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7th November 2023 (8 Topics)

Threats to Net neutrality in India


Recently, the Telecom Regulatory Authority of India (TRAI), at the request of the government, invited a comprehensive consultation on the need and possible mechanisms for regulation of Over-The-Top (OTT) services.

  • Upholding the principles of net neutrality is essential to foster a conducive environment for innovation, competition, and consumer welfare, especially in India.

What does Net Neutrality means?

  • Net neutrality is the principle that an Internet Service Provider (ISP) has to provide access to all sites, content, and applications at the same speed, under the same conditions, without blocking or giving preference to any content.

Why it is important to maintain net neutrality?

  • For users, net neutrality enables access and transparency of internet content and allows access to all internet services and applications.

Issues to Telecom companies:

  • For more than a decade now, telecom companies have seen revenue from traditional streams such as voice calls and Short Message Service (SMS) come under pressure, as competing OTT services are often free.
  • At the same time, they have had to invest heavily in upgrading their infrastructure to handle increased data traffic, without necessarily seeing an equivalent rise in revenue.
  • It is also their lament that OTT services are not subject to the same level of taxation and licensing fees, leading to an uneven playing field.
  • On the other hand, the use of OTT services has led to a surge in data consumption, which is a growing revenue stream for telecom companies.

Basis of TRAI regulation in India:

  • Net neutrality formed the basis of TRAI’s regulation on prohibition of discriminatory tariffs for data services brought out on February 8, 2016.
  • The regulator’s action forced the withdrawal of Facebook’s Free Basics platform and some other offerings in India. Later, on November 28, 2017, TRAI released its comprehensive recommendations, which have largely guided the adoption of this principle in India.
  • These steps taken by TRAI were noted elsewhere in the world. The Body of European Regulators for Electronic Communications (BEREC) and TRAI adopted a Joint Statement for an Open Internet on June 14, 2018, later reaffirmed in 2020.

Flawed argument that affects net neutrality:

  • OTT platforms sharing cost of bandwidth: The OTT consultation has renewed the clamour from the telecom companies that content providers such as Netflix, Amazon Prime, and Disney+ Hotstar be asked to share in the costs of bandwidth.
  • OTT run on Telecom infrastructure: They argue that streaming platforms are free riders, benefiting from the infrastructure built and maintained by the telecom companies. However, this argument is fundamentally flawed and sets a dangerous precedent that undermines the principle of net neutrality.
  • OTT generating data Demand: By offering services that consumer’s desire, OTT platforms generate demand for Internet access. They also pay for the content delivery networks (CDNs) to create pathways that substantially augment the capacity of the internet to deliver their content.
  • Telecom capatilising this data demand: Telecom companies capitalise on this demand (and the availability of OTT content) by providing connectivity to the Internet and charging subscribers for it. If they fail to cover costs, telecom companies are at liberty to increase their prices, which should go towards maintaining and upgrading their infrastructure.
  • Fair Market: One of the requirements for the operation of a fair market is that the costs and benefits of a transaction are fully accounted for in the exchange price. Therefore, any attempt to seek cross-subsidies instead of fully accounting for the costs could warrant scrutiny from the Competition Commission.
  • Competition within OTTs: OTT services compete in their own market on the basis of variety and quality of content, the quality of streaming, ease in navigation and discovery of content, and its availability on multiple devices.
  • Telecom charge by consumers and OTTs: The attempt of telcos to double dip by charging both consumers and content providers is not only avaricious but also undermines net neutrality, as stated above. To better comprehend the fallacy in telcos’ demand, let us employ an analogy.
  • Increased costs detrimental to Consumers: If OTT platforms were to acquiesce to the demands of the telcos, the incurred costs would trickle down to subscribers, either through increased subscription fees or degraded service quality for those platforms unwilling or unable to pay the toll. This outcome can only be detrimental to consumers who have come to rely on OTT services for entertainment, education, and professional pursuits.

Way Forward:

  • It is imperative for all stakeholders, including policymakers, to recognise the long-term ramifications of acquiescing to the short-sighted demands of telecom companies.
  • Upholding the principles of net neutrality is not merely about preserving the ethos of an open Internet but is also intrinsic to fostering a conducive environment for innovation, competition, and consumer welfare, especially countries such as India where the Internet is going to be the carrier of all Digital Public Infrastructure (DPI).

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