Editorial: Get your (free) basics right

By: |
January 12, 2016 12:34 AM

Differential pricing not necessarily discriminatory

While the Telecom Regulatory Authority of India (Trai) is yet to give its recommendations on differential pricing of data services, going by its initial comments, chances are it will decide against this. Its consultation paper received over 24 lakh comments, many of which could be termed ‘template’ responses—19 lakh responses were got from @supportfreebasics.in and @facebookmail.com and 4.84 lakh from forums like savetheinternet.in, apart from 15 service providers and nine associations. Trai would do well to keep in mind that while differential pricing can lead to discrimination, this is not necessarily so—indeed, as in the case of charges of predatory pricing, the regulator has to show that damage is being caused. A good example in this context is Facebook’s Free Basics that net neutrality activists are up in arms over. When RCom was offering Free Basics—Trai has asked it to put this on hold for now—was it preventing its users from accessing the internet except through Free Basics, or was it preventing a Google, say, from offering a Google Basics? If it was not practicing any such restrictions—since there is so much competition, it would be financial suicide for RCom to do this—Free Basics is just another service, causing no harm to anyone. Even if you assume Facebook prevented RCom from offering a similar service to others, the regulator would then have to look at RCom’s market share and see whether this was large enough to distort the market. Indeed, given that just a very tiny fraction of those using the internet are coming in through Free Basics, the attention being given to it is quite disproportionate, though Facebook’s assumption that poor Indians need free access to the internet is condescending.

Mobile phone manufacturers routinely pre-install certain apps on their handsets—loading an Amazon app as opposed to a Flikpart or a Snapdeal one looks discriminatory—but given how users can just as easily load other apps, not too much regulatory time is wasted upon this; in any case, the competition in the mobile phone space is also quite intense. Vodafone offering its customers a discounted price for Netflix, to use another hypothetical example, is not a problem as long as the telco is not unwilling—due to, say, an exclusivity clause in its contract with Netflix—to offer a similar deal to Eros Now or Hooq. Certainly it is true that, left unchecked, many agreements between telcos and others can eventually become discriminatory and can hurt competition. But, to stop this, the regulator needs to look at each agreement and come down on those that fall in this category—a blanket ban on grounds of possible abuse is no solution. Regulatory proportionality requires the action be commensurate with the likelihood and the size of the damage.

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