India And Net Neutrality: The Credibility Of The Regulator Matters More



Net neutrality has been one of the most studied and controversial areas of policy making for nearly one-and-a-half-decades now, since the term was coined back in 2003. As the US has been the most innovative nation in fueling the digital revolution globally, much of the regulations on it also has originated from the US, namely the Federal Communications Commission (FCC). Regulators elsewhere have broadly toed that line adopted by the FCC so far; however, recently FCC has favored against micro-managing net-neutrality, suggesting a new era ‘light-touch regulatory framework’ from that of a heavy-handed one so far.This intent was validated by a vote among FCC members on 14 December.

India has, however, reiterated its stand on it maintaining earlier policy bias. Net-neutrality has been widely debatedin policy-research circles because of its wider implications in promoting both competition and innovation.

If we apply the analogy of a ‘pipe’ that carries data from any source to the end-consumer through telecom service providers (TSPs, or through internet service providers, ISPs), the fundamental premise of net neutrality is that what type of data is being carried, irrespective of the source, does not matter and no differential pricing/preferential speed policy is allowed to the TSPs and the ISPs. The consumer pays for the amount of data consumed, irrespective of its nature or source, in a uniform manner.

The fundamental need of net neutrality drives from any anti-competitive and anti-innovative doctrine, where TSPs and ISPs themselves (anti-competitive), may be in collusion with present large organizations (anti-innovative) in different areas of services, prevent consumers access a competing TSP/ISP platform in the case of the former or a new start-up service provider in the case of the later.

For India, an example of both can be, if an Airtel consumer finds it easy to access Airtel Money/AirtelPayment Bank but finds it difficult to use competing Vodafone’s m-Pesa; one may think of a possible cause may be net neutrality being violated; although root causes can be others too. Similarly, assuming Airtel has a tie-up with Netflix and allows consumers faster download from Netflix but slower downloads from a competing start-up platform having innovations but not financial muscle like Netflix, again net neutrality may be violated leading to anti-competitive and anti-innovative possibilities.

However, the real root cause can be others too; and need to be studied, as problems can also lie at m-Pesa server end, or even at the competing video-on-demand service provider’s end. It is indeed complex.

The complexity multiplies in the age of ‘apps’ as most consumers in India access Internet from their mobile devices, and that too not through a mobile-browser – but through ‘apps’. More than 94% of subscribers of India’s broadband internet access is through mobile devices, in a total broadband subscriber base of around 324 million, as per TRAI’s September’2017 data release.

India’s newest TSP-entrant Reliance Jio has recently ventured into locking consumers up with low-end volte-enabled feature phones, and this has – particularly the JioPhone, has further raised concerns that net neutrality principles are being violated. Market forces are equally important as ‘apps’ are, and if a TSP offers a bundled-up services at a very cheap rate with a feature-phone/smartphone, where the user even does not have the choice of changing the sim-card to a competing company – does it too violate the principle of net-neutrality from an anti-competitive ground, as the metaphorical ‘pipe’ is accessed through the device itself?

Telecom Regulatory Authority of India (TRAI), equivalent to the FCC of the US, faces multiple of these challenges in its interpretation of net-neutrality and implementation of the same in a fair manner. The word, ‘fair’ is critical here, because perfect and utopian net neutrality may no longer be possible. As most new smartphones being sold in India (or anywhere) comes up with pre-loaded apps widely used by consumers in that market, can this industry-practice be also called anti-innovative as a new start-up in similar competing area may find itself in a disadvantageous position in this context?

It indeed is complex, given the way Internet and digital economy has grown and its wide penetration among consumers everywhere.

Although net-neutrality fundamentally is limited to the TSPs and ISPs, bundled-up services are akin to what European competition commission asked Microsoft to unbundle its Internet explorer from its operating system back in; and when not complied with its earlier order – put a hefty fine to the company.

Telecom companies globally, and more so in India, due to the cut-throat competition and one of the lowest price points that India has for telecom services, have fundamentally been against net-neutrality from the beginning. And these companies have a point as well – they invest heavily in the entirecapital-intensive infrastructure, the so-called ‘pipe’ and also invest in costly spectrum, through which the consumer finally gets the data in a mobile device. If some other low-cost innovation can further reduce that small revenue these TSPs generate, or even when many innovative internet giants like FANG companies and their alike been making a lot of money and seeing their m-cap soaring which eventually uses the same ‘pipe’ but the owners of the pipes have been struggling to make money, it is natural market force that the TSPs would also demand a share of all the revenue getting generated because of the ‘pipe’ itself.

Drawing the balance among market forces, innovation, fair competition has been one of the biggest challenges that any regulator of the like of FCC or TRAI faces today. Net-neutrality also cannot have a static definition, it needs to evolve. The proposal/decision of the FCC not to micro-manage net-neutrality and promote transparency, although has its legitimate critics, may have its time as well.

In case of TRAI, it has its records of high rhetoric and low on delivery and fairness. TRAI would do well if it understands the philosophy behind Justice Anthony M Kennedy’s comment, in scrutinising former president Barrack Obama’s health-care reform in the US Supreme Court:most questions in life are matters of degree.

TRAI needs to be seen to be a fair regulator, in this ‘matters of degree’, including on net-neutrality – be it as a strict regulator or a light-touch regulator. The way TRAI, including other government telecom bodies of India have mismanaged India’s telecom sector for decades, with blatant cronyism and favoritism/nepotism that saw withdrawal of one-after-another global players from the Indian market and rest bleeding often just to make a new entrant gain, has resulted in very less residual credibilityfor TRAI, as a fair regulator. Net-neutrality is not in isolation of how TSPs and ISPs get regulated; rather it is a small part of the ambit of the broader regulation.

Therefore, whatever TRAI’s policy on strict net-neutrality be on paper (with the exception again for Content Delivery Network, Jio has been built as a content-heavy TSP), the real test of India’s net-neutrality would be on its ‘fair’ implementation, even if it is not a perfect implementation. As TRAI has repeatedly failed in its acts in the recent past;and has its record over the years as well, what finally gets implemented in India in the name of net-neutrality is anybody’s guess.

Prof. RanjitGoswami is the Pro-VC at Sharda University, India.

An abridged version of this article first appeared in the East Asia Forum

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