A Department of Telecommunications committee released a much-sought-after report on net neutrality yesterday, July 16. This report comes in after what was perhaps the most intense policy debate in the country this year, with millions of voices chiming in. The net neutrality debate in India centered around whether telecom and internet service providers should be allowed to favour or discriminate access to websites, types of content, and applications.
Before we take a look at the committee report and its recommendations, it is useful to outline India's national interests in this space, as there are multiple objectives to be obtained.
India's national interests are primarily three-fold. First, it is a national priority to increase internet and broadband penetration in the country, enabling the largest number of Indians to get online. Second, India's IT industry must remain globally competitive and innovative, with entry barriers as low as possible for startups and new entrants. Third, India needs a healthy telecom and internet services provider industry. The case for net neutrality has been made extensively in many places, and at the core of it, India is better off with an enforcement of net neutrality principles in the absence of a fully competitive telecom and internet services industry, which currently has barriers to entry, and has limited competition.
After 6 months of deliberation, the committee comes down in favour of the principle of net neutrality "unhesitatingly", acknowledging that ISPs should not be allowed to discriminate across web content. However, the report leaves two doors open that violate the principles of a neutral internet.
First, the report recommends that VoIP calling (over Skype or WhatsApp, for example) within India must be subjected to the same regulatory environment as regular phone calls. Citing regulatory arbitrage where phone calls are subject to extensive price regulation, the committee feels that VoIP services get an unfair advantage. This is flawed reasoning. VoIP services are the most inexpensive forms of voice communication today, being only as expensive as the data they consume. TRAI has thus far regulated the pricing of phone calls with the intention of reducing tariffs and protecting consumer interests. Now that VoIP is feasible, TRAI should instead consider liberalising the tariff regime for telecom service providers, so that they can compete with VoIP services. This can be done without violating the principles of net neutrality.
Second, the report examines the cases for and against zero rating, and recommends that all tariff plans must be approved by TRAI before being introduced in the market. This is in addition to an ex-post mechanism which can handle complaints of the violation of net neutrality. However, the committee appears confused on the definition of zero rating - where an internet provider can choose to make certain websites or applications available for free. The committee cites free Wi-Fi and internet access coupons as examples of zero rating, which they are not as they seek to make all web access free, and are blind to websites.
The move to have TRAI approve all data tariff plans also puts an unnecessary regulatory burden against service providers. Internet service providers should be free to offer different data plans with varied pricing models, and be free to bundle them with other services - so long as the plans don't discriminate websites and content sources, irrespective of whether the content is notionally in the public interest. Imagine if in the year 2000, ISPs decided to offer Encyclopaedia Britannica for free, as it was educational in nature. Wikipedia might have never been born then, as it gave Britannica an unfair advantage. To give such an advantage to Wikipedia or any other website today will raise barriers against the next generation of innovations.
The committee also misses an opportunity to reflect on the larger regulatory role of the telecom and internet space, which was within its remit. The report correctly acknowledges that the end of a monopoly on telecom services provision (by BSNL) and the promotion of competition in the telecom sector has been key to its rapid development and expansion, where by 900 million+ cellphone connections exist in India today, with about 300 million internet uses and about 100 million broadband connections.
However, the report does not take this observation to its logical conclusion - and reflect on how to promote even more competition in the telecom industry: on how to reduce entry barriers for TSPs, on how much revenue to extract while auctioning spectrum, and on the role of price regulation for premium non-data services such as roaming, voice messaging and others.
Lamenting the limited nature of broadband penetration in India today, the report recommends public infrastructure provision and the promotion of low-cost devices to access the internet. In the past, such ideas have led to misplaced subsidies and flawed government programmes like the Aakash tablet, while market-led innovation has inevitably solved such challenges.
There is plenty of scope in promoting competition and contestability in internet and broadband service provision in India without violating the principles of net neutrality. The DoT committee report favouring the principles of net neutrality is but a first step. This needs to be followed by a larger rethink of internet services governance in India.
(Pavan Srinath and Varun Ramachandra are policy researchers with the Takshashila Institution, an independent think tank and school of public policy.)Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.