Why should you keep a close eye on the net neutrality debate in the US

The blog post by Subhrojit Mallick was published by Digit on November 24, 2017.

Back in 2014, a group of Redditors started debating net neutrality in India after Airtel announced it would charge extra for Voice Over IP (VoIP) services like Skype. Soon, that snowballed into a nation-wide campaign with over a million internet users participating. Things didn’t help when Facebook too wanted to provide a bunch of internet services for free in India through its Internet.org or Free Basics initiative. However, a year-long discussion and public outrage against the two, led the Telecom Regulatory Authority of India (TRAI) to rule in favour of net neutrality and stop both Airtel and Facebook in their tracks of violating a free and open internet.

Fast forward three years down the line and America, the birthplace of the internet, is struggling with the problem of internet freedom. The Federal Communications Commission (FCC) under the Donald Trump Administration led by Chairman Ajit Pai submitted a final draft proposal yesterday to repeal the existing net neutrality laws put in force by the Obama administration in 2015. The draft proposal will be voted upon by FCC by the end of the year and considering the FCC has a Republican majority under Ajit Pai, the proposal is likely to pass.

The draft removes almost every net neutrality rule from 2015, making ISPs the gatekeepers of the internet. It states internet providers will have the freedom to implement fast and slow speed lanes, prioritise traffic and block apps and services. The only rule they have to follow -- publicly disclose when they are doing any of the things stated above.

Executive director of the Centre for Internet and Society, Sunil Abraham elaborated on what's on Pai's mind.

"Ajit Pai's ideology is pro-market. He believes the market will sort all problems out. According to Pai, the magic of competition will eliminate all the harms emerging from net neutrality violation," he said.

"Pai has said, you do what you want to do, but you have to disclose that to the public. You can block, throttle, have fast lanes, prioritise traffic, have discriminatory pricing, but you disclose them. If the customer doesn't like it, he can swith to another network. Pai believes the transparency requirements will allow the magic of the market to diminish and eliminate harm. His regulation of net neutrality is transparency," Abraham further added.

However, such a move will have drastic effects on the free flow of internet traffic. Telecom companies and ISPs can handpick services by charging customers to access some sites or by slowing down the speeds of others. For instance, ISPs can make consumers pay more to watch high-quality content on Netflix.

With net neutrality rules repealed, the internet will become a pay-to-play service. It will essentially divide the internet into fast and slow lanes. One will be a speedy service that could be priced higher and another, much slower and cheaper. While big players like Amazon, Facebook, Google, Netflix and the likes can easily pay the higher fees and stay unfettered, newcomers and smaller players will have it tough. Although, the move will lead to cuts in profits for everyone. A higher price to consumers will eat into the user base of these companies, while startups and new voices in the media will find entry and success prohibitive.

Although it’s true that no single ISP in the US has the entire market to itself and the market is indeed divided into a handful of players, they do operate in a de facto monopolised way. How? ISPs in the US have sliced up the entire country into areas such that users in a particular area have only one choice of service provider. That essentially leaves users at the mercy of whatever Comcast or Spectrum is offering (or not offering).

By putting the net neutrality rules in place in 2015, the US had ensured these ISPs won’t do anything grossly uncompetitive. The current rules make broadband in the country a public utility, same as electricity. And now, Ajit Pai-led FCC is about to repeal those very rules that kept them grounded.

Will the FCC ruling make apps and services expensive in other countries?

While Pai’s jurisdiction does not extend beyond the United States, his tirades against a free internet will most definitely have rippling effects across the world. More importantly, it will raise the cost of operations of companies like Netflix and Amazon who will have to hire legal experts and lobbyists to negotiate deals with service providers. That extra cost will be burdened on the US consumers of course, but since they have a large international presence, it is likely that the extra cost will trickle down to users outside the US as well.

And that’s not just the streaming companies. All the tech giants hail from the US and it is only logical that a rise in their costs of operation will have an impact on their global operations.

Although, if the level playing field in the US is disrupted, companies will look for greener pastures and if that means moving out of the US to other countries, it could happen.

How will FCC’s decision impact India?

While US is grappling with such a reality, Indians fought against it and won. Or did they? Last year, after Airtel and Facebook were asked to drop their plans for differential pricing, TRAI released a paper on net neutrality and differential pricing to finalise its views on the matter. The regulatory body released a 14-question long consultation paper seeking comments on internet traffic management from the public.

“Increasingly, concerns have been raised globally relating to discriminatory treatment of Internet traffic by access providers. These concerns relating to nondiscriminatory access have become the centre of a global policy debate. The purpose of this second stage of consultation is to proceed towards the formulation of final views on policy or regulatory interventions, where required, on the subject of NN,” the paper read.

“Net Neutrality being repealed in the US will hurt innovation in that country, and will lead to a consolidation of power with those Internet companies which have the money to partner with US carriers. This hurts Indian product startups, because it means that their apps may not be as easily available to users in the US. The Internet is one world, and we need the same Internet to be available everywhere, across the world: one Internet for the entire world,” Nikhil Pahwa, Co-Founder of Internet Freedom Foundation told Digit.

That means, essentially, the debate on net neutrality is not over in India. In fact, both RS Sharma, the Chairman of TRAI and FCC’s Ajit Pai agree on the need to bridge the digital divide. Both are exploring ways to keep the internet open while providing access to the unconnected. Thankfully, both differs on the approach to meet that goal.

Pai believes the internet should be left unregulated despite the “hypothetical harms” to the consumer. He thinks the current rules were put in place to avoid theoretical harms which were not based on hard evidence. Pai claims there should be evidence-based regulation of the internet.

Sharma, in contrast, disagrees on an evidence-based approach.

“The TRAI's view of Net Neutrality has so far been diametrically opposite to Ajit Pai's FCC, and with good reason. Net Neutrality ensures that all ISPs and telecom operators act as exchanges of data between users, and do not discriminate on the basis of the type or source of that data. This allows for permission-less innovation on the Internet, which has given us the Internet that we have today,” Pahwa added.

Will India’s stance on net neutrality change after the FCC’s decision?

Rajan Mathews, Director General of Cellular Operators Association of India believes the FCC’s decision will no doubt have some impact on the path India takes.

“I think the policymakers will look at the decision the US makes. They had taken their decision as a point of reference before and the FCC’s ruling is too large an issue to not look at it. Both the DoT (Department of Telecom) and TRAI will have to reevaluate their approach in the context of the what happens in the US,” he said.

“Net neutrality approach in both countries is still in flux and India is going to tread lightly on net neutrality issues,” he added. As per Mathews, in India, the situation is different from the US where a handful of telecom companies and ISPs wield control of the entire country. In India, there is a licensed environment which provides a minimal standard of net neutrality, which is applied across the board and everybody who is providing a similar service is made to follow similar guidelines.

However, Mathews did attribute India’s efforts to enforce net neutrality to the United States’ efforts to place the rules in the first place in 2015 under the Obama administration, when internet was deemed as a public utility, same as electricity or telephone.

“Net neutrality in India emerged from the US definition. Now that they are going to repeal it, people in India who were looking at the US as a model will evaluate the implications of the move,” Mathews elaborated.

The US is looking to implement an ex-post approach to regulating the internet wherein the ISPs and telcos will adopt a free market approach and will only be investigated if they violate a rule. India, Mathews says, is adopting an ex-ante approach where there will be some commonly accepted criteria of net neutrality, but operators will have the ability to manage their traffic to ensure quality of service.

Minister of Information and Broadcasting, Ravi Shankar Prasad also helped alleviate fears of India following suit. During the Global Summit for Cyberspace Security held yesterday, he said, "The citizens' right of accessing the internet is "non-negotiable" and the government will not allow any company to restrict people's entry to the worldwide web."

Prime Minister Narendra Modi also came in support of net neutrality in India. He tweeted, "The internet, by nature, is inclusive and not exclusive. It offers equity of access and equality of opportunity."

Pahwa, who fought hard against Airtel and Facebook to ensure the internet remains neutral, was confident the decision won’t affect India’s stance on net neutrality. However, he is apprehensive that Indian telecom companies might borrow a leaf from their US counterparts and lobby hard to repeal the rules.

“I don't think the FCC decision affects the Indian regulation in any way, because the Indian regulator TRAI has already established strong and well rooted principles for Net Neutrality regulations in India. The only thing that worries me is that Indian telecom operators will use the developments in the US to push back against Net Neutrality with renewed vigour,” he said.

So, on the face of it, while India is well insulated from the catastrophe the United States has embarked upon, it is important to watch what the US is doing closely and make sure we don’t repeat their mistakes here.