Column: A case of poor connection

By: |
December 22, 2015 1:11 AM

Trai is wrong to assume differential data-pricing discriminates between subscribers

The Telecom Regulatory Authority of India (Trai) has recently issued a consultation paper on data pricing raising, inter alia, the question: Will the service-providers be allowed to have differential pricing for data usage, i.e., will the user be charged differently for accessing different websites, applications or platform?

Trai seems to be guided to raise this question because there is a provision in its tariff order which requires that service-providers shall not, in the matter of application of tariffs, discriminate between subscribers of the same class and such classification of subscriber shall not be arbitrary. Now, let us see the above in the light of the question raised by the Trai consultation paper. The question is also an acknowledgement that the differentiation that Trai is looking at is with regards to platform and not with regard to subscribers. In the situation mentioned in the question neither the operator is making any discrimination with reference to the subscriber of same class nor the classification is arbitrary. The only classification is with regard to portal and not with regard to customer.

Under the Act outlining its functions, Trai is mandated to protect the interest of consumers as well as of the operators. Trai has no obligation towards the non-licensed telecom entities. Therefore, the issue of discrimination needs to be seen from the point of view of customer classification and not platform-operators classification .

This essentially means that the question should be whether a telecom service-provider can come out with a plan which offers differential tariff to customers for accessing the same platform? If this is being done by the operator, then the Trai tariff order provision gets triggered to ensure that the classification is not arbitrary, but when the classification is only with regard to website or platform, and has nothing to do with the classification of subscribers, Trai need not put any restrictions Trai’s enthusiasm to look into this issue of data pricing is being justified by it with the argument that several negative effects might ensue because differential tariffs for platforms will result in classification of subscribers based on the content they want to access (those who want to access non-participating content will be charged at a higher rate than those who want to access participating content). This may potentially go against the principle of non-discriminatory tariff.

Here, again, Trai’s thinking is fallacious. The question we need to ask is whether all customers wanting to access participating content will be paying the same tariff or not? So, long as the answer to this is yes the question of discrimination does not arise. It will be true for non-participating content as well.

The second apprehension raised by Trai is that differential tariffs arguably disadvantage small content-providers who may not be able to participate in such schemes. Such providers may have difficulty in attracting users, if there exist substitutes for free. This may thus create entry barriers and a non-level playing field for these players, ultimately stifling innovation. Therefore, the tariff offerings have to be studied from the perspective whether it promotes or harms competition.

Again, Trai misses the fact it is trying to fight the case of discrimination between content providers as a class, while these content providers are neither in the scope of telecom laws nor they are covered under the Trai’s mandate. It is not the regulator’s job to provide protection to non-licensed content-providers. Even otherwise, it is not the entry cost that guides the decision of a customer to visit a specific platform but the compelling content of the platform that guides the decision.

Therefore, Trai would do well to pay heed to a word of caution. It is trying to examine the issue of discrimination amongst content-providers, under the excuse of discrimination of customers when no such discrimination exists in classification of subscribers in the differential data-pricing for platforms so long as all subscribers are offered the same tariff for the same platform.

The author is founder and CEO, Tathya Consulting

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Bad regulations could play spoilsport for online gaming
2Maligning Infosys, Amazon uncalled for, goes against govt’s vision of encouraging industry
3Fuelling inflation: Fuel prices pinching, get disinvestment right to lower fuel levies