Centre for Internet and Society

Will India win net neutrality battle?

praskrishna — 2016-01-11T02:28:44Z

There is more than what meets the eye in Facebook’s ‘noble mission’ of providing internet for all.

The article by Pratap Vikram Singh and Taru Bhatia was published by Governance Now on January 5, 2016. Sunil Abraham gave inputs.

India is gearing up for an era of startups and entrepreneurship and the man pushing it as one of his biggest development and self reliance agenda is none other than prime minister Narendra Modi, who launched the ‘Startup India, Standup India’ campaign this year. Few technology giants, led by the likes of Facebook and some telecom service providers, however, have thrown a technology spanner. It is important to note that a significant number of the startups in India are internet-based – next only to the US and China in having maximum number of tech startups, according to industry body NASSCOM.

For these to flourish and for India to have next Facebook or Google it is important to have an open and neutral internet, believe digital rights experts. A network which doesn’t discriminate between the data packets (smallest unit of information sent in binary format over a network) and provides level playing field for all. “It is critical for the Startup India campaign. If we let the principles of net neutrality be compromised, then it makes it very difficult for entrepreneurs and startups to compete against established players, who can close off the market for upstarts by schemes like differentiated pricing and zero rating (toll free access to websites or apps),” said Vishal Misra, associate professor, department of computer science, Columbia University.

A prerequisite for startups

A few months from now, country’s telecom regulator, the Telecom Regulatory Authority of India (TRAI), is going to decide whether internet would remain neutral and whether it will continue to foster innovation. A major threat to net neutrality, according to civil society and digital rights experts, comes from zero rating – toll free access to a few selected websites or apps, a strategy adopted by internet service providers or internet platforms to hook users to those select few sites. For telecom and internet service providers zero rating is a new stream of revenue, a way to secure optimal return on investment from their existing subscriber base – without requiring additional investment. The ISPs are arguing that they should be given more flexibility in managing their network – in a way they should be allowed to assume the role of gatekeeper of the internet.

For ISPs, net neutrality is an obsolete and utopian idea. Facebook, which has grown into a mammoth internet platform since its inception in 2004, has recently joined this bandwagon. Under its Free Basics initiative (erstwhile internet.org), the internet giant provides toll free access to a set of websites (including Facebook obviously!) handpicked by itself to the users. In India so far it has partnered with Reliance Communications.

Facebook by far is the most audacious and aggressive proponent of ‘zero rating’ scheme. From lobbying the prime minister to giving back-to-back ads in television channels and two-page ads in national dailies to circulating a vaguely written letter in support of Free Basics on its social media site, Facebook is pitching for ‘digital equality’ by giving access to 'basic internet’ or say a slice of the internet.

Cautioning against zero rating, Prabir Purkayastha, chairperson, Society for Knowledge Commons, said the way zero-rating is being discussed, it seems Indians are only the consumers of internet, which is not true. “Indians are also the innovators on internet,” said Purkayastha. “Internet has given the innovators the right to connect to the users without having a huge amount of money. This is the character that will be destroyed if zero-rating will be implemented,” he says.

That’s true. Be it US-based Facebook or Google or Indian Flipkart or PayTm or SnapDeal, had it not been for open and neutral internet they wouldn’t have become what are today.

Raman Jit Singh Chima, global public policy director, Access Now, a New York-based firm working for digital rights, said the idea is to prevent a telco or an internet platform from assuming a role of a gatekeeper and control access. Misra, too, has written extensively on the counter-productiveness of zero rating: stifling of innovation and service providers loosing incentive to improve service and keep prices low. Both Misra and Chima testified their views on net neutrality to the standing committee on IT in August after the department of telecommunications submitted an expert committee report on the neutrality issue.

Whither public consultation

To formulate a regulation on how internet will shape up, the TRAI has come out with two consultation papers concerning net neutrality in the last nine months. The first consultation paper on ‘regulatory framework for over the top players (OTTs)’, which came in March, was written in favour of telecom and internet service providers. “It was embarrassing,” said Purkayastha. Over 1.2 million people wrote to the regulator. This was result of the savetheinternet.in campaign ran by free internet activists and lawyers, who were later joined by All India Bakchod (AIB) whose video on net neutrality went viral on YouTube (the video has received three million views in last eight months). This was unprecedented in the history of TRAI consultations. However, the fate of those responses is still unclear.

In December the regulator brought another paper. This time it was titled ‘regulation on differential pricing’. Contrary to the initial paper, this paper is far more objective and reasonable, said Nikhil Pahwa, founder, MediaNama portal and a key volunteer behind savetheinternet.in campaign. The regulator has sought comments on its second paper by December 30 and counter-comments by January 7. Till the time a final call is taken, the telecom regulator has instructed Reliance Communications, Facebook’s India telecom partner, to put Free Basics on hold.

The savetheinternet.in campaign has formulated the responses to the new consultation paper and has made it available for everyone favouring net neutrality to send it to the TRAI. The AIB team has released another video titled ‘Save the Internet - 2 – Judgement Day’, which has been viewed close to one million times in just four months.

The neutrality debate started in India in December 2014 when Airtel, country’s largest telco, announced – although it later backtracked – that the company would charge consumers more for using VOIP services, on top of the data charges. Later, it went on to launch Airtel Zero, wherein it struck deal with online services providers for user access at zero rate. Facebook had already introduced internet.org by then. While it was initially led by civil society, the debate was later joined by politicians – Naveen Patnaik, M Chandrashekhar, Jay Panda, Rahul Gandhi and Arvind Kejriwal – who strongly came out in support of net neutrality.

Facebook has termed its zero rating platform as a philanthropic activity intended to connect billions of unconnected population so that they can access education, health and employment related information. It has urged users to sign a petition, cautioning them against "a small, vocal group of critics" lobbying to prevent 1 billion people from accessing 'affordable internet'. Under Free Basics, Facebook claims, it doesn't charge app developers and includes them if they comply to its 'objective tech specs'.

Free Basics: A camouflage?

Critics, however, call it a walled garden. In providing free access to close to a hundred websites it continues to play the role of a gatekeeper. It is not the poor who decide what to access but Facebook! While it says that it is not making money out of Free Basics as it doesn't display ads in the Free Basics version of Facebook, it keeps the option of monetisation open in the future.

“It [Free Basics] has been camouflaged as charity," said a senior TRAI official, in an off the record conversation. While speaking to the Guardian on Facebook’s zero rating in December, Tim Berners Lee, founder of world wide web (www), said, “In the particular case of somebody who's offering... something which is branded internet, it's not internet, then you just say no. No it isn't free, no it isn't in the public domain, there are other ways of reducing the price of internet connectivity and giving something... [only] giving people data connectivity to part of the network deliberately, I think is a step backwards.”

Speaking in favour of zero rating, Payal Malik, associate professor, economics, Delhi University, said that it is wrong to assume that all consumers will get hooked to zero rated sites. “In a way you are saying that all humans have same preferences and likes and dislikes, which is very unlikely,” said Malik.

Experts representing telecom industry argue that the net neutrality regulation should be geography specific and the telecom players should be given more flexibility in dealing with the network. Mahesh Uppal, a senior telecom consultant and director, ComFirst India, while speaking at a round table discussion in Delhi, said that a majority of population in the West including countries opting for strict net neutrality – including Netherlands, Slovenia and the US – are already connected. "The data connectivity is primarily through fixed lines - copper, co-ax cable or optical fibre wired — wherein it is easier to add capacity to meet traffic growth. However this is difficult to do so for wireless networks," said Uppal. In developing countries, including India, mobile telephony and internet majorly runs on wireless. Hence, he argued, telecom and internet service providers should be given flexibility to zero rate. For Uppal, if zero rating or sponsored content is implemented properly “it can be one of the ways to scale up internet access” to the unconnected regions.

Neutrality proponents, however, differ. “It is basic economic theory, and zero rated sites get a price advantage. There are studies that show customers stay within the world of zero rated sites and never venture outside or are aware of the full internet,” professor Misra said.

Zero or equal rating?

So is there a middle ground? Are there ways to increase access without tampering with open and neutral character of the internet? Experts believe there are. Some of the solutions are not completely black and white, but in between. While there is a fierce opposition to zero rating, it might work, according to Sunil Abraham, executive director, centre for internet and society (CIS), if provided with an amount of equal rating (giving free data pack to users so that they can access any site or app they want).

Mozilla Foundation advocates equal rating. The foundation has sought to create such an alternative in Bangladesh and countries in Africa within the Firefox OS ecosystem. The foundation has tied up with telecom operator Grameenphone in Bangladesh to provide 20 Mb data per day for free to users, in exchange for viewing an advertisement. The model could be easily replicated in India, said Pahwa of MediaNama.

For African countries, the foundation has partnered with Orange. Both allow Africans to purchase $40 Firefox OS smartphones that come packaged with free three to six months of voice calling, text, and up to 500 Mb of monthly data. Purkayastha of Knowledge Commons said that zero-rating plan by telecom operators only makes sense when government services are provided for free through it. “That is the form of zero-rating I would support.”

There are a few platforms which are reimbursing data in megabytes to users accessing partnering apps. The user can then use the free data pack to access any other site or app. Some of them include: mCent, Gigato and DataMi. mCent, owned by Boston-based firm Jana, is a pioneer in this area. It is being used by 30 million users cross 98 countries. In India, according to Jana, one out of every 10 internet users has subscribed to mCent.

Yes, it does violate neutrality as it puts those app providers not having enough money at a disadvantageous position vis-à-vis to those having deep pocket to reimburse data to users. “I think it’s a grey area,” said professor Misra. On the surface it seems to be just like Free Basics, however, Gigato (or mCent) is making no pretense that what they are doing is philanthropy of increasing access, said professor Misra, adding that it is still acceptable as user will have the data to venture out of the walled garden. The senior TRAI official too finds it acceptable. “In my opinion, Facebook should become like Gigato,” he said.

If the regulator is going to protect consumers’ right and also not stifle startups and entrepreneurism, it will have to ensure some broad, core principles of the internet. It will have to prevent both the ISPs and the internet platforms from becoming gatekeepers. It must not allow any throttling, blocking, fast and slow lanes, discrimination based on price or quality of service and distortion of level playing field. How and whether TRAI is going to do these would be clear in a few months.

For more details visit https://cis-india.org/internet-governance/news/governance-now-pratap-vikram-singh-and-taru-bhatia-january-6-2015-will-india-win-net-neutrality-battle

CDT Provides Answers to Questions on Internet Neutrality

pranesh — 2012-06-04T05:56:46Z

Pranesh Prakash of CIS asked David Sohn of CDT a few pointed questions on the emerging hot topic of 'Internet neutrality', and received very useful responses. Those questions and Mr. Sohn's responses are documented in this blog post.

As part of the Centre for Democracy and Technology's (CDT's) excellent "Ask CDT" initiative, we were provided the opportunity to clear up some of our doubts around "net neutrality" (which CDT prefers referring to as Internet neutrality rather than network neutrality) by asking an expert: David Sohn, CDT's Senior Policy Counsel. Reproduced below are the questions that I asked (inset and in gray), and David's replies (provided below each question). Some of the questions I asked below were doubts that I had, while some others are instances of donning the roles of devil's advocate. We hope this will be helpful in clarifying doubts that some of the readers of this blog have had as well.

1a. "As far as I can understand, content distribution networks (CDNs) such as Akamai, don't really fall within your understanding of violations of Internet neutrality. Why not? In what cases is 'spending more to get faster speeds' permitted for content hosts? Since not only specialised companies like Akamai, but regular Tier 1 companies like Level3 and AT&T also engage in CDN-like behaviour, does it make it more liable to illicit/underhand/non-transparent service differentiation techniques?"

1a. That's correct, CDNs don't violate either Internet neutrality principles or the FCC's recent rules. I talked about this at some length in a blog post a couple years ago. The short answer is that Internet neutrality does not aim to guarantee that all online content and services will work equally well, but rather to prevent ISPs from exercising "gatekeeper" control with respect to their subscribers. Thus, content providers who have money can purchase various advantages -- for example, more or better servers, upgraded software, or caching services from a CDN such as Akamai. Significantly, things like servers and caching are available from competitive sources; no supplier has gatekeeper control. In contrast, priority treatment on the transmission facilities serving any given Internet user is an advantage that only that user's ISP could provide. Another difference is that when one content provider purchases caching, it doesn't slow anybody else's traffic (indeed, it could speed it up, since it may help reduce overall network congestion). By contrast, when an ISP designates favoured traffic for priority transmission, non-favoured traffic by definition is de-prioritized. Think about a line of "bits" waiting in a router queue -- if you let some bits "cut in line," it inevitably lengthens the wait for those who don't get to cut. Given CDT's general comfort level with CDNs and the existence of competitive offerings in the marketplace, I'm not too concerned about who provides the service (Akamai, Level3, AT&T, etc.). It doesn't seem to be a case of the ISP leveraging its unique control over access to subscribers.

1b. "A large part of the claims of Internet neutrality supporters are founded on the basis of 'dumb networks', which can also be seen as a reformulation of the end-to-end principle. A question arises, which is often posed by the likes of Dave Farber, Bob Kahn and Robert Pepper: why should we stick dogmatically to the end-to-end principle when embedding 'intelligence' in the core is/will soon be a viable option *without* jeopardising the simplicity of the Internet? If you are fine with CDNs, then are you fine with a partial supplanting of the dogmatism of the end-to-end principle (because, after all, CDNs are in a sense, intelligence in the core rather than in the edges)?"

1b. I don't think that supporting Internet neutrality requires a dogmatic opposition to any and all built-in "intelligence" in the network. Certainly a strong case can be made for handling certain network management matters, such as some cyber security issues, at the network level. I get concerned on neutrality grounds not by the mere existence of "intelligence" in the core, but by the use of that intelligence to make judgments and decisions about which applications and services are most important or most in need of special treatment -- as opposed to remaining application-agnositic or, in the alternative, leaving the decision to end users. Intelligence that is put in the service of end users, allowing the users themselves to make judgments about what to prioritize, does not concern me at all. But if the network-level intelligence results in broader reliance on centralized evaluation and categorization of the type or content of Internet communications, and centralized decisions about what to favor or disfavor, then I think it poses a neutrality problem. The bottom line is, the idea that networks could benefit from some built-in intelligence does not argue for giving ISPs unbounded discretion to discriminate among traffic. Indeed, a network that empowered users themselves to determine the relative priority levels of their traffic based on their individual needs would be far "smarter" than on in which ISPs make broad, across-the-board choices.

2. "What is the bright-line rule that separates some IP-based networks that are 'private' (and hence free to do as they please), and others that are part of the 'Internet' (and hence need to follow Internet neutrality)? Where does IPTV fall? (While answering that question, think not only of present-day IPTV, but keep in mind its potential applications.) Where do 'walled gardens' of the WWW fall?"

2. In CDT's view, Internet access service provides a general-purpose ability to send and receive data communications across the Internet. Other services could be exempt from neutrality rules if they serve specific and limited functional purposes and have limited impact on the technical performance of Internet traffic. CDT's comments to the FCC went into considerable detail -- see, for example, the comments we filed in October. The FCC rules took a similar but not identical tack, saying that Internet access services are services that provide the capability to send and receive data "from all or substantially all Internet endpoints" or that provide a functional equivalent of such a service. In any event, the question of how clear the line is between Internet access services that are subject to neutrality rules and other services that are not is an important one that will bear close watching over time. As for IPTV, it offers a specific function -- access to video programming -- rather than general purpose access to the entire Internet. So IPTV can be distinguished from Internet service. As for "walled gardens," it likely would depend how large the garden is. If the garden seeks to offer a wide enough variety of sites that it can be used as a substitute for Internet access, then the FCC could choose to apply neutrality rules. At some point, a garden can become big and general-purpose enough that it is effectively serving as a non-neutral version of an Internet access service. That kind of end-run around neutrality rules shouldn't be allowed.

3a. "Should Internet neutrality be kept at the level of non-enforceable (but still important) enunciation of principles, or should they be enforceable laws? In either case, who has the authority to regulate Internet neutrality, given the non-territoriality of the 'Internet' (and especially keeping in mind the direction that ICANN's been taking with things like the Affirmation of Commitments). Why should the FCC have such powers? Why should any American governmental body have such powers?"

3a. It is important to have some enforceable rules. The FCC enunciated principles back in its 2005 broadband Policy Statement -- but when the agency tried to act after Comcast violated those principles, a court ruled that the FCC had no ability to do so. Enunciated principles are of little value if ISPs are free to violate them without consequence. For U.S. Internet users, I think the FCC is an appropriate agency in which to lodge the authority to police neutrality violations; the FCC has a long history of working to ensure that providers of physical communications infrastructure do not abuse their position. And since the focus is on the provisions of physical communications connections, I don't the the territoriality issue you raise is a major problem. The United States has the authority to establish rules for companies providing last-mile communications links to U.S.-based subscribers. The Internet is of course a global medium, but the endpoint connections have a clear geographic location.

3b. "If Internet neutrality is really about ensuring fair competition (so an ISP doesn't promote one company's content), then why not just allow competition law / anti-trust law to ensure that fair competition? What are the lacunae in global competition laws that necessitate the separate articulation of 'Internet neutrality' principles/rules?"

3b. The ability of antitrust law to protect Internet openness is pretty limited. Absent a clear anticompetitive motive, network operators likely could curtail Internet openness in a variety of ways without running afoul of antitrust law. Antitrust’s prohibition against anticompetitive conduct is a far cry from any kind of affirmative policy to preserve the Internet’s uniquely open network structure. Nor can antitrust law take into account the major non-economic reasons for maintaining an open Internet, such as the impact on independent speech and civic empowerment. Finally, as a practical matter, antitrust cases tend to drag on for many years. Individual innovators and small startup companies – key beneficiaries of Internet openness – are unlikely to be in a position to bring antitrust cases against major network operators.

4a. "One of the strongest arguments of anti-Internet neutrality folks is that adoption of Internet neutrality principles/rules will ensure that it is only the consumers who foot the bill for bandwidth consumption, and bandwidth hogs (like NetFlix) don't ever pay. This, they say, is unfair on consumers. How do you respond to this?"

4a. First, I question the statement that "bandwidth hogs like NetFlix don't ever pay." For starters, NetFlix buys a huge amount of bandwidth connecting its servers to the Internet. Once on the Internet, its traffic is carried onward pursuant to peering agreements between the ISPs and backbone providers. When NetFlix traffic volume grows, it may trigger new payment demands between carriers, as we've seen in the recent dispute between Comcast and Level3. But the bottom line is, nobody is forced to carry any traffic they haven't contractually agreed to handle. Of course, it is true that NetFlix doesn't make payments to (for example) AT&T for delivering NetFlix traffic to AT&T's customers. That might seem unfair if you think of NetFlix as a "bandwidth hog" eating up AT&T's capacity. I believe that is the wrong way to think about it. NetFlix has no ability to forcefeed traffic onto AT&T's network. Every bit it sends was requested by an AT&T subscriber. So if there are "bandwidth hogs" here, they are the end users -- they are the ones that pull all those bits onto AT&T's network. And they have already paid AT&T for the ability to get those bits. I would add that when individual users choose to download huge volumes, I have no problem with the ISP charging them more. Second, you suggest that it may be unfair to ask consumers to foot the full bill for their connectivity. But the Internet is such an open and innovation-friendly platform precisely because it is so user-driven. This user-centric focus could change if ISPs start thinking of themselves as providing services not just to end user subscribers, but also to non-subscribers such as large online content providers to whom the ISPs do not directly provide bandwidth. The ISPs would then have divided loyalties; rather than just focusing on empowering users, they would be collecting fees to steer users in particular directions. Sure, in other contexts there are examples of "two-sided markets" in which end users foot only part of the bill. Newspapers are often cited. But including paid advertising in newspapers doesn't have much impact in how the overall product is perceived or presented to users. In contrast, ISPs charging content providers for special transmission priority would be akin to a newspaper in which advertisers pay not just to place ads, but also to influence where the substantive articles appear -- which ones go on the front page and which on the interior, for example. In turn, content providers of all stripes would need to think about striking deals with multiple ISPs -- something that is not necessary today. In the end, turning the Internet into a two-sided market would make the medium dramatically less open, less innovative, and less empowering of users.

4b. "If a consumer wants a faster connection (to access content faster), she can get that by paying the ISP more and getting more bandwidth. If a business wants a faster connection (to deliver content faster), it can get that by paying the ISP more bandwidth. However, certain kinds of paying for faster delivery of content are sought to be curbed. Where should we draw that line? And Why should we hold on so dearly to a certain model of accounting for costs?"

4b. Consumers and businesses should be able to pay their respective ISPs for more bandwidth. I think that is very different from paying other people's ISPs for preferential treatment. The latter arrangement turns ISPs into gatekeepers with respect to their subscribers -- because once the quality of delivery depends on which content providers have struck a deal with the subscribers' ISP, every content provider needs to negotiate with that ISP in order to keep up with its competitors. We hold on to the Internet's model of accounting for costs because it is part of what makes the Internet such an open, innovative environment: content providers and innovators don't face the hurdle of having to negotiate deals with all their users' ISPs.

For more details visit https://cis-india.org/internet-governance/blog/cdt-internet-neutrality

Indian activists slam FCC decision to ditch net neutrality

Admin — 2017-12-18T15:27:04Z

Indian net neutrality activists are assured the ongoing net neutrality tussle in the US will have no impact on India.

The article by Kul Bhushan was published in the Hindustan Times on November 23, 2017.

Net neutrality is in the news again. This time it is because the US’ Federal Communications Commission (FCC) has decided to formally scrap existing protections that are meant to keep access to internet equitable.

India had its own tryst with the idea of net neutrality after it blocked the zero-rating programmes by social networking giant Facebook — which proposed to rollout the Internet.org or Free Basics project in February last year.

A powerful social media campaign made Facebook back down and the Telecom Regulatory Authority of India (TRAI) to announce that ‘differential pricing’ — a practice where some services or sites are priced in a special manner — will no longer be allowed.

Some people who were at the forefront of the net neutrality campaign in here almost three years ago have expressed their displeasure over the FCC’s move.

“I think the approach the FCC is taking is flawed. Spectrum is a public resource and it needs to be spent on maximisation of public good. That public good, and the utility of the Internet is based on the freedom that people have to create new apps and services, without needing permission from ISPs, or the fear that ISPs might discriminate against them or favour their competitors. This is what net neutrality enables,” said Nikhil Pahwa, founder of publication Medianama and one of the activists.

“By going against Net Neutrality, FCC chairman Ajit Pai is attacking the core of what makes the Internet tick. We didn’t let that happen in India, and instead, focused on increasing competition between ISPs and telecom operators, because of which we’ve see broadband prices drop, quality of service improve, a tremendous growth in Internet users in India. For this, we owe a great debt to all those who supported Net Neutrality, especially the TRAI,” he added.

Apar Gupta, who is closely associated with the ‘Save the Internet’ initiative and is the co-founder of Internet Freedom Foundation, said, “FCC’s move to take back the internet order is a huge setback to the global campaign to ensure open internet because it undermines the net neutrality.”

“I don’t think the development should impact the regulatory process in India considering TRAI’s strong support for net neutrality. I hope that TRAI comes out with a comprehensive network neutrality regulation in the future,” he responded when asked about the possible impact on India of the FCC move.

Sunil Abraham, executive director of Bangalore-based research organisation Centre for Internet and Society, said there should be no impact on India from the FCC move.

He also slammed FCC chief Pai’s attempt to change the existing net neutrality rules. “What Ajit Pai is trying to do he’s not saying he will not regulate. He is saying when companies violate net neutrality principles they should be transparent about it. He hopes the magic of market competition will help resolve the problem,” he said

“Pai’s approach to the net neutrality might work in a market where there is a lot of competition. In the US, there is no competition and that in case damage will be immediate,” he added.

For more details visit https://cis-india.org/internet-governance/news/hindustan-times-kul-bhushan-november-23-2017-indian-activists-slam-fcc-decision-to-ditch-net-neutrality

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

Admin — 2018-01-18T14:50:52Z

As the United State's FCC Chairman Ajit Pai gears up to repeal the net neutrality laws put in place in 2015, India should sit up and take note.

The blog post by Subhrojit Mallick was published by Digital.in 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.

What is FCC chairman Ajit Pai doing?

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 pricingto 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.

For more details visit https://cis-india.org/internet-governance/news/digit-in-subhrojit-mallick-november-24-2017-why-you-should-keep-a-close-eye-on-the-net-neutrality-debate-in-the-us

Regulatory Perspectives on Net Neutrality

pranesh — 2015-07-18T02:46:30Z

In this paper Pranesh Prakash gives an overview on why India needs to put in place net neutrality regulations, and the form that those regulations must take to avoid being over-regulation.

With assistance by Vidushi Marda (Programme Officer, Centre for Internet and Society) and Tarun Krishnakumar (Research Volunteer, Centre for Internet and Society). I would like to specially thank Vishal Misra, Steve Song, Rudolf van der Berg, Helani Galpaya, A.B. Beliappa, Amba Kak, and Sunil Abraham for extended discussions, helpful suggestions and criticisms. However, this paper is not representative of their views, which are varied.

Today, we no longer live in a world of "roti, kapda, makaan", but in the world of "roti, kapda, makaan aur broadband". ^{^[1]} This is recognized by the National Telecom Policy IV.1.2, which states the need to "recognise telecom, including broadband connectivity as a basic necessity like education and health and work towards 'Right to Broadband'."^{^[2]} According to the IAMAI, as of October 2014, India had 278 million internet users. ^{^[3]} Of these, the majority access Internet through their mobile phones, and the WEF estimates only 3 in 100 have broadband on their mobiles.^{^[4]} Thus, the bulk of our population is without broadband. Telecom regulation and net neutrality has a very important role in enabling this vision of Internet as a basic human need that we should aim to fulfil.

1. Why should we regulate the telecom sector?

All ICT regulation should be aimed at achieving five goals: achieving universal, affordable access; ^{^[5]} ensuring and sustaining effective competition in an efficient market and avoiding market failures; protecting against consumer harms; ensuring maximum utility of the network by ensuring interconnection; and addressing state needs (taxation, security, etc.). Generally, all these goals go hand in hand, however some tensions may arise. For instance, universal access may not be provided by the market because the costs of doing so in certain rural or remote areas may outweigh the immediate monetary benefits private corporations could receive in terms of profits from those customers. In such cases, to further the goal of universal access, schemes such as universal service obligation funds are put in place, while ensuring that such schemes either do not impact competition or very minimally impact it.

It is clear that to maximise societal benefit, effective regulation of the ICT sector is a requirement, which otherwise, due to the ability of dominant players to abuse network effect to their advantage, is inherently prone towards monopolies. For instance, in the absence of regulation, a dominant player would charge far less for intra-network calls than inter-network calls, making customers shift to the dominant network. This kind of harm to competition should be regulated by the ICT regulator. However, it is equally true that over-regulation is as undesirable as under-regulation, since over-regulation harms innovation - whether in the form of innovative technologies or innovative business models. The huge spurt of growth globally of the telecom sector since the 1980s has resulted not merely from advancements in technology, but in large part from the de-monopolisation and deregulation of the telecom sector.^{^[6]} Similarly, the Internet has largely flourished under very limited technology-specific regulation. For instance, while interconnection between different telecom networks is heavily regulated in the domestic telecom sector, interconnection between the different autonomous systems (ASes) that make up the Internet is completely unregulated, thereby allowing for non-transparent pricing and opaque transactions. Given this context, we must ensure we do not over-regulate, lest we kill innovation.

2. Why should we regulate Net Neutrality? And whom should we regulate?

We wouldn't need to regulate Net Neutrality if ISPs were not "gatekeepers" for last-mile access. "Gatekeeping" occurs when a single company establishes itself as an exclusive route to reach a large number of people and businesses or, in network terms, nodes. It is not possible for Internet services to reach the customers of the telecom network without passing through the telecom network. The situation is very different in the middle-mile and for backhaul. Even though anti-competitive terms may exist in the middle-mile, especially given the opacity of terms in "transit agreements", a packet is usually able to travel through multiple routes if one route is too expensive (even if that is not the shortest network path, and is thus inefficient in a way). However, this multiplicity of routes is not possible in the last mile.

This leaves last mile telecom operators (ISPs) in a position to unfairly discriminate between different Internet services or destinations or applications, while harming consumer choice. This is why we believe that promoting the five goals mentioned above would require regulation of last-mile telecom operators to prevent unjust discrimination against end-users and content providers.

Thus, net neutrality is the principle that we should regulate gatekeepers to ensure they do not use their power to unjustly discriminate between similarly situated persons, content or traffic.

3. How should we regulate Net Neutrality?

3.1. What concerns does Net Neutrality raise? What harms does it entail?

Discriminatory practices at the level of access to the Internet raises the following set of concerns:

1. Freedom of speech and expression, freedom of association, freedom of assembly, and privacy.

2. Harm to effective competition

a. This includes competition amongst ISPs as well as competition amongst content providers.

b. Under-regulation here may cause harm to innovation at the content provider level, including through erecting barriers to entry.

c. Over-regulation here may cause harm to innovation in terms of ISP business models.

3. Harm to consumers

a. Under-regulation here may harm consumer choice and the right to freedom of speech, expression, and communication.

b. Over-regulation on this ground may cause harm to innovation at the level of networking technologies and be detrimental to consumers in the long run.

4. Harm to "openness" and interconnectedness of the Internet, including diversity (of access, of content, etc.)

a. Exceptions for specialized services should be limited to preserve the open and interconnectedness of the Internet and of the World Wide Web.

It might help to think about Net Neutrality as primarily being about two overlapping sets of regulatory issues: preferential treatment of particular Internet-based services (in essence: content- or source-/destination-based discrimination, i.e., discrimination on basis of 'whose traffic it is'), or discriminatory treatment of applications or protocols (which would include examples like throttling of BitTorrent traffic, high overage fees upon breaching Internet data caps on mobile phones, etc., i.e., discrimination on the basis of 'what kind of traffic it is').

Situations where the negative or positive discrimination happens on the basis of particular content or address should be regulated through the use of competition principles, while negative or positive discrimination at the level of specific class of content, protocols, associated ports, and other such sender-/receiver-agnostic features, should be regulated through regulation of network management techniques . The former deals with instances where the question of "in whose favour is there discrimination" may be asked, while the latter deals with the question "in favour of what is there discrimination".

In order to do this, a regulator like TRAI can use both hard regulation - price ceilings, data cap floors, transparency mandates, preventing specific anti-competitive practices, etc. - as well as soft regulation - incentives and disincentives.

3.1.1 Net Neutrality and human rights

Any discussion on the need for net neutrality impugns the human rights of a number of different stakeholders. Users, subscribers, telecom operators and ISPs all possess distinct and overlapping rights that are to be weighed against each other before the scope, nature and form of regulatory intervention are finalised. The freedom of speech, right to privacy and right to carry on trade raise some of the most pertinent questions in this regard.

For example, to properly consider issues surrounding the practice of paid content-specific zero-rating from a human rights point of view, one must seek to balance the rights of content providers to widely disseminate their 'speech' to the largest audiences against the rights of consumers to have access to a diverse variety of different, conflicting and contrasting ideas.

This commitment to a veritable marketplace or free-market of ideas has formed the touchstone of freedom of speech law in jurisdictions across the world as well as finding mention in pronouncements of the Indian Supreme Court. Particular reference is to be made to the dissent of Mathew, J. inBennett Coleman v. Union of India^{^[7]} and of the majority Sakal Papers v. Union of India^{^[8]} which rejected the approach.

Further, the practice of deep-packet inspection, which is sometimes used in the process of network management, raises privacy concerns as it seeks to go beyond what is "public" information in the header of an IP packet, necessary for routing, to analysing non-public information. ^{^[9]}

3.2 What conditions and factors may change these concerns and the regulatory model we should adopt?

While the principles relating to Net Neutrality remain the same in all countries (i.e., trying to prevent gatekeepers from unjustly exploiting their position), the severity of the problem varies depending on competition in the market, on the technologies, and on many other factors. One way to measure fair or stable allocation of the surplus created by a network - or a network-of-networks like the Internet - is by treating it as a convex cooperation game and thereupon calculating that game's Shapley value:^{^[10]} in the case of the Internet, this would be a game involving content ISPs, transit ISPs, and eyeball (i.e., last-mile) ISPs. The Shapley value changes depending on the number of competitors there are in the market: thus, the fair/stable allocation when there's vibrant competition in the market is different from the fair/stable allocation in a market without such competition. That goes to show that a desirable approach when an ISP tries to unjustly enrich itself by charging other network-participants may well be to increase competition, rather than directly regulating the last-mile ISP. Further, it shows that in a market with vibrant last-mile competition, the capacity of the last-mile ISP to unjustly are far diminished.

In countries which are remote and have little international bandwidth, the need to conserve that bandwidth is high. ISPs can regulate that by either increasing prices of Internet connections for all, or by imposing usage restrictions (such as throttling) on either heavy users or bandwidth-hogging protocols. If the amount of international bandwidth is higher, the need and desire on part of ISPs to indulge in such usage restrictions decreases. Thus, the need to regulate is far higher in the latter case, than in the former case.

The above paragraphs show that both the need for regulation and also the form that the regulation should take depend on a variety of conditions that aren't immediately apparent.

Thus, the framework that the regulator sets out to tackle issues relating to Net Neutrality are most important, whereas the specific rules may need to change depending on changes in conditions. These conditions include:

● last-mile market

○ switching costs between equivalent service providers

○ availability of an open-access last-mile

○ availability of a "public option" neutral ISP

○ increase or decrease in the competition, both in wired and mobile ISPs.

● interconnection market

○ availability of well-functioning peering exchanges

○ availability of low-cost transit

● technology and available bandwidth

○ spectrum efficiency

○ total amount of international bandwidth and local network bandwidth

● conflicting interests of ISPs

○ do the ISPs have other business interests other than providing Internet connectivity? (telephony, entertainment, etc.)

3.3 How should we deal with anti-competitive practices?

Anti-competitive practices in the telecom sector can take many forms: Abuse of dominance, exclusion of access to specific services, customer lock-in, predatory pricing, tying of services, cross-subsidization, etc., are a few of them. In some cases the anti-competitive practice targets other telecom providers, while in others it targets content providers. In the both cases, it is important to ensure that ensure that telecom subscribers have a competitive choice between effectively substitutable telecom providers and an ability to seamlessly switch between providers.

3.3.1 Lowering Switching Costs

TRAI has tackled many of these issues head on, especially in the mobile telephony space, while competitive market pressures have helped too:

● Contractual or transactional lock-in. The easiest way to prevent shifting from one network to another is by contractually mandating a lock-in period, or by requiring special equipment (interoperability) to connect to one's network. In India, this is not practised in the telecom sector, with the exception of competing technologies like CDMA and GSM. Non-contractual lock-ins, for instance by offering discounts for purchasing longer-term packages, are not inherently anti-competitive unless that results in predatory pricing or constitutes an abuse of market dominance. In India, switching from one mobile provider to another, though initiated 15 years into the telecom revolution, is in most cases now almost as easy as buying a new SIM card.^{^[11]} TRAI may consider proactive regulation against contractual lock-in.

● Number of competitors. Even if switching from one network to another is easy, it is not useful unless there are other equivalent options to switch to. In the telecom market, coverage is a very important factor in judging equivalence. Given that last mile connectivity is extremely expensive to provide, the coverage of different networks are very different, and this is even more true when one considers wired connectivity, which is difficult to lay in densely-populated urban and semi-urban areas and unprofitable in sparsely-populated areas. The best way to increase the number of competitors is to make it easier for competitors to exist. Some ways of doing this would be through enabling spectrum-sharing, lowering right-of-way rents, allowing post-auction spectrum trading, and promoting open-access last-mile fibre carriers and to thereby encourage competition on the basis of price and service and not exclusive access to infrastructure.

● Interconnection and mandatory carriage. The biggest advantage a dominant telecom player has is exclusive access to its customer base. Since in the telecom market, no telco wants to not connect to customers of another telco, they do not outright ban other networks. However, dominant players can charge high prices from other networks, thereby discriminating against smaller networks. In the early 2000s, Airtel-to-Airtel calls were much cheaper than Airtel-to-Spice calls. However, things have significantly changed since then. TRAI has, since the 2000s, heavily regulated interconnection and imposed price controls on interconnection ("termination") charges.^{^[12]} Thus, now, generally, inter-network calls are priced similarly to intra-network calls. And if you want cheaper Airtel-to-Airtel calls, you can buy a special (unbundled) pack that enables an Airtel customer to take advantage of the fact that her friends are also on the same network, and benefits Airtel since they do not in such cases have to pay termination charges. Recently, TRAI has even made the interconnection rates zero in three cases: landline-to-landline, landline-to-cellular, and cellular-to-landline, in a bid to decrease landline call rates, and incentivise them, allowing a very low per call interconnection charges of 14 paise for cellular-to-cellular connections. ^{^[13]}

○ With regard to Net Neutrality, we must have a rule that no termination charges or carriage charges may be levied by any ISP upon any Internet service. No Internet service may be discriminated against with regard to carriage conditions or speeds or any other quality of service metric. In essence all negative discrimination should be prohibited. This means that Airtel cannot forcibly charge WhatsApp or any other OTT (which essentially form a different "layer") money for the "privilege" of being able to reach Airtel customers, nor may Airtel slow down WhatsApp traffic and thus try to force WhatsApp to pay. There is a duty on telecom providers to carry any legitimate traffic ("common carriage"), not a privilege. It is important to note that consumer-facing TSPs get paid by other interconnecting Internet networks in the form of transit charges (or the TSP's costs are defrayed through peering). There shouldn't be any separate charge on the basis of content (different layer from the carriage) rather than network (same layer as the carriage). This principle is especially important for startups, and which are often at the receiving end of such discriminatory practices.

● Number Portability. One other factor that prevents users from shifting between one network and another is the fact that they have to change an important aspect of their identity: their phone number (this doesn't apply to Internet over DSL, cable, etc.). At least in the mobile space, TRAI has for several years tried to mandate seamless mobile number portability. The same is being tried by the European Commission in the EU. ^{^[14]} While intra-circle mobile number portability exists in India - and TRAI is pushing for inter-circle mobile number portability as well^{^[15]} - this is nowhere as seamless as it should be.

● Multi-SIM phones. The Indian market is filled with phones that can accommodate multiple SIM cards, enabling customers to shift seamlessly between multiple networks. This is true not just in India, but most developing countries with extremely price-sensitive customers. Theoretically, switching costs would approach zero if in a market with full coverage by n telecom players every subscriber had a phone with n SIM slots with low-cost SIM cards being available.

The situation in the telecom sector with respect to the above provides a stark contrast to the situation in the USA, and to the situation in the DTH market. In the USA, phones get sold at discounts with multi-month or multi-year contracts, and contractual lock-ins are a large problem. Keeping each of the above factors in mind, the Indian mobile telecom space is far more competitive than the US mobile telecom space.

Further, in the Indian DTH market, given that there is transactional lock-in (set-top boxes aren't interoperable in practice, though are mandated to be so by law^{^[16]}), there are fewer choices in the market; further, the equivalent of multi-SIM phones don't exist with respect to set-top boxes. Further, while there are must-carry rules with respect to carriage, they can be of three types: 1) must mandatorily provide access to particular channels^{^[17]} (positive obligation, usually for government channels); 2) prevented from not providing particular channels (negative obligation, to prevent anti-competitive behaviour and political censorship); and 3) must mandatorily offer access to at least a set number of channels (positive obligation for ensuring market diversity). ^{^[18]} Currently, only (1) is in force, since despite attempts by TRAI to ensure (3) as well.^{^[19]}

If the shifting costs are low and transparency in terms of network practice is reported in a standard manner and well-publicised, then that significantly weakens the "gatekeeper effect", which as we saw earlier, is the reason why we wish to introduce Net Neutrality regulation. This consequently means, as explained above in section 3.2, that despite the same Net Neutrality principles applying in all markets and countries, the precise form that the Net Neutrality regulations take in a telecom market with low switching costs would be different from the form that such regulations would take in a market with high switching costs.

3.3.2 Anti-competitive Practices

Some potential anti-competitive practices, which are closely linked, are cross-subsidization, tying (anti-competitive bundling) of multiple services, and vertical price squeeze. All three of these are especial concerns now, with the increased diversification of traditional telecom companies, and with the entry into telecom (like with DTH) of companies that create content. Hence, if Airtel cross-subsidizes the Hike chat application that it recently acquired, ^{^[20]} or if Reliance Infocomm requires customers to buy a subscription to an offering from Reliance Big Entertainment, or if Reliance Infocomm meters traffic from another Reliance Big Entertainment differently from that from Saavn, all those would be violative of the principle of non-discrimination by gatekeepers. This same analysis can be applied to all unpaid deals and non-commercial deals, including schemes such as Internet.org and Wikipedia Zero, which will be covered later in the section on zero-rating.

While we have general rules such as sections 3 and 4 of the Competition Act, we do not currently have specific rules prohibiting these or other anti-competitive practices, and we need Net Neutrality regulation that clearly prohibit such anti-competitive practices so that the telecom regulator can take action for non-compliance . We cannot leave these specific policy prescriptions unstated, even if they are provided for in section 3 of the Competition Act. These concerns are especial concerns in the telecom sector, and the telecom regulator or arbitrator should have the power to directly deal with these, instead of each case going to the Competition Commission of India. This should not affect the jurisdiction of the CCI to investigate and adjudicate such matters, but should ensure that TRAI both has suo motu powers, and that the mechanism to complain is made simple (unlike the current scenario, where some individual complainants may fall in the cracks between TRAI and TDSAT).

3.3.3 Zero-rating

Since a large part of the net neutrality debate in India involves zero-rating practices, we deal with that in some length. Zero-rating is the practice of not counting (aka "zero-rating") certain traffic towards a subscriber's regular Internet usage. The zero-rated traffic could be zero-priced or fixed-price; capped or uncapped; subscriber-paid, Internet service-paid, paid for by both, or unpaid; content- or source/destination-based, or agnostic to content or source/destination; automatically provided by the ISP or chosen by the customer . The motivations for zero-rating may also be varied, as we shall see below. Further, depending on the circumstances, zero-rating could be competitive or anti-competitive. All forms of zero-rating result in some form of discrimination, but not all zero-rating is harmful, nor does all zero-rating need to be prohibited.

While, as explained in the section on interconnection and carriage above, negative discrimination at the network level should be prohibited, that leaves open the question of positive discrimination. It follows from section 3.1 that the right frame of analysis of this question is harm to competition, since the main harm zero-rating is, as we shall see below, about discriminating between different content providers, and not discrimination at the level of protocols, etc.

Whether one should allow for any form of positive discrimination at the network level or not depends on whether positive discrimination of (X) has an automatic and unfair negative impact on all (~X). That, in turn, depends on whether (~X) is being subject to unfair competition. As Wikipedia notes, "unfair competition means that the gains of some participants are conditional on the losses of others, when the gains are made in ways which are illegitimate or unjust." Thus, positive discrimination that has a negative impact on effective competition shall not be permitted, since in such cases it is equivalent to negative discrimination ("zero-sum game") . Positive discrimination that does not have a negative impact on effective competition may be permitted, especially since it results in increased access and increases consumer benefit, as long as the harm to openness and diversity is minimized .

While considering this, one should keep in mind the fact that startups were, 10-15 years ago, at a huge disadvantage with regard to wholesale data purchase. The marketplaces for data centres and for content delivery networks (which speed up delivery of content by being located closer, in network terms, to multiple last-mile ISPs) were nowhere near as mature as they are today, and the prices were high. There was a much higher barrier to startup entry than there is today, due to the prices and due to larger companies being able to rely on economies of scale to get cheaper rates. Was that unfair? No. There is no evidence of anti-competitive practices, nor of startups complaining about such practices. Therefore, that was fair competition, despite specific input costs that were arguably needed (though not essential) for startups to compete being priced far beyond their capacity to pay.

Today the marketplace is very different, with a variety of offerings. CDNs such as Cloudflare, which were once the preserve of rich companies, even have free offerings, thus substantially lowering barriers for startups that want faster access to customers across the globe.

Is a CDN an essential cost for a startup? No. But in an environment where speed matters and customers use or don't use a service depending on speed; and where the startup's larger competitors are all using CDNs, a startup more or less has to. Thankfully, given the cheap access to CDNs these days, that cost is not too high for a startup to bear. If the CDN market was not competitive enough, would a hypothetical global regulator have been justified in outright banning the use of CDNs to 'level' the playing field? No, because the hypothetical global regulator instead had the option to (and would have been justified in) regulating the market to ensure greater competition.

A regulator should not prohibit an act that does not negatively impact access, competition, consumer benefit, nor openness (including diversity), since that would be over-regulation and would harm innovation.

3.3.3.1 Motivations for Zero-Rating

3.3.3.1.1 Corporate Social Responsibility / Incentivizing Customers to Move Up Value Chain

There exist multiple instances where there is no commercial transaction between the OTT involved and the telecom carrier, in which zero-priced zero-rating of specific Internet content happens. We know that there is no commercial transaction either through written policy (Wikipedia Zero) or through public statements (Internet.org, a bouquet of sites). In such cases, the telecom provider would either be providing such services out of a sense of public interest, given the social value of those services, or would be providing such services out of self-interest, to showcase the value of particular Internet set the same time.

The apprehended risk is that of such a scheme creating a "walled garden", where users would be exposed only to those services which are free since the search and discovery costs of non-free Internet (i.e., any site outside the "walled garden") would be rather high. This risk, while real, is rather slim given the fact that the economic incentives for those customers who have the ability to pay for "Internet packs" but currently do not find a compelling reason to do so, or out of both a sense of public interest and self-interest of the telecom providers works against this.

In such non-commercial zero-priced zero-rating, a telecom provider would only make money if and only if subscribers start paying for sites outside of the walled garden. If subscribers are happy in the walled garden, the telecom provider starts losing money, and hence has a strong motivation to stop that scheme. If on the other hand, enough subscribers start becoming paying customers to offset the cost of providing the zero-priced zero-rated service(s) and make it profitable, that shows that despite the availability of zero-priced options a number of customers will opt for paid access to the open Internet and the open Web, and the overall harms of such zero-priced zero-rating would be minimal. Hence, the telecom providers have an incentive to keep the costs of Internet data packs low, thus encouraging customers who otherwise wouldn't pay for the Internet to become paying customers.

There is the potential of consumer harm when users seek to access a site outside of the walled garden, and find to their dismay that they have been charged for the Internet at a hefty rate, and their prepaid balance has greatly decreased. This is an issue that TRAI is currently appraised of, and a suitable solution would need to be found to protect consumers against such harm.

All in all, given that the commercial interests of the telecom providers align with the healthy practice of non-discrimination, this form of limited positive discrimination is not harmful in the long run, particularly because it is not indefinitely sustainable for a large number of sites. Hence, it may not be useful to ban this form of zero-priced zero-rating of services as long as they aren't exclusive, or otherwise anti-competitive (a vertical price-squeeze, for instance), and the harm to consumers is prohibited and the harm to openness/diversity is minimized.

3.3.3.1.2 Passing on ISP Savings / Incentivizing Customers to Lower ISP's Cost

Suppose, for instance, an OTT uses a CDN located, in network distance terms, near an eyeball ISP. In this case, the ISP has to probably pay less than it would have to had the same data been located in a data centre located further away, given that it would have fewer interconnection-related charges.

Hence the monetary costs of providing access to different Web destinations are not equal for the ISP. This cost can be varied either by the OTT (by it locating the data closer to the ISP - through a CDN, by co-locating where the ISP is also present, or by connecting to an Internet Exchange Point which the ISP is also connected to - or by it directly "peering" with the ISP) or by the ISP (by engaging in "transparent proxying" in which case the ISP creates caches at the ISP level of specific content (usually by caching non-encrypted data the ISP's customers request) and serves the cached content when a user requests a site, rather than serving the actual site). None of the practices so far mentioned are discriminatory from the customer's perspective with regard either to price or to prioritization, though all of them enable faster speeds to specific content. Hence none of the above-mentioned practices are considered even by the most ardent Net Neutrality advocates to be violations of that principle. ^{^[21]} However, if an ISP zero-rates the content to either pass on its savings to the customer^{^[22]} or to incentivize the customer to access services that cost the ISP less in terms of interconnection costs, that creates a form of price discrimination for the customer, despite it benefiting the consumer.

The essential economic problem is that the cost to the ISP is variable, but the cost to the customer is fixed. Importantly, this problem is exacerbated in India where web hosting prices are high, transit prices are high, peering levels are low, and Internet Exchange Points (IXPs) are not functioning well. ^{^[23]} These conditions create network inefficiencies in terms of hosting of content further away from Indian networks in terms of network distance, and thus harms consumers as well as local ISPs. In order to set this right, zero-rating of this sort may be permitted as it acts as an incentive towards fixing the market fundamentals. However, once the market fundamentals are fixed, such zero-rating may be prohibited.

This example shows that the desirability or otherwise of discriminatory practices depends fully on the conditions present in the market, including in terms of interconnection costs.

3.3.3.1.3 Unbundling Internet into Services ("Special Packs")

Since at least early 2014, mobile operators have been marketing special zero-rating "packs". These packs, if purchased by the customer, allow capped or in some instances uncapped, zero-rating of a service such as WhatsApp or Facebook, meaning traffic to/from that service will not be counted against their regular Internet usage.

For a rational customer, purchasing such a pack only makes sense in one of two circumstances:

● The person has Internet connectivity on her Internet-capable phone, but has not purchased an "Internet data pack" since she doesn't find the Internet valuable. Instead, she has heard about "WhatsApp", has friends who are on it, and wishes to use that to reduce her SMS costs (and thereby eat into the carriage provider's ability to charge separately for SMSes). She chooses to buy a WhatsApp pack for around ₹25 a month instead of paying ₹95 for an all-inclusive Internet data pack.

● The person has Internet connectivity on her Internet-capable phone, and has purchased an "Internet data pack". However, that data pack is capped and she has to decide between using WhatsApp and surfing web sites. She is on multiple WhatsApp groups and her WhatsApp traffic eats up 65% of her data cap. She thus has to choose between the two, since she doesn't want to buy two Internet data packs (each costing around ₹95 for a month). She chooses to buy a WhatsApp pack for ₹25 a month, paying a cumulative total of ₹120 instead of ₹190 which she would have had to had she bought two Internet data packs. In this situation, "unbundling" is happening, and this benefits the consumer. Such unbundling harms the openness and integrity of the Internet.

If users did not find value in the "special" data packs, and there is no market demand for such products, they will cease to be offered. Thus, assuming a telco's decision to offer such packs is purely customer-demand driven - and not due to deals it has struck with service providers - if Orkut is popular, telcos would be interested in offering Orkut packs and if Facebook is popular, they would be interested in offering a Facebook pack. Thus, clearly, there is nothing anti-competitive about such customer-paid zero-rating packs, whereas they clearly enhance consumer benefit. Would this increase the popularity of Orkut or Facebook? Potentially yes. But to prohibit this would be like prohibiting a supermarket from selectively (and non-collusively) offering discounts on popular products. Would that make already popular products even more popular? Potentially, yes. But that would not be seen as a harm to competition but would be seen as fair competition. This contravenes the "openness" of the Internet (i.e., the integral interconnected diversity that an open network like the Internet embodies) as an independent regulatory goal. The Internet, being a single gateway to a mind-boggling variety of services, allows for a diverse "long tail", which would lose out if the Internet was seen solely as a gateway to popular apps, sites, and content. However, given that this is a choice exercised freely by the consumer, such packs should not be prohibited, as that would be a case of over-regulation.

The one exception to the above analysis of competition, needless to say, is if that these special packs aren't purely customer-demand driven and are the product of special deals between an OTT and the telco. In that case, we need to ensure it isn't anti-competitive by following the prescriptions of the next section.

3.3.3.1.4 Earning Additional Revenues from Content Providers

With offerings like Airtel Zero, we have a situation where OTT companies are offering to pay for wholesale data access used by their customers, and make accessing their specific site or app free for the customer. From the customer's perspective, this is similar to a toll-free number or a pre-paid envelope or free-to-air TV channel being offered on a particular network.

However, from the network perspective, these are very different. Even if a customer-company pays Airtel for the toll-free number, that number is accessible and toll-free across all networks since the call terminates on Airtel networks and Airtel pays the connecting network back the termination charge from the fee they are paid by the customer-company. This cannot happen in case of the Internet, since the "call" terminates outside of the reach of the ISP being paid for zero-rating by the OTT company; hence unless specific measures are taken, zero-rating has to be network-specific.

The comparison to free-to-air channels is also instructive, since in 2010 TRAI made recommendations that consumers should have the choice of accessing free-to-air channels à-la-carte, without being tied up to a bouquet.^{^[24]} This would, in essence, allow a subscriber to purchase a set-top box, and without paying a regular subscription fee watch free-to-air channels. ^{^[25]} However, similar to toll-free numbers, these free-to-air channels are free-to-air on all MSO's set-top boxes, unlike the proposed Airtel Zero scheme under which access to a site like Flipkart would be free for customers on Airtel's network alone.

Hence, these comparisons, while useful in helping think through the regulatory and competition issues, should not be used as instructive exact analogies, since they aren't fully comparable situations.

3.3.3.1.5 Market Options for OTT-Paid Zero-Rating

As noted above, a competitive marketplace already exists for wholesale data purchase at the level of "content ISPs" (including CDNs), which sell wholesale data to content providers (OTTs). This market is at present completely unregulated. The deals that exist are treated as commercial secrets. It is almost certain that large OTTs get better rates than small startups due to economies of scale.

However, at the eyeball ISP level, it is a single-sided market with ISPs competing to gain customers in the form of end-users. With a scheme like "Airtel Zero", this would get converted into a double-sided market, with a gatekeeper without whom neither side can reach the other being in the middle creating a two-sided toll. This situation is ripe for market abuse: this situation allows the gatekeeper to hinder access to those OTTs that don't pay the requisite toll or to provide preferential access to those who pay, apart from providing an ISP the opportunity to "double-dip".

One way to fix this is to prevent ISPs from establishing a double-sided market. The other way would be to create a highly-regulated market where the gatekeeping powers of the ISP are diminished, and the ISP's ability to leverage its exclusive access over its customers are curtailed. A comparison may be drawn here to the rules that are often set by standard-setting bodies where patents are involved: given that these patents are essential inputs, access to them must be allowed through fair, reasonable, and non-discriminatory licences. Access to the Internet and common carriers like telecom networks, being even more important (since alternatives exist to particular standards, but not to the Internet itself), must be placed at an even higher pedestal and thus even stricter regulation to ensure fair competition.

A marketplace of this sort would impose some regulatory burdens on TRAI and place burdens on innovations by the ISPs, but a regulated marketplace harms ISP innovation less than not allowing a market at all.

At a minimum, such a marketplace must ensure non-exclusivity, non-discrimination, and transparency. Thus, at a minimum, a telecom provider cannot discriminate between any OTTs who want similar access to zero-rating. Further, a telecom provider cannot prevent any OTT from zero-rating with any other telecom provider. To ensure that telecom providers are actually following this stipulation, transparency is needed, as a minimum.

Transparency can take one of two forms: transparency to the regulator alone and transparency to the public. Transparency to the regulator alone would enable OTTs and ISPs to keep the terms of their commercial transactions secret from their competitors, but enable the regulator, upon request, to ensure that this doesn't lead to anti-competitive practices. This model would increase the burden on the regulator, but would be more palatable to OTTs and ISPs, and more comparable to the wholesale data market where the terms of such agreements are strictly-guarded commercial secrets. On the other hand, requiring transparency to the public would reduce the burden on the regulator, despite coming at a cost of secrecy of commercial terms, and is far more preferable.

Beyond transparency, a regulation could take the form of insisting on standard rates and terms for all OTT players, with differential usage tiers if need be, to ensure that access is truly non-discriminatory. This is how the market is structured on the retail side.

Since there are transaction costs in individually approaching each telecom provider for such zero-rating, the market would greatly benefit from a single marketplace where OTTs can come and enter into agreements with multiple telecom providers.

Even in this model, telecom networks will be charging based not only on the fact of the number of customers they have, but on the basis of them having exclusive routing to those customers. Further, even under the standard-rates based single-market model, a particular zero-rated site may be accessible for free from one network, but not across all networks: unlike the situation with a toll-free number in which no such distinction exists.

To resolve this, the regulator may propose that if an OTT wishes to engage in paid zero-rating, it will need to do so across all networks, since if it doesn't there is risk of providing an unfair advantage to one network over another and increasing the gatekeeper effect rather than decreasing it.

However, all forms of competitive Internet service-paid zero-priced zero-rating, even when they don't harm competition, innovation amongst content providers, or consumers, will necessarily harm openness and diversity of the Internet. For instance, while richer companies with a strong presence in India may pay to zero-rate traffic for their Indian customers, decentralized technologies such as XMPP and WebRTC, having no central company behind them, would not, leading to customers preferring proprietary networks and solutions to such open technologies, which in turn, thanks to the network effect, leads to a vicious cycle. These harms to openness and diversity have to be weighed against the benefit in terms of increase in access when deciding whether to allow for competitive OTT-paid zero-priced zero-rating, as such competition doesn't exist in a truly level playing field . Further, it must be kept in mind that there are forms of zero-priced zero-rating that decrease the harm to openness / diversity, or completely remove that harm altogether: that there are other options available must be acknowledged by the regulator when considering the benefit to access from competitive OTT-paid zero-priced zero-rating.

3.3.3.1.6 Other options for zero-rating

There are other models of zero-priced zero-rating that either minimize the harm is that of ensuring free Internet access for every person. This can take the form of:^{^[26]}

● A mandatorily "leaky" 'walled garden':

○ The first-degree of all hyperlinks from the zero-rated OTT service are also free.

○ The zero-rated OTT service provider has to mandatorily provide free access to the whole of the World Wide Web to all its customers during specified hours.

○ The zero-rated OTT service provider has to mandatorily provide free access to the whole of the World Wide Web to all its customers based on amount on usage of the OTT service.^{^[27]}

● Zero-rating of all Web traffic

○ In exchange for viewing of advertisements

○ In exchange for using a particular Web browser

○ At low speeds on 3G, or on 2G.

3.3.3.2. What kinds of zero-rating are good

The majority of the forms of zero-rating covered in this section are content or source/destination-based zero-rating. Only some of the options covered in the "other options for zero-rating" section cover content-agnostic zero-rating models. Content-agnostic zero-rating models are not harmful, while content-based zero-rating models always harm, though to varying degrees, the openness of the Internet / diversity of OTTs, and to varying degrees increase access to Internet-based services. Accordingly, here is an hierarchy of desirability of zero-priced zero-rating, from most desirable to most harmful:

1. Content- & source/destination-agnostic zero-priced zero-rating.^{^[28]}

2. Content- & source/destination-based non-zero-priced zero-rating, without any commercial deals, chosen freely & paid for by users. ^{^[29]}

3. Content- & source/destination-based zero-priced zero-rating, without any commercial deals, with full transparency. ^{^[30]}

4. Content- & source/destination-based zero-priced zero-rating, on the basis of commercial deal with partial zero-priced access to all content, with non-discriminatory access to the same deal by all with full transparency.^{^[31]}

5. Content- & source/destination-based zero-priced zero-rating, on the basis of a non-commercial deal, without any benefits monetary or otherwise, flowing directly or indirectly from the provider of the zero-rated content to the ISP, with full transparency. ^{^[32]}

6. Content- & source-destination-based zero-priced zero-rating, across all telecom networks, with standard pricing, non-discriminatory access, and full transparency.

7. Content- & source-destination-based zero-priced zero-rating, with standard pricing, non-discriminatory access, and full transparency.

8. Content- & source-destination-based zero-priced zero-rating, with non-discriminatory access, and full transparency.

9. Content- & source-destination-based zero-priced zero-rating, with non-discriminatory access, and transparency to the regulator.

10. Content- & source-destination-based zero-priced zero-rating, without any regulatory framework in place.

3.3.4 Cartels and Oligopoly

While cartels and oligopolies may have an impact on Net Neutrality, they are not problems that any set of anti-discrimination rules imposed on gatekeepers can fix. Further, cartels and oligopolies don't directly enhance the ability of gatekeepers to unjustly discriminate if there are firm rules against negative discrimination and price ceilings and floors on data caps are present for data plans. Given this, TRAI should recommend that this issue be investigated and the Competition Commission of India should take this issue up.

3.4 Reasonable Network Management Principles

Reasonable network management has to be allowed to enable the ISPs to manage performance and costs on their network. However, ISPs may not indulge in acts that are harmful to consumers in the name of reasonable network management. Below are a set of guidelines for when discrimination against classes of traffic in the name of network management are justified.

● Discrimination between classes of traffic for the sake of network management should only be permissible if:

○ there is an intelligible differentia between the classes which are to be treated differently, and

○ there is a rational nexus between the differential treatment and the aim of such differentiation, and

○ the aim sought to be furthered is legitimate, and is related to the security, stability, or efficient functioning of the network, or is a technical limitation outside the control of the ISP^{^[33]}, and

○ the network management practice is the least harmful manner in which to achieve the aim.

● Provision of specialized services (i.e., "fast lanes") is permitted if and only if it is shown that

○ The service is available to the user only upon request, and not without their active choice, and

○ The service cannot be reasonably provided with "best efforts" delivery guarantee that is available over the Internet, and hence requires discriminatory treatment, or

○ The discriminatory treatment does not unduly harm the provision of the rest of the Internet to other customers.

These principles are only applicable at the level of ISPs, and not on access gateways for institutions that may in some cases be run by ISPs (such as a university network, free municipal WiFi, at a work place, etc.), which are not to be regulated as common carriers.

These principles may be applied on a case-by-case basis by a regulator, either suo motu or upon complaint by customers.

^{^[1]} Report of the Special Rapporteur on the Promotion and Protection of the right to freedom of opinion and expression, (19 May 2011), http://www2.ohchr.org/english/bodies/hrcouncil/docs/17session/A.HRC.17.27_en.pdf.

^{^[2]} Available at http://www.trai.gov.in/WriteReadData/userfiles/file/NTP%202012.pdf.

^{^[3]} IAMAI, India to Cross 300 million internet users by Dec 14, (19 November, 2014), http://www.iamai.in/PRelease_detail.aspx?nid=3498&NMonth=11&NYear=2014.

^{^[4]} World Economic Forum, The Global Information Technology Report 2015, http://www3.weforum.org/docs/WEF_Global_IT_Report_2015.pdf.

^{^[5]} http://www.ictregulationtoolkit.org/4.1#s4.1.1

^{^[6]} See R.U.S. Prasad, The Impact of Policy and Regulatory Decisions on Telecom Growth in India (July 2008), http://web.stanford.edu/group/siepr/cgi-bin/siepr/?q=system/files/shared/pubs/papers/pdf/SCID361.pdf.

^{^[7]} 1973 AIR 106

^{^[8]} 1962 AIR 305

^{^[9]} "When ISPs go beyond their traditional use of IP headers to route packets, privacy risks begin to emerge." Alissa Cooper, How deep must DPI be to incur privacy risk? http://www.alissacooper.com/2010/01/25/how-deep-must-dpi-be-to-incur-privacy-risk/

^{^[10]} Richard T.B. Ma & Vishal Misra, The Public Option: A Non-Regulatory Alternative to Network Neutrality, http://dna-pubs.cs.columbia.edu/citation/paperfile/200/netneutrality.pdf

^{^[11]} Mobile number portability was launched in India on January 20, 2011 in the Haryana circle. See http://indiatoday.intoday.in/story/pm-launches-nationwide-mobile-number-portability/1/127176.html . Accessed on April 24, 2015.

^{^[12]} For a comprehensive list of all TRAI interconnection regulations & subsequent amendments, see http://www.trai.gov.in/Content/Regulation/0_1_REGULATIONS.aspx.

^{^[13]} See Telecommunication Interconnection Usage Charges (Eleventh Amendment) Regulations, 2015 (1 of 2015), available at http://www.trai.gov.in/Content/Regulation/0_1_REGULATIONS.aspx.

^{^[14]} Article 30 of the Universal Service Directive, Directive 2002/22/EC.

^{^[15]} See Telecommunication Mobile Number Portability (Sixth Amendment) Regulations, 2015 (3 of 2015), available at http://www.trai.gov.in/Content/Regulation/0_1_REGULATIONS.aspx.

^{^[16]} The Telecommunication (Broadcasting and Cable) Services (Seventh) (The Direct to Home Services) Tariff Order, 2015 (2 of 2015).

^{^[17]} Section 8, Cable Television Networks Act, 1995.

^{^[18]} TRAI writes new rules for Cable TV, Channels, Consumers, REAL TIME NEWS, (August 11, 2014), http://rtn.asia/rtn/233/1220_trai-writes-new-rules-cable-tv-channels-consumers.

^{^[19]} An initial requirement for all multi system operators to have a minimum capacity of 500 channels was revoked by the TDSAT in 2012. For more details, see http://www.televisionpost.com/cable/msos-not-required-to-have-500-channel-headends-tdsat/.

^{^[20]} Aparna Ghosh, Bharti SoftBank Invests $14 million in Hike, LIVE MINT, (April 2, 2014), http://www.livemint.com/Companies/nI38YwQL2eBgE6j93lRChM/Bharti-SoftBank-invests-14-million-in-mobile-messaging-app.html.

^{^[21]} Mike Masnick, Can We Kill This Ridiculous Shill-Spread Myth That CDNs Violate Net Neutrality? They Don't, https://www.techdirt.com/articles/20140812/04314528184/can-we-kill-this-ridiculous-shill-spread-myth-that-cdns-violate-net-neutrality-they-dont.shtml.

^{^[22]} Mathew Carley, What is Hayai's stance on "Net Neutrality"?, https://www.hayai.in/faq/hayais-stance-net-neutrality?c=mgc20150419

^{^[23]} Helani Galpaya & Shazna Zuhyle, South Asian Broadband Service Quality: Diagnosing the Bottlenecks, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1979928

^{^[24]} DTH players told to offer pay channels on la carte basis, HINDU BUSINESS LINE (July 22, 2010), http://www.thehindubusinessline.com/todays-paper/dth-players-told-to-offer-pay-channels-on-la-carte-basis/article999298.ece.

^{^[25]} The Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff Order, 2010.

^{^[26]} These suggestions were provided by Helani Galpaya and Sunil Abraham, based in some cases on existing practices.

^{^[27]} This is what is being followed by the Jana Loyalty Program: http://www.betaboston.com/news/2015/05/06/with-a-new-loyalty-program-mobile-app-marketplace-jana-pushes-deeper-into-the-developing-world/

^{^[28]} Example: free Internet access at low speeds, with data caps.

^{^[29]} Example: special "packs" for specific services like WhatsApp.

^{^[30]} Example: zero-rating of all locally-peered settlement-free traffic.

^{^[31]} Example: "leaky" walled gardens, such as the Jana Loyalty Program that provide limited access to all of the Web alongside access to the zero-rated content.

^{^[32]} Example: Wikipedia Zero.

^{^[33]} A CGNAT would be an instance of such a technology that poses network limitations.

For more details visit https://cis-india.org/internet-governance/blog/regulatory-perspectives-on-net-neutrality

CIS Submission to TRAI Consultation on Free Data

pranesh — 2016-07-01T16:04:27Z

The Telecom Regulatory Authority of India (TRAI) held a consultation on Free Data, for which CIS sent in the following comments.

The Telecom Regulatory Authority of India (TRAI) asked for public comments on free data. Below are the comments that CIS submitted to the four questions that it posed.

Question 1
Is there a need to have TSP agnostic platform to provide free data or suitable reimbursement to users, without violating the principles of Differential Pricing for Data laid down in TRAI Regulation? Please suggest the most suitable model to achieve the objective.

Is There a Need for Free Data?

No, there is no need for free data, just as there is no need for telephony or Internet. However, making provisions for free data would increase the amount of innovation in the Internet and telecom sector, and there is a good probability that it would lead to faster adoption of the Internet, and thus be beneficial in terms of commerce, freedom of expression, freedom of association, and many other ways.

Thus the question that a telecom regulator should ask is not whether there is a need for TSP agnostic platforms, but whether such platforms are harmful for competition, for consumers, and for innovation. The telecom regulator ought not undertake regulation unless there is evidence to show that harm has been caused or that harm is likely to be caused. In short, TRAI should not follow the precautionary principle, since the telecom and Internet sectors are greatly divergent from environmental protection: the burden of proof for showing that something ought to be prohibited ought to be on those calling for prohibition.

Goal: Regulating Gatekeeping

TRAI wouldn’t need to regulate price discrimination or Net neutrality if ISPs were not “gatekeepers” for last-mile access. “Gatekeeping” occurs when a single entity establishes itself as an exclusive route to reach a large number of people and businesses or, in network terms, nodes. It is not possible for Internet services to reach their end customers without passing through ISPs (generally telecom networks). The situation is very different in the middle-mile and for backhaul. Even though anti-competitive terms may exist in the middle-mile, especially given the opacity of terms in “transit agreements”, a packet is usually able to travel through multiple routes if one route is too expensive (even if that is not the shortest network path, and is thus inefficient in a way). However, this multiplicity of routes is generally not possible in the last mile.¹ This leaves last mile telecom operators (ISPs) in a position to unfairly discriminate between different Internet services or destinations or applications, while harming consumer choice.

However, the aim of regulation by TRAI cannot be to prevent gatekeeping, since that is not possible as long as there are a limited number of ISPs. For instance, even by the very act of charging money for access to the Internet, ISPs are guilty of “gatekeeping” since they are controlling who can and cannot access an Internet service that way. Instead, the aim of regulation by TRAI should be to “regulate gatekeepers to ensure they do not use their gatekeeping power to unjustly discriminate between similarly situated persons, content or traffic”, as we proposed in our submission to TRAI (on OTTs) last year.

Models for Free Data

There are multiple models possible for free data, none of which TRAI should prohibit unless it would enable OTTs to abuse their gatekeeping powers.

Government Incentives For Non-Differentiated Free Data

The government may opt to require all ISPs to provide free Internet to all at a minimum QoS in exchange for exemption from paying part of their USO contributions, or the government may pay ISPs for such access using their USO contributions.

TRAI should recommend to DoT that it set up a committee to study the feasibility of this model.

ISP subsidies

ISP subsidies of Internet access only make economic sense for the ISP under the following ‘Goldilocks’ condition is met: the experience with the subsidised service is ‘good enough’ for the consumers to want to continue to use such services, but ‘bad enough’ for a large number of them to want to move to unsubsidised, paid access.

Providing free Internet to all at a low speed.
1. This naturally discriminates against services and applications such as video streaming, but does not technically bar access to them.
Providing free access to the Internet with other restrictions on quality that aren’t discriminatory with respect to content, services, or applications.

Rewards model

A TSP-agnostic rewards platform will only come within the scope of TRAI regulation if the platform has some form of agreement with the TSPs, even if it is collectively. If the rewards platform doesn’t have any agreement with any TSP, then TRAI does not have the power to regulate it. However, if the rewards platform has an agreement with any TSP, it is unclear whether it would be allowed under the Differential Data Tariff Regulation, since the clause 3(2) read with paragraph 30 of the Explanatory Memorandum might disallow such an agreement.

Assuming for the sake of argument that platforms with such agreements are not disallowed, such platforms can engage in either post-purchase credits or pre-purchase credits, or both. In other words, it could be a situation where a person has to purchase a data pack, engage in some activity relating to the platform (answer surveys, use particular apps, etc.) and thereupon get credit of some form transferred to one’s SIM, or it could be a situation where even without purchasing a data pack, a consumer can earn credits and thereupon use those credits towards data.

The former kind of rewards platform is not as useful when it comes to encouraging people to use the Internet, since only those who already see worth in using in the Internet (and can afford it) will purchase a data pack in the first place. The second form, on the other hand is quite useful, and could be encouraged. However, this second model is not as easily workable, economically, for fixed line connections, since there is a higher initial investment involved.

Recharge API

A recharge API could be fashioned in one of two ways: (1) via the operating system on the phone, allowing a TSP or third parties (whether OTTs or other intermediaries) to transfer credit to the SIM card on the phone which have been bought wholesale. Another model could be that of all TSPs providing a recharge API for the use of third parties. Only the second model is likely to result in a “toll-free” experience since in the first model, like in the case of a rewards platform that requires up-front purchase of data packs, there has to be a investment made first before that amount is recouped. This is likely to hamper the utility of such a model.

Further, in the first case, TRAI would probably not have the powers to regulate such transactions, as there would be no need for any involvement by the TSP. If anti-competitive agreements or abuse of dominant position seems to be taking place, it would be up to the Competition Commission of India to investigate.

However, the second model would have to be overseen by TRAI to ensure that the recharge APIs don’t impose additional costs on OTTs, or unduly harm competition and innovation. For instance, there ought to be an open specification for such an API, which all the TSPs should use in order to reduce the costs on OTTs. Further, there should be no exclusivity, and no preferential treatment provided for the TSPs sister concerns or partners.

“0.example” sites

Other forms of free data, for instance by TSPs choosing not to charge for low-bandwidth traffic should be allowed, as long as it is not discriminatory, nor does it impose increased barriers to entry for OTTs. For instance, if a website self-certifies that it is low-bandwidth and optimized for Internet-enabled feature phones and uses 0.example.tld to signal this (just as wap.* were used in for WAP sites and m.* are used for mobile-optimized versions of many sites), then there is no reason why TSPs should be prohibited from not charging for the data consumed by such websites, as long as the TSP does so uniformly without discrimination. In such cases, the TSP is not harming competition, harming consumers, nor abusing its gatekeeping powers.

OTT-agnostic free data

If a TSP decides not to charge for specific forms of traffic (for example, video, or for locally-peered traffic) regardless of the Internet service from which that traffic emanates, as as long as it does so with the end customer’s consent, then there is no question of the TSP harming competition, harming consumers, nor abusing its gatekeeping powers. There is no reason such schemes should be prohibited by TRAI unless they distort markets and harm innovation.

Unified marketplace

One other way to do what is proposed as the “recharge API” model is to create a highly-regulated market where the gatekeeping powers of the ISP are diminished, and the ISP’s ability to leverage its exclusive access over its customers are curtailed. A comparison may be drawn here to the rules that are often set by standard-setting bodies where patents are involved: given that these patents are essential inputs, access to them must be allowed through fair, reasonable, and non-discriminatory licences. Access to the Internet and common carriers like telecom networks, being even more important (since alternatives exist to particular standards, but not to the Internet itself), must be placed at an even higher pedestal and thus even stricter regulation to ensure fair competition.

Transparency can take one of two forms: transparency to the regulator alone and transparency to the public. Transparency to the regulator alone would enable OTTs and ISPs to keep the terms of their commercial transactions secret from their competitors, but enable the regulator, upon request, to ensure that this doesn’t lead to anti-competitive practices. This model would increase the burden on the regulator, but would be more palatable to OTTs and ISPs, and more comparable to the wholesale data market where the terms of such agreements are strictly-guarded commercial secrets. On the other hand, requiring transparency to the public would reduce the burden on the regulator, despite coming at a cost of secrecy of commercial terms, and is far more preferable.

To resolve this, the regulator may propose that if an OTT wishes to engage in paid zero-rating, it will need to do so across all networks, since if it doesn’t there is risk of providing an unfair advantage to one network over another and increasing the gatekeeper effect rather than decreasing it.

Question 2

Whether such platforms need to be regulated by the TRAI or market be allowed to develop these platforms?

In many cases, TRAI would have no powers over such platforms, so the question of TRAI regulating does not arise. In all other cases, TRAI can allow the market to develop such platforms, and then see if any of them violates the Discriminatory Data Tariffs Regualation. For government-incentivised schemes that are proposed above, TRAI should take proactive measure in getting their feasibility evaluated.

Question 3

Whether free data or suitable reimbursement to users should be limited to mobile data users only or could it be extended through technical means to subscribers of fixed line broadband or leased line?

Spectrum is naturally a scarce resource, though technological advances (as dictated by Cooper’s Law) and more efficient management of spectrum make it less so. However, we have seen that fixed-line broadband has more or less stagnated for the past many years, while mobile access has increased. So the market distortionary power of fixed-line providers is far less than that of mobile providers. However, competition is far less in fixed-line Internet access services, while it is far higher in mobile Internet access. Switching costs in fixed-line Internet access services are also far higher than in mobile services. Given these differences, the regulation with regard to price discrimination might justifiably be different.

All in all, for this particular issue, it is unclear why different rules should apply to mobile users and fixed line users.

Question 4

Any other issue related to the matter of Consultation.

None.

In India’s mobile telecom sector, according to a Nielsen study, an estimated 15% of mobile users are multi-SIM users, meaning the “gatekeeping” effect is significantly reduced in both directions: Internet services can reach them via multiple ISPs, and conversely they can reach Internet services via multiple ISPs. See Nielsen, ‘Telecom Transitions: Tracking the Multi-SIM Phenomena in India’, http://www.nielsen.com/in/en/insights/reports/2015/telecom-transitions-tracking-the-multi-sim-phenomena-in-india.html↩

For more details visit https://cis-india.org/internet-governance/blog/cis-submission-trai-consultation-free-data