. Free Basics claims to give people access to basic services on their mobile phones in markets where internet access is less affordable. Under this service, websites that include content on topics like news, employment, health, education and local information can be accessed for free, without paying any data charges. As a major policy initiative, the Department of Telecommuni­cations released its report on the issue of net neutrality in July 2015. The report recommended that the core principles of net neutrality must be adhered to. It also suggested that legitimate traffic management practices may be allowed, but these practices should be tested against the core principles. Although the report was not a final statement on the subject, it provided an insight into the government’s stand and views regarding net neutrality.

Meanwhile, TRAI has recently relea­sed a consultation paper on differential pricing of data services. While the paper does not directly mention the issue of net neutrality, the concerns raised in the paper are closely related to it.

Differential pricing

In its consultation paper, TRAI has stated that some of the recently launched plans of telecom operators offer zero or discounted tariffs for a certain content of particular websites/applications/platforms. The ob­jec­­­­tive of such schemes, as claimed by the service/content providers, is to enable people to access certain content on the internet free of charge.

According to TRAI, there are a number of variations of these plans. Under one version, an entity creates a platform whe­re­­­in content providers and telecom service providers (TSPs) can register. Subject to the approval of the platform provider, the registered customers of the TSPs will be able to access the websites, either in full or only for certain content. Another mechanism involves the provision of discounted data by TSPs for some identified websites/applications.

According to the regulator, the net result  of these offers is that they em­power TSPs to select certain content providers (either through the platforms or directly) and offer discounted access plans to the websites/applications/platforms. While these preferential tariffs may provide easy access to these websites, it may also result in making the entry of certain websites through the pipes of TSPs more difficult. For example, TSPs could come up with such differentiated tariffs wherein they disincentivise access to certain websites by charging higher tariffs for accessing them.

TRAI, therefore, feels that there is a trade-off involved with regard to differential pricing. On the one hand, differential pricing appears to make overall internet access more affordable by reducing the cost of certain types of content. In addition, it enables people who have so far not been able to use internet services to access at least some part of the internet. This could encourage further uptake of internet services, as first-time internet users may experience its benefits and start paying for full access. On the other hand, differential tariffs result in the classification of subscribers based on the content they want to access. Those who want to access non-participating content will be charged at a higher rate than those who want to access participating content. Moreover, differential tariffs can prove to be disadvantageous for small content providers who may not be able to participate in such schemes. This may thus create entry barriers and a non-level playing field for these players, thereby stifling innovation. Therefore, tariff offerings have to be studied from the perspective of whether they promote or harm competition. Also, one can argue that differential tariffs can be used as a tool by TSPs to incentivise or disincentivise access to different content available on the internet by varying the price of access, upward or downward. It is also possible that if the practice of differential pricing is permitted, TSPs might start promoting their own websites/applications/service platforms by offering lower rates.

Therefore, according to TRAI, the potential benefits and disadvantages of such practices have to be weighed in order to determine the regulatory approach.

Differential tariffs can prove to be disadvantageous for small content providers who may not be able to participate in such schemes. This may thus create entry barriers and a non-level playing field for these players, thereby stifling innovation.

Alternative models for promoting internet access

In the consultation paper, TRAI has suggested alternative models to drive the adoption of mobile broadband in the country. One approach that has been proposed by the regulator is that of delinking free internet access from specific content, and instead limiting it by volume or time. For instance, a telecom operator could provide the initial data for free, without limiting it to any particular content. The current examples of this approach include free browsing or discounted tariffs for a specified time period, or giving away a certain amount of daily data for free. In another model suggested by TRAI, content providers could promote internet access by reimbursing the cost of browsing or download directly, irrespective of the customer’s TSP. Methods such as coupons and direct money transfers can be employed to reward users for visiting these websites.

International scenario

Countries all over the world are struggling to strike a balance between competing positions and interests in the net neutrality debate, while maintaining sufficient leeway for larger public goals. In its 2014 Web Index report, the Web Foundation observed that 74 per cent of the 86 countries included in the study lacked clear and effective net neutrality rules. However, it needs to be noted that net neutrality is a complex issue and has different nuances specific to a country, depending on its social, political and economic conditions.

Very few countries have opted for specific legislations for the enforcement of net neutrality provisions. Chile was the first country to legislate a law regarding the issue in July 2010. As per the law, internet service providers (ISPs) in Chile are prohibited from arbitrarily blocking, interfering with, discriminating against and restricting the right of any internet user to send, receive or offer any legal content, application or service on the internet. In April 2014, Brazil also passed a legislation, known as the Marco Civil da Internet (the Civil Inter­net Regulatory Framework), which gives legal backing to the enforcement of net neutrality principles. Meanwhile, in the UK, the Office of Communications (OFCOM) follows a light-touch regulatory approach on the issue. OFCOM has not imposed strict restrictions on traffic management; instead it relies on the existing regulation and market structures. ISPs follow a voluntary Open Internet Code of Prac­tice which was developed by stakeholders. However, a few of the major ISPs have refused to sign this code. In the US, the regulations released by the Federal Com­munications Com­mis­sion in February 2015 listed three “bright line” rules for net neutrality: no blocking, no throttling and no paid prioritisation. Reasonable network management practices are permitted only to manage the technical and engineering aspects of the network and not to promote business practices. ISPs are also required to publish consumer-friendly information about their practices in order to maintain transparency.

The way forward

TRAI has reportedly received a record response to the consultation paper, even th­ou­gh most of the responses were received through Facebook. However, this clearly shows that there is a serious

concern amongst the public regarding modifications to the basic concept of net neutrality, which may curb people’s right to free and fair internet access. Currently, the regulator is in the process of collating and analysing the responses and is expected to submit its recommendations soon.

It is imperative that TRAI in its recommendations strikes the right balance between the demands of all the stakeholders. To this end, it is important to devise a regulatory model that encourages oper­ator profitability without restricting users’ freedom to access any data service.

Puneet Kumar Arora