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Non-issue Like Net Neutrality Gets Ok, Zilch on Telco Costs

The telecom sector continues to haemorrhage, but instead of trying to fix this by lowering government levies on the sector or injecting much-needed rationality into spectrum pricing, the Telecom Commission—the country’s highest decision-making body in telecom—has decided to endorse the TRAI’s view on net neutrality that, while very high-profile, is of much lesser importance. Indeed, going by the economic affairs secretary’s interview the other day, the government seems to have no plans to meaningfully lower these levies anytime soon. While activists projected net neutrality as a burning issue for the sector, and both the government and the regulator bought into this, it was never clear what problem it was trying to solve. Even now, after TRAI has come out with its recommendations that, for instance, ban a Free Basics, it has not spelled out how this hurts anyone.

Both TRAI and senior ministers have argued that India doesn’t want “walled gardens” and instead wants the “full internet”, but surely the free access to a stripped-down version of various sites that Facebook was offering was better than no access? Activists argued that Facebook could design its specifications in such a way that not everyone could get their sites onto the Free Basics platform, but even if that were true, as people got richer, they could move to the “full internet” and then access all sites. A Flipkart, similarly, could use an Airtel Zero to offer free access to its sites—the telco withdrew the offer after the net neutrality campaign’s onslaught, but it is not clear how this was an abuse of power. Net neutrality activists railed against telcos that wanted over-the-top (OTT) players like WhatsApp to pay for riding on their networks, but surely a service that ate into telco revenues—SMS revenues have all but dried up as a result—can’t be good for the country? When three-fourths of Indians don’t have access to the internet, the emphasis should be on rolling out the internet, not on ensuring those that have this access on their smart phones are able to get even cheaper calls/messages—till RJio’s new phone was announced, only those that had smart phones could use their WhatsApp to send zero-cost messages or to make free long-distance calls. In that sense, the fight really boiled down to the rights of Indians who didn’t have access to the internet versus the rights of those that already did and had smart-phones. Given that telcos have invested several lakhs of crore rupees in setting up their networks, anything that affects their revenues will slow the rollout of networks across the country.

It got worse. The TRAI’s net neutrality views that have just been endorsed by the Telecom Commission didn’t allow a telco to, for instance, negotiate a lower-rent Netflix subscription for its subscribers as this was seen to discriminate against the subscribers of other telcos. Nor could the telco increase internet speeds to provide better Netflix viewing for its subscribers. While much of this would be considered standard commercial contracting—the larger the number of subscribers, the larger the Netflix discount—in the developed world, the TRAI banned it. And, having done this, for reasons best known to it, TRAI decided to find a way out. It did this through what it called the ‘intranet’. So, if the telco had an agreement with Netflix and hosted all its movies/shows on its own server, these could even be offered free to subscribers! Instead of coming down against commercial innovation, TRAI would have done well to let various deals happen and, in case there was rampant abuse of monopoly powers, then come up with restrictions on this—without having done this, TRAI’s net neutrality recommendations are nothing but a solution looking for a problem, especially now that both data and call rates have plummeted. – Financial Express

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