Trai’s consultation paper on differential pricing is seriously handicapped by the lack of relevant data & information
In early December, the Telecom Regulatory Authority of India (Trai) issued its “Consultative Document on Differential Pricing for Data Services”. It sought views from the public and stakeholders on whether telecom companies should be allowed to price internet access based on the nature of internet content. The issue is important for India but unfortunately, the document and process are whimsical and further complicate an already contentious debate on net neutrality. In short, the document is a crude and simplistic fudge.
It is a fudge because it deals piecemeal with a part of the net neutrality debate—about which another consultation is already underway—and without reference to the ongoing process or an explanation as to why a new consultation was necessary.
The Trai has an ongoing consultation on a related subject which started in March 2015. In this, it sought views on whether telecom operators—India’s main internet service providers (ISPs)—can charge differential rates for OTT (over-the-top) internet services. It was largely focused on services such as Skype and WhatsApp which offer telephony and messaging, using the internet. The document generated a heated debate and attracted over a million responses, both for and against. The Trai has yet to complete this consultative process and make recommendations to the government.
The Trai’s new consultation seeks views on whether telecom operators must be allowed to provide subsidised or free access to some websites or services. a practice called “zero-rating” in the context of net neutrality regulation.
Most regulators and activists would see a connection between the two consultations. Both relate to whether an ISP should be allowed to charge a differential price—whether a premium price or zero-rating—for accessing any web content. Virtually all commentators, media and players, on either side of the net neutrality debate, see the issues as related.
Surprisingly, Trai seemed to see it much the same way in the earlier document which mentioned net neutrality and differential pricing explicitly in several places. In fact, a specific question was: “Is there a justification for allowing differential pricing for data access and OTT communication services?” This is not very different from the first of the four questions in the new consultation. It asks: “Should the TSPs be allowed to have differential pricing for data usage for accessing different websites, applications or platforms?” Trai has not shared any reasons, rationale or urgency for a new consultation.
Trai’s new document conspicuously avoids familiar terminology including net neutrality, paid prioritisation or zero-rating. Again, without explanation, Trai chairperson RS Sharma was reported by NDTV as saying the issue “may be a part of net neutrality”. However, the current consultation refers to “a specific problem which has come to the notice of Trai” (sic). He is presumably referring to, as the document says, “some plans [that] have come to notice of Trai which amount to differential tariff plans of the TSPs who offer zero or discounted tariffs of certain websites /applications /platforms” (sic).
The new document is largely devoid of any relevant data. With barely 21 short paragraphs and just 4 questions, it is brief, (interestingly, like the previous consultative document on penalties for call drops). The Trai’s consultative documents, barring rare exceptions, have traditionally contained significant background information and relevant market data, besides international experience. The current document, on the other hand, lacks even the data that would be expected from Trai for analysing the issues on hand. After all, companies are mandated to file all their tariffs with the Trai. However, there is no information about the number of companies who offer zero-rated services, or of tariffs filed, or otherwise reported from the market, to gauge the nature and size of the challenge.
The Trai document makes several references to discriminatory tariffs and competition. However, there is little analysis done or guidance provided to stakeholders—of the nature and intensity of competition in the telecom market in India. For instance, in a market with 6-10 major players in each service area, can any player perform a gate-keeping function, as the document suggests?
The absence of quality information and data is a serious handicap in a consultation about a complex and contentious issue like net neutrality. It prevents a proportional response suited to India’s specific environment. For instance, India is unique in three important respects: First, that network bandwidth is a serious handicap in India since the network is predominantly wireless. Second, over 80% of its population have no access to the internet. Third, the very high level of competition between mobile operators. This is unlike almost all countries actively engaged with the issue.
Few countries see the zero-rating in binary yes/no terms. Over 90% of countries have no rules in place for zero-rating. There is significant difference between the dozen-odd countries that do have some rules in place to deal with net neutrality or zero rating. The US, for example, has a net neutrality law in place, but does not ban zero-rating outright. It will treat each type of zero-rating on a case by case by basis. In the circumstances, it is odd that India is undertaking a separate consultation, almost entirely focused on zero-rating and yet with virtually no discussion of its own many facets. This is worrying and defies comprehension.
An explanation for the curious approach may be that new document has a radically different tone from the earlier one. The previous document spoke about net neutrality, but focused largely on OTT services and the threat they posed to telecom operators. It was widely criticised for this. The new document swings in the opposite direction: It seems more concerned about the threat posed by the operators offering zero-rated services. Avoiding a reference to the older paper and abandoning terminology in widespread use, arguably helps Trai avoid awkward questions about the new stance.
Trai’s tariff regulation powers are binding on all players, including the government. Basing such regulation on a questionable regulatory process, devoid of relevant data or informed analysis is risky. Mistakes can hurt all stakeholders including operators, content players as well as users of zero-rated services and will be time consuming and expensive to correct. This is sufficient reason to avoid unorthodox fudges.
The author is a consultant and specialises in regulatory aspects of telecom and internet markets