The Jekyll and Hyde in net neutrality

By: , and |
Updated: Apr 22, 2015 11:01 AM

We must come up with a solution that carefully balances investment while protecting the internet as a vital political and economic space

net neutrality, net neutrality india, net neutrality debate, net neutrality news, European Commission, OTT services, OTT players, WhatsApp, Whatsapp calls, Skype, skype call, Telecom Regulatory Authority of IndiaThe internet has suddenly exploded with calls for net neutrality from users, politicians, celebrities, talking heads and newspapers. (Rohnit Phore)

Consultation papers released by the Telecom Regulatory Authority of India (Trai) don’t normally generate too much public excitement—the ‘views’ counter for the papers on Trai’s website rarely climbs past the 5,000 mark. In just over three weeks, however, the Trai consultation paper on ‘Regulatory Framework for Over-the-top (OTT) services’ has clocked over 41,000 views. If that number seems astonishing for a government paper on regulatory policy, it is dwarfed by the 3 lakh emails from internet users sent to Trai, courtesy the website “”, the activity on which has, in turn, surged because of comedy troupe AIB’s “Save the Internet” video on YouTube—the video petition’s response to Trai in favour of net neutrality and has been viewed 21 lakh times. The internet has suddenly exploded with calls for net neutrality from users, politicians, celebrities, talking heads and newspapers. The unprecedented backlash to the undertone in Trai’s consultation paper questioning the immediate merit of introducing net neutrality in India also forced content providers such as Flipkart and NDTV to hastily withdraw from their partnership deals with Airtel’s ‘Zero’ and Facebook’s ‘’, respectively, which while delivering free services to users, could potentially fall foul of the principles of net neutrality.

By any measure, such an impassioned response to a technical regulatory issue would seem extraordinary to anybody who hadn’t previously followed the net neutrality debate in the US. For those who did, the Indian response should strongly invoke a sense of deja vu. A little under a year ago, the US Federal Communications Commission (FCC) website crashed after being inundated with thousands of public comments on a consultation paper that sought public opinion on net neutrality. The cause of this spike? A YouTube video on the subject by comedian John Oliver that ended with him urging viewers to write to the FCC. The video sparked what quickly became an issue of national importance, with mobilisation and public demand eventually causing President Barack Obama to issue a statement favouring net neutrality and the FCC eventually ruling to embrace it. And so here, as there, the issue seems to become an article of faith almost overnight. Here, as there, the telecom service providers’ injured reputations mean that the public denies them any benefit of doubt (and Airtel’s sinister ‘Zero’ moniker is not doing it any favours). And here, as there, the outpouring of public demand in effect seems to have already taken the issue out of the regulator’s hands.

In the absence of regulation and notified principles on the subject, let’s do the next best thing that is often done in such situations in India, i.e. airlift the bright-line rules the US has just implemented that “ban paid prioritisation, and the blocking and throttling of lawful content and services” and ask whether Airtel Zero and Facebook violate these touchstones? There is no doubt that they do and given the immense social media pressure such deals will perhaps disintegrate on their own. But that’s not the point. It is, is India ready for net neutrality?

Let’s look at the essentials on both sides of the extremely polarised and skewed debate. One might add that fence-sitting is grossly unpopular and rare. Proponents invoke the ‘utilities’ argument, comparing internet provision to electricity access for which providers cannot and should not have a say in end-use. Would you like to be told which equipment can and cannot be powered by the electricity you have paid for? Advocates equate discrimination with internet censorship and the resultant lack of transparency as restrictions on access that they are loath to accept. A more adroit but subtle case in favour of net neutrality is that it is near impossible to predict the path that innovation on the internet will take.

The resources and user-technology interactions that will create the ‘primordial soup’ of conditions suited to new innovation cannot be determined in advance and so should be left alone—the unprecedented speed with which the internet has evolved is cited as proof of this phenomenon and artificial constraints on access are thus opposed. The standard narrative in favour of net neutrality takes two things as a given—that the infrastructure exists to enable participation and access, and that an absence of net neutrality regulation will affect both users and innovation adversely.

Naysayers, however, argue that in the face of capacity constraints, the most efficient way to manage a resource is through some form of price discrimination (a la, toll roads) where users self-select through willingness to pay. In economics jargon, internet has become ‘rivalrous’—one person’s use affects the other’s due to such capacity constraints. On the other hand, a rural road is both non-excludable and non-rival since commuters enjoy its services without getting in each other’s way. And, in all cases, rural roads are publicly funded. For a privately funded ‘utility’ such as the internet to expand and to realise the digital infrastructure India needs and indeed deserves, some form of price discrimination for cost recovery ought to be possible. Consumers should have the right to choose whether they want to pay for full-service internet access or select services. Those willing to pay, choose to use it although it does raise concerns of inequity in public spaces.

But the crux is really how to best manage India’s limited internet access resources and to embed incentives for expanding it.

If viewed objectively (shorn of the rhetoric), both sides seem reasonable. The net neutrality knot is thus quite difficult to untie. And much of the current perspectives on the subject are coloured by how the internet has existed historically in a state of de facto neutrality. That coupled with how internet access is increasingly viewed as a political right (and understandably so—one need only look to the Middle-East for a reminder) means that any critical assessment of net neutrality is made at the risk of angering a vocal and passionate citizenry. But an objective assessment is essential, even to determine whether implementation and enforcement of the rule is possible. Do India’s regulatory institutions possess the capacity to ensure compliance? Ensuring technical adherence ex ante is near impossible—the examination of internet traffic is both prohibitively expensive as well as counter-productive. And if compliance is sought under threat of ex post penalties, we must bear in mind that our adjudicatory institutions are overburdened—if not carefully designed, we risk such penalties simply being absorbed as a cost of doing business.

None of this is to in any way suggest that India must abandon the cause of net neutrality—the public attention is an opportunity. Instead, India must resist succumbing to a partisan framing of the debate that demands picking sides, and come up with a solution that carefully balances investment while protecting the internet as a vital political and economic space. Economists often discuss policy choices using the ‘Theory of the Second Best’—the broad idea that, in a state of multiple constraints, relieving one may not improve and indeed could worsen the situation.

While we debate net neutrality, one possible course of action, inspired by the archives on regulation in Trai, is to allow ‘non-neutral’ retail arrangements but mandate that all operators make available a minimum ‘all access’ plan at a minimum quality of service and a specific price. In 1999, Trai introduced a standard tariff package (STP) to be always available to the subscriber regardless of and in addition to alternatives designed by service providers based on custom and usage. The STP thus serves as an insurance against service provider exploitation. Such ‘soft touch’ regulation for internet access could be coupled with requirements for operators to declare non-neutral plans as clearly being so, much like the client education rules common in financial services. Another possible solution could be to rein in operator-content provider arrangements while still allowing price discrimination—operators being allowed to manage their networks based on usage and capacity constraints seems somewhat reasonable, even as financial arrangements to throttle competition are decidedly not. These may not be perfect solutions, but they show that it is possible to avoid being forced into picking a side. If India is to have rules protecting the internet, then surely they can be made in India. Compromise is not always a bad word. To quote Robert Louis Stevenson, it is the best and cheapest lawyer.

Kathuria is director and chief executive at the Indian Council for Research on International Economic Relations (ICRIER). Kedia is a research associate and Urdhwareshe is a research assistant at ICRIER. Views are personal

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