Given how the Supreme Court (SC) struck down the Trai’s call-drop order on grounds of it being arbitrary, unreasonable and non-transparent, telcos would do well to challenge Trai’s order on differential pricing of data services—this has assumed great importance since leading telcos like Bharti Airtel, Vodafone, Idea and now newcomer RJio will be competing on not just the speed of their 4G data services but also their pricing of entertainment/video offerings. No matter how Trai may couch its order prohibiting differential pricing of data based on content, this flows from the notion of net-neutrality on which it has not spelled out its position. There was a consultation on net-neutrality by the previous Trai chairman, but this was not completed; instead, when the new chairman was appointed, he started a fresh consultation on only one part of the net neutrality issue. So, just as the SC mentioned ‘the (Trai) regulation does not lay down any quality of service’ as one of the reasons for striking down the call-drop order that was all about service-quality, Trai needs to spell out its position on net neutrality first—indeed, telcos bidding in the next auctions would do well to insist this is done before they fork out tens of thousands of crore rupees and later find their options limited by strict net neutrality rules.
Trai banned differential data pricing on grounds it would hurt customers, but didn’t show how this was going to happen. After all, in the case of a Free Basics, users may not have been getting the ‘full’ internet, but at least they were getting free access to some form of the internet—similarly, it is not clear how a telco offering lower tariffs for entertainment content to its users is hurting subscribers of other telcos. As the SC pointed out in the call-drop case, ‘a legislatively pre-determined penalty, without fault or loss being established … (is) manifestly arbitrary and unreasonable’. Indeed, while every country has its own definition of net neutrality, and it is in court in countries like the US, if strict net neutrality rules are followed—and allow, for instance, a WhatsApp voice to eat into a telco’s voice revenues—this will cut into telco profits and ensure a billion Indians continue to remain without access to the internet. There is little in Trai’s data-pricing order that acknowledges this challenge of who will build out India’s internet infrastructure if the private telcos find their revenue streams badly hit—naturally then, Trai does not respond to this issue which you would expect any regulation to do. But as SC pointed out in the call-drop case, ‘(Trai) must respond in a reasoned manner to (comments) that raise significant problems, to explain how the agency resolved any significant problems raised by the comments, and to show how that resolution led the agency to the ultimate rule … including a rational connection between the facts it found and the choices it made’. There are several other issues such as Trai not recognising that there were significant commercial interests on both sides of the net neutrality debate—and not just consumer interests, as it postulated—but they all point in the same direction of Trai not coming out with a well-reasoned order which could be considered rational and transparent.