Over the past few weeks, net neutrality has become a major topic of discussion in India. It started soon after the Telecom Regulatory Authority of India (Trai) brought out a consultation paper on regulating over the top (OTT) services. The response was phenomenal—Trai received over a million responses from people across the country. FE in partnership with Ficci organised a debate—Decoding Net Neutrality—to understand what the major issues were. Sunil Jain, managing editor, The Financial Express moderated the two hour-long discussion. Excerpts:
Anant Goenka, wholetime director and head of new media, The Indian Express: Ladies and gentlemen, a very warm welcome and good afternoon. Thank you all for being here. Globally net neutrality can best be described as work in progress. I am personally very glad that The Indian Express and The Financial Express have taken opposing points of view, both equally valued and well researched. At the Express nothing excites us more than a good debate, so I am really looking forward to this. I would like to thank Ficci for taking the initiative to have a fair and neutral debate.
Sunil Jain, managing editor, The Financial Express: Thanks Anant. Rahul Gandhi has sought a debate in Parliament on net neutrality. This is a subject which would go to Parliament and possibly to the Supreme Court as well. There are a lot of global rules that are to be worked out. In different countries, we are looking at these things differently. We all talk about the US, where the FCC has given a 3:2 ruling. We also have former FCC chairman Kevin Martin with us here today. I plan to raise four or five basic questions for which we need answers. I want to begin with Rajeev Chandrasekhar on what net neutrality means.
Decoding Net Neutrality: Part 1
Rajeev Chandrasekhar, MP, Rajya Sabha: This is for the first time that you have actually seen such a consumer movement pushing back against what is in my opinion, a reasonably biased consultation process. That is a politically correct version of it. What is net neutrality? There is an effort under way to pitch this as complicated, utopian and philosophical. This is about market abuse. My view is that the telco, the internet access provider is not an internet player. They are operating as access to the internet. The internet under net neutrality is a completely different organism. It is a public network. It has evolved as a collaborative set of computer networks. It is these days that it has started becoming more valuable, because of the number of consumers and commercials and the marketplace players on the internet. But with operators having started to say that we want to be able to control the internet, that’s where I have a problem.
Rajan Mathews, director general, COAI: We are suggesting that the same service be subject to same rules. We believe we have been very, very innovative in the services we have offered the consumer. We seem to be the only business where offering something free is counter-intuitive. We have a billion customers, who we need to put on the internet. We need to ask the government what is the governance model. I think we have put the cart before the horse and have not looked at the larger issue.
Decoding Net Neutrality: Part 2
Rajat Kathuria, director and chief executive, ICRIER: By discussing net neutrality in isolation, we may not have the entire picture. If this is a public network for public good, yet at the same time, it is funded by the private sector, it needs to be assigned to many users at the retail level and at the wholesale level, to figure out the best way to do this.
Mahesh Uppal, director, Com First: We must accept that there is no clarity on net neutrality. I think, the generic decision that public networks should be accessible equally to users is a sensible position. But, we must recognise that this criteria must apply to all public networks, be it roads or any other public network. These are early days for net neutrality approach specific for India. Unlike any other network, ours is a predominantly wireless network. Whether we like it or not, nature is not manufacturing spectrum any more. So there is a limit to how much spectrum we have and how much traffic it will hold. You may recall that the net neutrality rules in the US did not apply to wireless network till recently. But I do want is that any prioritisation that takes place, happens within the well accepted norms and within best world practices.
Subho Ray, president, IAMAI: There should be no blocking, throttling and preferential treatment. There should be no prioritisation. And what Chandrasekhar missed out is that this should not be done on a commercial basis. Everybody agrees that there is need for network optimisation, which is a technical issue.
Ankhi Das, head, Public Policy, Facebook India: Internet.Org is based on three principles. It is non-exclusive, all operators can participate. Number two, it is free, free free. Facebook doesn’t pay an operator anything. Content providers are not paying anything. It is a technical arrangement to make the app available and there is a marketing support that we are providing to create awareness for the Internet.org app. There is no cash changing hands. Internet.org is a free app provided free to Indian users. Number three is that the content piece for our app is for unconnected consumers and in coming days we will come out with tools and put out information for their participation.
It’s free, no one has to pay to join the app: Ankhi Das, Facebook India, on internet.org
Pranesh Prakash, policy director, Centre for Internet & Society: Neutrality as regulation is to ensure that gatekeepers (telcos) do not use their unique powers to unjustly discriminate on grounds of content, source, destination or type of traffic. So essential to all of these is the role of the gate keepers. Competition is the best regulation. Any kind of negative discrimination should be strictly prohibited. The rest we can have a reasonable dialogue on how the network management we need.
Sunil Jain: This is like the blind man looking at the elephant. Everybody seems to be pro-net neutrality and if everybody is for pro-net neutrality, why are we having this discussion. We need to be more specific. What I can make out is that you can do a kind of discrimination if you will, you can do some sort of fast lane if you will, but you cannot do them for an individual. But you can do so for a class of service. So you can therefore say VoIP service will reach users faster than e-mail. So, are we clear and agreed that you can have quality of service regulations for certain classes of service?
Rajeev: This is not for the first time that things are being shown in different perspective. This happened in the case of WLL and then with 2G spectrum auctions where the way to public opinion initially is that this is not good. The specific issue today is that the power of the network operator which is taking the consumer on the internet must be regulated. The fundamental issue of net neutrality is the owner of the pipeline must not have the power to start steering traffic.
Sunil Jain: A whole lot of people want to know can I use
WhatsApp voice on the data pack that I have or will Airtel make it difficult for me to use?
Rajan: We do not do things arbitrarily. We are offering customers choice. Let the recommendations come and then let’s see where it goes. Beyond that there are issues of commercial rights that have to be addressed. This is why I said this is not going to happen before the Supreme Court rules.
Sunil Jain: You are making a point that it is perfectly okay for Airtel, Vodafone or any other operator to say that my data pack cost for normal data and another for voice.
Rajan: Please understand, there is a difference between differentiation and discrimination. We do not discriminate we do differentiate. All businesses differentiate.
Rajat Kathuria: To an economist, discrimination and differentiation are no different. So price discrimination is a way of differentiating between a certain class of subscriber, as long as that discrimination is not arbitrary. And that is permissible. As Pranesh was saying, competition is the best regulation. In the US the trigger to this entire debate was the power enjoyed by the geographical monopoly of ISPs that made them dominant and they used it in their favour. ISPs in India do not enjoy that kind of monopoly power. In order to regulate you have to ensure what do you want to regulate and that you have enough instruments and capacity to be able to enforce that regulation that you are going to put in place.
Rajat Kathuria, Director and Chief Executive, ICRIER on the whole debate around Net Neutrality
Mahesh Uppal: Market abuse per se not is acceptable. If anybody is abusing the gateway in any way to discriminate between a class of people who should not be differentiated between, that is unacceptable. We must recognise that network neutrality is compounded in the Indian regulatory context. World over you would regulate in a technology neutral fashion. You have four ways of providing voice telephony—fixed lines, mobile phones, satellite phones and voice over IP. Unfortunately, we are unable to regulate all of them in the same way. So if the goal is to regulate by functionality which I think is sound regulatory practice, then clearly there is something wrong in our regulatory approach to some of these services, which is compounding the problem; which is actually providing an incentive to violate network neutrality.
Rajeev: The telcos business model is getting messed up because of all the innovation on the net. Therefore they should have a renegotiated settlement on the license fees, effectively that is the point Mahesh is making. But that has nothing to do with net neutrality. That is the separate discussion. Operators are shooting themselves on the foot. Nobody asked them to bid for spectrum at levels you are pricing. It is not that telcos are not benefiting from OTT or what is happening on the net. Data revenues are climbing. It is the benefit that is accruing to the access providers from what is happening on the internet. Now Rajan has threatened of going to the Supreme Court and getting a settlement. That is a separate issue and has nothing to do with the net neutrality and consumer rights.
Baijayant Jay Panda, MP, Rajya Sabha: I have family interests in entities that would benefit from lack of net neutrality. But I have come out in favour of net neutrality in all aspects. There are two broad issues from which flows the debate on net neutrality. One is the classical free market debate on not allowing cartels to develop. It is ironic that many of the sponsors of some of these data plans are entities that grew up because of net neutrality—the Googles, Facebook, Zomato.
It will come to our lap soon, as was stated in Parliament. After Trai takes a decision, the ministry will take a call, the Cabinet will take a call, it might go to the courts. Certainly in Parliament, there are many of us who want to legislate to ensure that there is a level playing field. You can talk on classes of services that can be prioritised such as 911 access, emergency access or to harness government schemes such as Jan Dhan so that financial transactions get some priority. Spectrum may be limited but access in the future is not going to be limited. There would be new ways of providing access.
Sunil Jain: Kevin used to be head of FCC in 2009. Assuming that FCC rules are perfect, does the FCC allow for a class of service like the VoIP to be charging a higher package?
Kevin J Martin, former chairman, US Federal Communication Commission: It allows for a class of services to be prioritised but not for a fee. So what it says is that Voice over IP and real time communications, an operator can allow all those packets to be prioritised in order for them to function properly. They can’t offer it as a separate service for a fee.
Sunil Jain: Are you okay with zero rating?
Jay Panda: Absolutely not. I thought I made it clear, because zero rating creates fragmentation. It creates perhaps a new category of first time internet users, that has some benefit. This is what the FCC also has said. But it does create a sort of walled garden in the sense that those who are sponsoring that plan, only their sites or their apps gets accessed.
Rajeev: Let’s say Facebook for example or Internet.org. If they are abusing their presence on the net to grow bigger by making sure all other apps are throttled and killed because of their market abuse. That is for the Competition Commission of India (CCI) and the existing domestic competition laws to intervene. And that is not legislating one time. So on zero tariff I have a problem.
Rajat: I would like to know from Kevin regarding discriminating pricing for voice is not allowed in the US. Under what provisions of US is this not allowed? Was it something that FCC did it or was it done by the CCI?
Kevin: A separate set of net neutrality rules were adopted recently. The Commission recently re-established that these were telecommunication services and they adopted additional net neutrality rules that has to be provided on a non-discriminating basis.
Pranesh Prakash: Fifteen years ago, those content providers who were giving free access to contents were saying ISPs are benefiting from this. They are able to charge customers directly. ISPs are to give us money. That is exactly the opposite of the argument made now by ISPs.
Sunil Jain: The talk is about how public spaces need to be free. The debate in India is that public space is created by private money. If BSNL had created this, I think it would have been a different talk that we are having now. What Trai seems to be saying is that if there is a normal voice call, the operator earns 40 paise, if that same call is made through VoIP he earns one or two paise. How are we going to be able to fund the future growth of the internet. Jay, the point you made about vouchers, payments. 85% of Indians do not have access to the internet today. Telcos claim that they are cash strapped. If we say that the OTT are not going to be licensees like telcos, how are we going to build out the internet?
Jay Panda: I am not saying that the government is blameless. Clearly, the government wasn’t ahead of the curve and certainly and partly responsible for the mess that we are in. But it was only the telcos who benefited from VoIP not being allowed to interconnect to the PSTN (public switched telecom network). That is a fact, not an opinion. How do we go forward. The telcos have contributed to the USO Fund, which the government is sitting on. We have got billions of dollars. I have raised this question many a times in Parliament over the past 7-8 years. It ought to be used to roll out and make internet available all over the country and the government has to chip in.
There should be no prioritisation of one brand over another: Baijayant Jay Panda on Net Neutrality
Mahesh Uppal: I think Mr Panda’s point is certainly half correct which is that currently VoIP calls are not possible to be terminated on the PSTN despite the regulation not specifically barring that. So clearly, that is a commercial decision rightly or wrongly that it is not barred by regulation. However, the second point that VOIP calls are currently subject to certain regulatory advantages, which clearly creates new problems.
Jay Panda: As far as the argument goes that OTTs should be unregulated, I am generally in favour of that because it promotes entrepreneurship and promotes benefits down the line.
Rajat Kathuria: The distinct regulatory burden on services has created lot of anomalies and arbitrage within India and I think it is better rather than going up to the level, you revert down. We need not mix the issue of net neutrality with OTT licensing. We have to keep those two separately. This would lead to further distortion.
We seem to be the only business where offering something free is counter-intuitive. We have a billion customers, who we need to put on the internet. We need to ask the government what is the governance model. I think we have put the cart before the horse and have not looked at the larger issue.
Rajan Mathews, Director general, COAI
It is free, free free. Facebook doesn’t pay an operator anything. Content providers are not paying anything. It is free to the users. It is a technical arrangement to make the app available and there is marketing support that we are providing to create awareness for the Internet.org app. There is no cash changing hands.
Ankhi Das, Head, public policy, Facebook India
I am not saying that the government is blameless. Clearly, the government wasn’t ahead of the curve and is partly responsible for the mess that we are in. But it was only the telcos who benefited from VoIP not being allowed to interconnect to the PSTN network.
Baijayant Jay Panda, MP, Rajya Sabha
If this is a public network for public good, yet at the same time it is funded by the private sector, it needs to be assigned to many users at the retail level and at the wholesale level, to figure out the best way to do this.
Rajat Kathuria, Director and chief executive, ICRIER.