Permit zero-rating schemes for a limited period

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Updated: July 9, 2015 1:09:06 AM

The net neutrality debate has compelled the government to take note of the potential threats to the open and universally accessible character of the internet—for content and application providers on one hand and general users on the other.

The net neutrality debate has compelled the government to take note of the potential threats to the open and universally accessible character of the internet—for content and application providers on one hand and general users on the other. While the issue has gained prominence in India of late, it has been extensively debated in many countries for quite some time. Regulatory measures adopted in those countries can provide useful insight to policy planners. But these must be treated with circumvention, considering the fact that a large number of Indians are still deprived of internet access.

Many arguments, often conflicting, representing competing interest groups (telcos, internet companies, society representatives) have been advanced in the debate, which has somewhat obfuscated the primary goal of net neutrality—the welfare of the society through sharing of information, low cost of innovation, encouragement to entrepreneurship and availability of choices to the users. Non-discriminated access to different applications, database and other legal information available on the internet for all citizens is as crucial to the society as the existence of a robust telecom infrastructure.

The telecom access landscape dominated by private telcos—many of whom are in nascent stage of operations with inchoate infrastructure—has seen huge growth over the past decade. But this has not been sufficient for ensuring internet access to every nook and corner of the country and will require huge capital investments for many more years to come. Telecom operators have been employing various techniques, which are often in conflict with the core tenets of net neutrality, in order to protect their bottom lines from competing services being offered by internet companies.

‘Zero rating’ is one such discriminatory technique where telecom operators allow customers access to select online content or services at no additional cost through a prior arrangement with content providers. The selected sites are rated at zero cost to the customers, violating the essence of net neutrality, which requires non-discrimination between different content and applications.

The zero rating arrangement has many variants. One, in exchange of commercial arrangements or payments by entities owning the content or applications. Two, zero rating of select applications within a class of similar applications without any charges to the content or application provider. Three, zero rating of all applications within a class without any charges to the content or application providers. The practice has been in vogue in India, especially the second variant, wherein telcos treat their affiliated applications or content (games, music) over and above the data-cap of the user in limited tariff plans. Many tariff plans include unlimited access to select applications such as Facebook or Google free of cost or at fixed cost to the subscriber for a limited period. But the issue became controversial after the launch of by Facebook in association with Reliance and the Zero platform of Airtel.

As with all other aspects of net neutrality, zero rating has its share of proponents and opponents. The proponents, primarily telcos, try to paint their business case in zero rating with their benevolent intent in making internet available to low-income groups. They contend that access to limited variants of the internet shall spur demand for increased internet connectivity, which, in turn, shall lead to the economies of scale necessary for investment decisions.

The opponents cite lack of adequate data to establish correlation between increased internet subscription and zero-rated schemes. Their counter-claim is based on the premise that normalisation of these schemes shall prompt access providers adopt discriminatory practices on the pretext of making internet available. Such schemes might prompt the regular internet user to unsubscribe his internet plan and restrict himself to free schemes. These also have huge implications for startups.

Due to the network effect of big internet content providers, internet access providers tend to gravitate towards them. The opponents to zero rating argue that prohibition of paid-prioritisation in net neutrality regulations should not be restricted to technical discrimination but should also include tariff discrimination. In zero rating, telcos artificially make select apps more attractive and tilt the market in their favour.

The treatment to zero rating globally isn’t uniform. While regulators in Chile, the Netherlands, Slovenia and Canada have explicitly prohibited zero rating, regulators in Germany, Austria and Norway veer around the view that it violates net neutrality. On the other hand, contribution of zero rating in growth of internet penetration in many developing countries has been recognised. in Zambia, Ghana, Kenya, Tanzania and Columbia; Google Free Zone in Kenya, Sri Lanka, Thailand and the Philippines; Wikipedia Zero in Nepal are some examples.

Over 75% of Indians are bereft of any digital access. We need to give sufficient leeway to telcos and convince them of the potential RoI in expanding their existing telecom networks by allowing flexibility in their commercial arrangements and tariff offerings. But this flexibility should not be so wide so as to stifle basic tenets of free and unrestricted internet access. One such approach may be permitting these zero-rating plans for a limited period for any subscriber and subject these to the regulatory oversight as opposed to the regulatory forbearance currently practised by Trai for data tariff plans. We don’t need to reject zero-rating schemes outright.

The author is a former civil servant and a public policy consultant

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