Data, without a doubt, has emerged as the single most important defining element for the telecom industry globally in the past few years. The consumption of data has grown everywhere at a pace that was unimaginable when even 3G was introduced. 4G, with more capacity, faster speeds and very affordable tariffs on the one hand, clubbed with the availability of virtually unlimited content on every conceivable topic on the internet on the other, has been responsible for what can only be described as a “data revolution”.
One of the most important reasons, attributed by experts to the massive explosion of content availability across the universe, is the fact that such content or applications are freely available on the net with no discrimination shown by telecom service providers for accessing different content by their customers. In other words, it is generally believed that the success of the internet with the availability of rich content is because all concerned stakeholders have taken a neutral stance vis-à-vis different content and have let consumers decide what they want to see or use. On the other hand, as many content providers made a fortune with skyrocketing valuations, discontent started emerging amongst the telecom operator fraternity, which was peeved at the fact that while they carried all that content and traffic on their networks built with great pain at a massive cost, they were getting valued as mere “utility companies” and were reduced to what got popularly coined at successive GSMA conferences in Barcelona as “dumb pipes”, serving the unregulated and free over-the-top (OTT) service providers with virtually no capex. OTTs were being generally referred to by operators as “guys who are eating our lunch”.
Accordingly, what has transpired as perhaps the most intriguing debate in recent times across the globe is on “net neutrality”. It is intriguing because every living educated human being seems to be passionate about it; most people have at best a vague idea about it; believe that but for net neutrality, some evil forces for their petty gains would deprive the universe of the much-needed technological innovation; and it is paradoxical that it is almost certain that if a referendum is held across the world, almost 100 per cent (if not 100 per cent) participants would vote in “favour” of net neutrality.
This article is aimed at first tracking the history of “net neutrality” and thereafter, attempting to provide clarity on the subject in simple and understandable terms.
First, the history
While the issue about access to the internet has been an issue of contention in the US among network users and access providers since the 1990s, the term “net neutrality” was coined by a Columbia University Media Law Professor Tim Wu in 2003. Since then, the topic has attracted debate about not only what net neutrality should be but whether it should be required by law. As expected, the debate started in the US and has extended internationally. The issue has been at the forefront of debate in the US since the 1990s, but after five failed attempts to pass the bill in Congress on this subject and various attempts by the Federal Communications Commission (FCC) to issue rules and guidelines, which got struck down by various courts, till 2015, the matter had not been legally settled even in the US.
After lengthy public consultations, on February 26, 2015, the FCC issued what it termed as “sustainable rules of the roads that will protect free expression and innovation on the internet and promote investment in the nation’s broadband networks”. These rules were popularly known as the “FCC’s open internet rules” and became effective from June 12, 2015, but not before being challenged before the US Court of Appeals for the District of Columbia circuit, which upheld these rules on June 14, 2016.
These new rules were to apply to fixed and mobile broadband alike and would protect consumers no matter how they accessed the internet, whether on a desktop computer or any mobile device. The order sets three “bright line rules” that ban practices that are known to harm the open internet. These are:
- No blocking: Broadband providers may not block access to legal content, apps, services, or non-harmful devices.
- No throttling: Broadband providers may not impair or degrade lawful internet traffic on the basis of content, apps, services, or non-harmful devices.
- No paid prioritisation: Broadband providers may not favour some lawful internet traffic over other lawful traffic in exchange for consideration of any kind – in other words, no “fast lanes”. This rule also bans internet service providers from prioritising content and services of their affiliates.
The order also authorised the commission to address issues that may arise in the exchange of traffic between content providers and network providers by way of appropriate enforcement action, if it determines that the interconnection activities are not just and reasonable.
While the FCC’s open internet order did provide a good set of basic rules to address net neutrality, it seems to have confined its thinking to only an internet user’s point of view, leaving open some very important issues unanswered with respect to the fair treatment to network providers vis-à-vis content providers.
It is ironical that the concept of “net neutrality” has been rejected since then in the US itself, where it all emanated, by the current FCC under the chairmanship of Ajit Pai. However, even in the US, it is not a done deal as only recently California State passed a law embracing net neutrality, rejecting the FCC stand. Notably, California is a state with a Democratic majority. I have a feeling that even in the US, like in the rest of the world, the clamour for net neutrality is far from buried and will keep resurrecting over time.
In India, the leaning on net neutrality on the lines of the earlier orders of the FCC is apparent and the Telecom Regulatory Authority of India is currently engaged in a long consultative process thereon. This position is clearly in line with the rest of the world.
To my mind, the three fundamental issues that need to be answered clearly and unambiguously in order to effectively address net neutrality, particularly in the Indian context, and which are not covered in the FCC order are: to whom does “neutrality” apply – network providers or content providers or both? What needs to be neutral? Should the principle of “same service same rules” be applicable to all service providers? These are explained as under:
To whom does “neutrality” apply?
Net neutrality is actually being treated as “network neutrality” as it applies to only network providers, because as far as content providers are concerned (applications, OTTs, etc.), there is no concept of neutrality at all. For instance, most apps today are free while hundreds of thousands are paid. For the same application, in many instances, one version is free, while the advanced one is paid. Even some very advanced apps like Google Maps are provided free, which ensures that smaller developers have no chance of competing. It is ironical that the entities demanding neutrality, that is, mainly content providers, themselves do not respect any neutrality.
What needs to be neutral?
Since there is no neutrality on “charging” by content providers themselves, there should be no logic or justification for demanding it from network providers. The only neutrality that needs to be ensured to give a chance to all apps should be with respect to the three “bright line rules” laid down by the FCC – no blocking, no throttling and no paid prioritisation.
Applicability of the principle of “same service same rules” to all service providers
This is an important universal debate involving a small number of large global companies offering applications that provide the same services as those offered by licensed telecom operators. These are known as OTT. A few well-known examples are WhatsApp, Skype, Viber and Facebook Messenger, which offer a combination of messaging, voice and video services.
These are not regulated at all, even while providing “voice calls” openly. The argument that this data is completely wrong and malicious as the technology on which you deliver “voice” is irrelevant. Voice is voice whether delivered on 2G, 3G or 4G or satellite and whether using circuit switching or packet switching, for example, VoIP (voice over internet protocol) or VoLTE (voice over LTE).
As a result, unlike telecom operators, they pay no licence fee to the government, have no quality of service obligations, pay no termination charges for calls landing on telecom networks, have no security obligations, have no know-your-customer (KYC) requirements and have no obligation to pay for using the telecom networks of operators.
As a consequence of this “non-neutral” treatment in favour of OTTs, our government loses huge revenue by way of licence fee, causing a loss to the exchequer, loses a huge amount of foreign exchange, and compromises national security on account of lack of KYC or scrutiny obligations.
This principle, while being most visible in telecommunications, would also apply to various other industries and services. For instance, there could be OTTs/apps seeking deposits or offering transfer of money, services that are otherwise regulated by the central bank. Similarly, there could be apps offering health services and medicines, which would compete with entities that are regulated under relevant laws, ensuring quality of health services offered, or for that matter, apps offering education, a subject that is also regulated. Uber, for instance, has emerged as a viable competitor globally to traditional taxi service providers, who complain that they are not subjected to the same rules and regulations as licensed taxi service providers. The list could be endless.
I have no doubt that vis-à-vis telecom, as part of the consultation process started by our regulator to tackle this contentious and important issue, the above principles will be addressed with an open and unbiased mind, based on facts and logic. India has an opportunity to lead the world in adopting the correct approach and principles in tackling and settling this global debate – not just for telecom but for all industries that are regulated or licensed.
While it is critical that a conducive environment is created to encourage and promote innovation on the internet for enriching the lives of people through ever evolving technological advancements, it is equally important to create a healthy financial model for network providers to invest continuously in broadband networks to cater to the insatiable demand for data. All innovations will collapse if there are no networks capable of transmitting the traffic. The two have no choice but to co exist and co-thrive. Regulation and policies need to clearly recognise this harsh reality.
The telecom industry could be a beacon on this vital topic for all other industries.