Net neutrality: No free internet NLD, local calls

By: | Updated: July 17, 2015 3:28 PM

Panel also nixes paid prioritisation data plans

smartphonesMobile operators make about 3.45% of their revenues from international calls and around 18% and 56% from NLD and local calls, respectively. (Representationla Imgae: Thinkstock)

Taking a somewhat middle-of-the-road approach, a department of telecommunications-appointed committee on net neutrality has recommended that apps of over-the-top (OTT) players like Skype, WhatsApp and Viber can continue to be used for making international calls or for messaging, but they will have to be licensed when they are used for making either local or national long-distance (NLD) calls.

The report, which was released by DoT on Thursday, is recommendatory in nature and has sought stakeholders’ comment, which along with the report of the Telecom Regulatory Authority of India — when it comes — would be used by the government to finalise its policy on net neutrality.

FE was the first to report on the entire contents of the report in its July 1 edition and has been campaigning for the one service, one principle approach that requires regulation of OTTs.

While partial regulation of OTTs has been recommended by the DoT panel, on the contentious issue
of sponsored data plans it broadly views them against the principles of net neutrality.

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However, it has taken a nuanced stance on applying the principle to specific data plans. For instance, plans like Facebook’s Internet.org is a strict no-no as are any form of collaboration between telecom service providers (TSPs) and content providers that enable a gatekeeping role to be played by any entity that is seen to be against net neutrality. However, coming to Bharti Airtel’s Zero platform, it has said that a toll-free number kind of plan is fine but any ‘walled garden approach’ based on paid prioritisation should not be allowed. Since there is a possibility of providing several tariff plans, it has desisted from a blanket approval or disapproval approach and said that every tariff needs to be first approved by Trai against the principles of net neutrality.

The forbearance operators enjoy with regard to conventional voice and data tariff plans would not apply to any sponsored data plan. Instead, a prior approval of the regulator needs to be taken and in case of any dispute on the principles of net neutrality over such plans, DoT would be the final arbiter.

Broadly seen, the report comes as partial relief to leading telcos that are facing the possibility of OTTs cutting into their lucrative voice revenues since a 1-minute voice call gives telcos 40-50 paise of revenue, while a 1-minute VoIP call results in just 4 paise revenue. However, when it comes to data packages such as Airtel Zero or Internet.org, the going would not be that simple or straight.

Mobile operators make about 3.45% of their revenues from international calls and around 18% and 56% from NLD and local calls, respectively.

The issue of net neutrality had become contentious since Trai came out with a consultation paper in March asking, among other things, whether OTTs needed to be brought under the ambit of licensing conditions. A viral social media campaign also ensured Bharti Airtel withdrew a package charging differential rates — three times the normal rate for regular data packages — for VoIP services. While the telco has not withdrawn its Airtel Zero package, a high-pitched campaign saw the country’s largest e-commerce player Flipkart desisting from joining it.

‘Specific OTT communication services dealing with messaging should not be interfered with through regulatory instruments,’ the report has said, while maintaining that status quo should be maintained in this regard.

On VoIP-based communication services, the report says, ‘In case of domestic calls (local and national), communication services by TSPs and OTT communication services may be treated similarly from a regulatory angle for the present. The nature of regulatory similarity, the calibration of regulatory response and its phasing can be appropriately determined after public consultations and Trai’s recommendations to this effect.’

‘In contrast to OTT communication services, there’s no case for prescribing regulatory oversight for OTT application services,’ the committee concluded.

The committee has argued its case for treating messaging application services and communication services differently. ‘In the case of VoIP OTT communication services, there exists a regulatory arbitrage wherein such services also bypass the existing licensing and regulatory regime creating a non-level playing field between TSPs and OTT providers both competing for the same service provision. Public policy response requires that regulatory arbitrage does not dictate winners and losers in a competitive market by service provision,’ the report noted.

Proponents of OTT operations argue that if operators lose out on voice revenue, they still earn data revenue through services like WhatsApp or Viber. However, the realisation for a mobile operator is not similar from voice calls and data services. For instance, a minute of voice usage on mobile phone fetches an operator around 50 paise. In the case of a similar duration of VoIP call, there’s a realisation of only 4 paise.

Mobile operators maintain that if they are not offered a level playing field with OTTs, their businesses would be viable only by raising data prices by up to six times. Such high rates, they say, would become unaffordable for a large number of people, denying them access to the internet. They have been urging that the principle of same service, same rules be applied to bring voice calls and VoIP under the same regulatory regime.

On average, revenues earned through data by mobile operators is around 25 paise per MB of data and the average size of a one-minute VoIP call is around 150 KB. The average holding time in a call is of two minutes whereas in the case of VoIP calls it is around 12 minutes. It is this difference between prices of voice calls and VoIP calls that has prompted the proliferation and success of communication OTT apps. The low cost of usage incentivises the user to have longer conversations in VoIP calls compared with traditional telecom calls, which further congests networks.

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