A telco double dip attempt that threatens Net neutrality
- November 7, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
A telco double dip attempt that threatens Net neutrality
Subject : Science and Tech
Section: Awareness in IT
- In July this year, 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 ‘OTT services’, which became controversial.
- The principle of net neutrality states that internet users should be able to access all content on the internet without being discriminated by TSPs.
- This means that –
- All websites or applications should be treated equally by TSPs,
- All applications should be allowed to be accessed at the same internet speed, and
- All applications should be accessible for the same cost.
- Net neutrality argues that the internet should be accessible to everyone and requires all ISPs to provide the same level of data access and speed to all traffic.
- Traffic to one service or website cannot be blocked or degraded.
What will happen if there is no Net Neutrality?
- If there no net neutrality, ISPs will have the power (and inclination) to shape internet traffic so that they can derive extra benefit from it.
- For example, several ISPs believe that they should be allowed to charge companies for services like YouTube and Netflix because these services consume more bandwidth compared to a normal website.
- Basically, these ISPs want a share in the money that YouTube or Netflix make.
- Without net neutrality, the internet as we know it will not exist. Instead of free access, there could be package plans for consumers.
- For example, if you pay Rs 500, you will only be able to access websites based in India. To access international websites, you may have to pay a more.
- Or maybe there can be different connection speed for different type of content, depending on how much you are paying for the service and what add-on package you have bought.
- Instead of an open and free internet, without net neutrality, we are likely to get a web that has silos in it and to enter each silo, you will have to pay some “tax” to ISPs.
Regulation of Net Neutrality
- Until now, net neutrality has not directly been regulated in India by any law or policy framework. Earlier, in 2016, the TRAI had ruled in favour of net neutrality.
- However, despite lack of formal rules, ISPs in India mostly adhere to the principal of net neutrality.
- There have been some incidents where Indian ISPs have ignored net neutrality but these are few and far between.
- Internationally, countries like the USA, Japan, Brazil, Chile, Norway, etc. have some form of law, order or regulatory framework in place that affects net neutrality.
- The US Federal Communications Commission (telecom regulator in the USA) released new internet rules in March 2015, which mainly disallow blocking, throttling or slowing down, and paid prioritisation of certain applications over others.
- While the UK does not allow blocking or throttling of OTT services, it allows price discrimination.
About Over The Top (OTT) services:
- It refers to a media service offered directly to viewers via the Internet. OTT bypasses cable, broadcast, and satellite television platforms—the types of companies that have traditionally acted as controllers or distributors of such content.
- Examples: content providers such as Netflix, Amazon Prime, and Disney+ Hotstar.
- For more than a decade now, telecom companies have seen revenue from traditional streams such as voice calls and 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.
- They also complain that OTT services are not subject to the same level of taxation and licensing fees, leading to an uneven playing field. On the flip side, the use of OTT services has led to a surge in data consumption, which is a growing revenue stream for telecom companies.
Flawed argument that affects net neutrality
- The OTT consultation has renewed the clamour from the telecom companies that OTT platforms/ content providers be asked to share in the costs of bandwidth. 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. Telecom companies do not own the Internet; rather, they provide access to it.
- Consumers pay the telcos for access services by purchasing data plans. By offering services that consumers 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 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. 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 subsidise instead of fully accounting for the costs could warrant scrutiny from the Competition Commission of India (CCI).
- In the marketplace for Internet access, the consumers are free to choose the provider that offers them the highest bandwidth, data volume, and reliability at an affordable price. These are distinct markets because services from one are not substitutable for services in the other.
- Therefore, it is logical to maintain a separation of costs between these two markets. The attempt of telcos to double dip by charging both consumers and content providers is not only avaricious but also undermines net neutrality.
- 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.
Basis of TRAI regulation
- Net neutrality formed the basis of TRAI’s regulation on prohibition of discriminatory tariffs for data services brought out in 2016. The regulator’s action forced the withdrawal of Facebook’s Free Basics platform and some other offerings in India.
- In 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 in 2018. The two organisations agreed through this memorandum of understanding to cooperate in developing technological and policy initiatives for net neutrality. Many other countries have also adopted net neutrality, thereafter.
- It is imperative for all stakeholders, including policymakers, to recognise the long term ramifications of acquiescing to the shortsighted 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).