The Trai decision, in February, to rule out differential pricing on data on grounds that this violated net neutrality was always puzzling since, as Trai’s order said, differential pricing was allowed on a case-by-case basis in even the US and the EU. What was even odder was the intranet loophole Trai left when it said “data transmitted over closed electronic communications networks, such as intranets are not prohibited by these regulations”. Theoretically, this meant that while a telco, couldn’t offer movies to its subscribers at a lower rate—say by working out a deal with a Netflix which also offered this service independently—it could use the intranet loophole. That is, instead of, say, an Airtel/RJio customer being routed the normal way—from her phone to Airtel/RJio’s spectrum to its base transceiver station to its switch and from there, through a gateway to the internet where a video was stored—the customer would just be routed from the Airtel/RJio switch to an Airtel/RJio server where the same video would be stored. If Trai thought a Facebook tying up with an RCom to allow customers free access to all websites that met certain technical standards—in terms of being data-light—violated net neutrality, this is pretty much the same.
With Bharti Airtel thinking of tying up with a US-based commercial content provider—which obviously offers the same content to others, probably on the internet, for a fee—it has asked Trai if hosting this on the intranet conforms to net neutrality principles. If Trai says it is not, the saving grace for Bharti Airtel is that rivals like RJio will also be prohibited from offering a similar service—unless RJio buys content and ensures this is not sold separately to users, which is unlikely to be the case for new entertainment content that users will want. While that works as a tit-for-tat strategy, given how much money telcos have invested in rolling out their networks, and need to invest in the future for buying spectrum as well as augmenting networks, it will hurt everyone since entertainment is the biggest draw for data on the mobile phone. What will then happen is that all telecom companies will supply the same content at the same prices to their users and, in effect, get reduced to simply dumb pipes—since, in this model, the bulk of the money accrues to the creators of content and not the pipes that carry this content, this reduces their incentive to invest in the future. That is something the telecom regulator will need to consider after needlessly tying itself up in knots with its net neutrality decision in February.