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Mandating US-Style Network Neutrality Makes Little Sense For India

09/04/2015 10:38 AM IST | Updated 15/07/2016 8:25 AM IST
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A woman walks in front of an Airtel shop displaying an advertisement in Mumbai, India, Wednesday, Feb. 8, 2012. India's top mobile operator Bharti Airtel is reporting a 22 percent drop in quarterly profit due to higher interest rates and 3G network rollout costs, its eighth straight quarter of decline in net profit. (AP Photo/Rajanish Kakade)

Let me be upfront. Indian users need and deserve robustly fair access to internet but mandating strict network neutrality is a bad idea.

It is risky to raise network neutrality to a lofty principle.

Few can have basic objections against network neutrality. We do not want those who run railways to decide our destination or itinerary, or the power company to determine which appliances to use. However, we do accept and often advocate breach of network neutrality in almost all public networks. In railways, our fast trains, e.g. Rajdhani, serve selective stations and customers, our city roads bar trucks during busy periods and the toll road close to my house is closed to those on bicycles, scooters and motorbikes. The electricity network has differential rules for home and industry customers as well as for small and heavy ones. So, it is important to keep network neutrality in perspective.

Network neutrality is more of a commercial issue.

A few months ago, mobile operator Airtel attempted--it backtracked later--to charge a premium for Over the Top (OTT) players like Skype. Its new Airtel Zero plan offers cheaper or free access to some web applications. On the other hand, several OTT operators have attempted arrangements with mobile operators which would privilege their service or application over others. For instance, Facebook, a supporter of network neutrality, has a 'zero rating' arrangement with RCom, which makes it cheaper/easier to use Facebook than other services. Google is also reportedly pursuing zero rating arrangements. It is clear that they see network neutrality in primarily commercial terms.

Less than 3% of Indians rely on fixed lines for telephony or internet access. Wireless technologies offer lower bandwidth than fibre or cable.

It is illogical to demand network neutrality when capacity is a constraint and its efficient use a priority.

India's telecommunications network is almost entirely wireless. Less than 3% of Indians rely on fixed lines for telephony or internet access. Wireless technologies offer lower bandwidth than fibre or cable. Wireless capacity in India is further constrained by poor access to its scarce, but vital resource, viz. radio frequency spectrum. Not surprisingly, calls drops are rampant and data usage is predominantly narrow band. India's operators have among the lowest holdings of spectrum in the world. They cannot augment their spectrum, even if they were willing to pay, since the government is unable (and sometimes unwilling) to release more. It is therefore unrealistic to think that India's wireless operators can indefinitely expand the capacity of their networks to accommodate the exponentially rising traffic from OTT services.

The US argument for network neutrality does not apply to India.

The problem for US internet and broadband markets is abuse of monopolies. For India, it is scarcity. The vast majority of US users depend on a single player for broadband access. The market is split broadly between cable or fibre monopolies. In contrast, in India, Airtel the biggest player has roughly 25% of the market, while at least four others have around 15%. An internet user in India frequently has as many as ten providers to choose from.

India's regulatory environment works against net neutrality.

Unlike the US and major markets, India's network operators pay licence fees, running into billions of dollars to be able to offer telephony and SMS services which, Skype and WhatsApp offer free. US and Europe do not generally pay licence fees and the government does not collect a hefty share of operator revenues in fees. So while, internationally, regulation is moving towards technology neutrality, India has different regulation for voice calls based on VOIP (voice over internet protocol) and other mobile technologies. It would be difficult to justify network neutrality in such circumstances.

Telecom companies or OTT players acting unilaterally to favour their own allies or hurt competing services poses an emerging challenge.

It is risky if network operators can act unilaterally.

Telecom companies or OTT players acting unilaterally to favour their own allies or hurt competing services poses an emerging challenge. Given the number of operators and OTT players, the problem can only get worse since few users would understand the intricate arrangements affecting their access to applications and services. They will find it even more difficult to budget their expenses, since data pricing is already unfathomable for less savvy users.

Removing inconsistencies in regulatory regime will remove the excuse to violate network neutrality.

The TRAI has no obligation to protect revenues of any network operator or OTT player. However, it is expected to work with government to provide a conducive environment that promotes robust competition and growth.

It faces a unique challenge as it formulates an approach to OTT services. It would be a mockery if it proposes new restrictions or charges for use of OTT services. Equally so, if it recommended continuing existing ones for network operators.

The point is, remove regulatory burdens on both types of players. The TRAI and the Department of Telecommunications (DoT) need to recognize and remove the inconsistencies in India's regulatory regime. This, rather than a doctrinaire approach to network neutrality, is the key to delivering sustainable access to the internet and its many powerful features and technologies.

Dr Mahesh Uppal is the director of Com First (India), which advises major Indian telecommunications companies on policy, regulation and strategy.

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