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Trai's historic decision

Parminder Jeet Singh, February 13, 2016 0:11 IST

NET NEUTRALITY : As most public services go digital, it makes sense to ensure access to them free of data charges, as a citizen's right.

In its ruling on “Prohibition of Discriminatory Tariffs for Data Services”, the Telecom Regulatory Authority of India (Trai) has held that data services over the Internet are a commodity business whereby data cannot be discriminated on the basis of the content it carries. It also asserted its regulatory control over data services, which would be provided as a regulated public utility.

This is a historic decision setting a high bar for maintaining complete Net Neutrality, and thus sanctifying the Internet in the Indian law, as a model of equal and non-discriminatory communication, information-exchange and networking.

The Internet was always supposed to be so, but as it became the anchor of society-wide digital transformations, and thus a carrier of untold value and riches, it has been sought to be captured by big business in an exclusive market paradigm. This decision safeguards the Internet as being first an egalitarian social artifact, providing a social and economic level playing field for all, before it is a market good.

The original net neutrality concern was with the quality of service-based discrimination, making for a tiered Internet. Strong advocacy the world-over resulted in telcos losing this battle. By early 2015, it appeared evident that quality-based differentiation was simply not going to pass public and regulatory muster.

Quickly shifting their strategy, even the telcos begun to profess net neutrality, but seeking such exceptions that could still enable revenues from the content providers' side, which was their main objective. They argued that price-based discrimination, including zero rating, did not violate net neutrality because all content got the same quality of service.

Taking a middle ground, regulators in the US and EU, and most other countries, while ex ante outlawing quality-based discrimination, left price-based discrimination to be subjected to ex post consideration, on a case to case basis.

Promoters of price-based discrimination claimed that such practices are especially important for developing countries, helping their huge unconnected population come online faster. Facebook’s grand campaign promoting its zero-rated “Free Basics” service become the most visible manifestation of this particular spin.

The most striking feature of Trai’s ruling is that it has upended this logic. Noting that jurisdictions like the US and EU had left differential pricing for ex post consideration, the Trai held the case of a developing country like India, with a huge unconnected population, to be more (rather than less) appropriate for banning differential pricing because such conditions especially allow the telcos to, problematically, “shape the users' Internet experience”.

Maintaining that “what cannot be done directly, cannot also be done indirectly”, the ruling bans even models offering deferred free data allowance for accessing specific services which can later be used for accessing full Internet.

The ruling is thus perhaps the most clear and absolute anywhere in the world in fully protecting what it calls as “the unique architecture of the Internet”, and allowing no loopholes. So strong is the economic attraction of gate-keeping data services that the slightest loophole would certainly be blasted into a gaping hole by big telcos and Net businesses, disfiguring Internet’s egalitarian architecture.

Rejecting the argument that Trai should act only ex post, on a case to case basis, it went with the contrary view that “differential tariff for data services goes against the basic features of the Internet and it needs to be restricted upfront on account of the far reaching consequences that it is bound to have on the structure of the Internet and the rights of stakeholders. Once such practices are allowed, it may not be possible to quantify, measure or remedy the consequences in the short to medium term.”

With Trai clarifying that data services would remain an undifferentiated commodity, telcos should now focus on extending the infrastructure and improving overall quality of service rather than eying revenue potential from the content providers' side. It gives both the data and content businesses a much needed certainty. This is especially important for the telcos in view of the forthcoming spectrum auction.

Revenue potential

The regulator has said that it will now examine quality of service based discrimination, the original net neutrality issue. However, having disallowed price-based discrimination, it is unthinkable how a regulator can allow quality-based discrimination, which is a more core net neutrality violation. A similar short regulatory order on quality-based discrimination, based on Trai’s existing powers, should firmly close the matter.

Some misgivings have been expressed about the exemption of closed networks from the price discrimination ban. Can a telco develop its own channels of content and applications, outside the public Internet, available only to its own customers?

The regulator insists that it will ensure that this exception is not misused for specifically undermining the spirit of the ruling. This is the ‘specialised services’ issue which other countries are also considering, and would require further discussions. Special networks like for tele-health services and motor-vehicle automation are cited as possibly requiring a different treatment.

Emergency situations are also exem-pted by the ruling: personal ones, like he-alth and personal safety related, and collective, like floods and earthquakes. This leaves open a window for other possible public interest exceptions, like essential public services, as designated by the regulator. As most public services go digital, it makes sense to ensure access to them free of data charges, as a citizen’s right.

The ruling is silent on the question raised in the regulator's consultation about alternative ways to provide connectivity for the currently excluded, which received a lot of public inputs. This is understandable because this is a regulatory decision, on something within the regulator's own power.

Alternative ways for expanding connectivity has to be in the form of Trai's recommendations to the government, and taken up separately. However, this is an important and urgent issue raised by the “Free Basics” controversy, which should be addressed comprehensively and quickly.

(The writer is with Bengaluru-based NGO, IT for Change)

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