Nasscom against differential pricing for data services

The article by Moulishree Srivastava was published in Livemint on January 5, 2016. Pranesh Prakash gave inputs.

India’s top software lobby on Monday said if select web content needs to be provided cheaper for some Indians, it must be the regulator that decides on such content, not companies.

In its response to a consultation paper by the Telecom Regulatory Authority of India (Trai) on differential pricing for data usage, the National Association of Software and Services Companies (Nasscom) objected to plans such as Free Basics and Airtel Zero where companies choose content to be provided at different speeds and prices, but backed powers for the regulator to allow such a model if the regulator deems they are in “public interest”, while adhering to principles of net neutrality.

“We strongly oppose any model where telecom service providers (TSPs) or their partners have a say or discretion in choosing content that is made available at favourable rates, speed... any differential pricing by TSP either directly such as Airtel Zero or indirectly as in the case of Free Basics through a platform provider which limits access to the internet services or websites (selected by the TSP or by the partners) violate the idea of net neutrality,” said R. Chandrashekhar, president, Nasscom.

“But when we recognize the reality of India as a country which has low internet penetration and even lower broadband penetration, apart from low levels of digital literacy and limited local language content... there may be a need to provide certain services in public interest at differential or lower prices which the regulator feels are necessary,” he said.

“Therefore, it is important that the regulator should have the power to allow differential pricing for certain types or classes of services that are deemed to be in public interest and based on mandatory prior approvals,” he said. “Any such programmes should abide by the principles of net neutrality and not constrain innovation in any way and not constrain innovation in any way.”

Differential pricing for data usage means offering services at different price points to different users. However, analysts say it could lead to an anti-competitive environment, hurting small companies and start-ups, while giving the TSPs and their partner platforms near-monopolistic access to the vast amount of user data that has potential commercial value in a country such as India where privacy laws are not strong.

Differential pricing is a significant aspect of the net neutrality debate that erupted in India in 2015, when Trai released a consultation paper in April. Soon, telecom operator Bharti Airtel Ltd launched Zero, a marketing platform that allows customers to access mobile applications for free but charges the application providers.

Facebook’s Free Basics service (the new name for Internet.org) aims to offer people without the Internet free access to a handful of websites and a range of services through mobile phones, which net neutrality activists say will violate the core principle that everyone should have unrestricted access to Internet and it should not be regulated by a company.

Following the outrage, Trai put Free Basics on hold, asking Reliance Communications Ltd to furnish the detailed terms and conditions of its Free Basics service. The next step will be announced later this month.

In an op-ed in the Times of India last week, Nandan Nilekani, co-founder of Infosys Ltd. and former chairman of Unique Identification Authority of India, publicly criticized Facebook’s Free Basics, calling it a walled garden.

“The walled garden of Free Basics goes against the spirit of openness on the internet, and in the guise of being pro-poor, balkanises it. Only Free Basics-approved websites will be accessible for free,” he said in the article which he co-authored with Viral Shah who led the design of government’s subsidy platforms using Aadhaar. “In theory, anyone meeting the technical guidelines today can participate. However, services that may potentially compete with telco offerings may not join Free Basics. Since Facebook does not currently subsidise free usage, telcos will have to foot the bill by raising prices.”

He said schemes such as direct benefit transfer for Internet data packs would be better compared to programmes such as Free Basics.

Nasscom, in its response, recommended “mandatory prior approval of such services by the regulator and sharing of periodic information on tariff plans seek to lower the price as well as zero rating services,” adding that these programmes should abide by the principle of net neutrality, meaning it should not limit consumers access to pre-defined set of services or websites.

“Any such differential pricing programs should have explicit approval of the regulator—and should be deemed to be in the public interest and the onus of proving it to be in the public interest in the first instance would be on service provider and before Trai arrives at a final decision a public consultation is also advised because of the dangers involved,” Nasscom said. “Even after the approval, suitable oversight mechanism should be maintained by the regulator in all such case.”

Pranesh Prakash, policy director at the Centre for Internet and Society (CIS), said Nasscom’s approach to make differential pricing plans and options as an exception rather than the rule was quite reasonable. “It says that if differential pricing services adhere to the guidelines of being non-discriminatory, non-anti-competitive, non-predatory, non-ambiguous and transparent, they can be allowed under the supervision of the regulator, which is similar to the position adopted by CIS,” he said.

“Though some of their positions are ambiguous—for instance what they mean by non-discriminatory, and whether they are okay with differential pricing between classes of applications, are unclear—and some of their recommendations increase regulatory complexity, such as their proposal for independent not-for-profit entities with independent boards to own and manage such differential pricing programs, by and large it is a useful submission,” Prakash added.