1 Response to TRAI Consultation Paper on Net Neutrality Released on January 04, 2017 PREAMBLE: I. INTRODUCTION: 1. At the outset, we would like to state that Industry is fully committed towards connecting the 1 Billion Unconnected Citizens of India and fully supports the Digital India vision of the Government of India. The Industry suggests adoption of policies and promoting ecosystem which enables fulfillment of this vision. II. SCOPE OF THE CONSULTATION TO BE ENHANCED: 1. Need for comprehensive discussion and holistic view a. Any discussion on Net Neutrality needs to be comprehensive and should not focus only on traffic management which is just one aspect of Net Neutrality. b. The comprehensive discussion should cover the following issues: i. Issues relating to OTT Communication Service Providers: Same Service Same Rules ii. Economic Issues iii. Security and Privacy Related issues iv. Pricing aspects of traffic v. Treatment of free data c. Further, we would like to express our concern regarding the piece-meal addressal of the issue of Net Neutrality and re-commencement of de novo consultations on Net Neutrality confined only to traffic management without dealing with the key issues related to OTT Players. d. The Authority had issued a detailed Consultation Paper in March 2015, covering the larger subject of Regulatory Framework for OTT Services, where Net Neutrality was
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1
Response to
TRAI Consultation Paper
on
Net Neutrality
Released on January 04, 2017
PREAMBLE:
I. INTRODUCTION:
1. At the outset, we would like to state that Industry is fully committed towards
connecting the 1 Billion Unconnected Citizens of India and fully supports the
Digital India vision of the Government of India. The Industry suggests adoption of
policies and promoting ecosystem which enables fulfillment of this vision.
II. SCOPE OF THE CONSULTATION TO BE ENHANCED:
1. Need for comprehensive discussion and holistic view
a. Any discussion on Net Neutrality needs to be comprehensive and should not focus
only on traffic management which is just one aspect of Net Neutrality.
b. The comprehensive discussion should cover the following issues:
i. Issues relating to OTT Communication Service Providers: Same Service Same
Rules
ii. Economic Issues
iii. Security and Privacy Related issues
iv. Pricing aspects of traffic
v. Treatment of free data
c. Further, we would like to express our concern regarding the piece-meal addressal of
the issue of Net Neutrality and re-commencement of de novo consultations on Net
Neutrality confined only to traffic management without dealing with the key issues
related to OTT Players.
d. The Authority had issued a detailed Consultation Paper in March 2015, covering the
larger subject of Regulatory Framework for OTT Services, where Net Neutrality was
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also dealt with as an inter-linked issue. The comments and counter comments were
duly submitted by all the stakeholders but no Open House Discussion was held in
the matter and nor did the Authority submit any recommendations on the subject.
Thus, the well-established Consultation process was not completed by the Authority.
e. In contrast, a special high-level Committee of the Department of
Telecommunications (DoT) held consultations with all stakeholders at the same time
and came out with its detailed Report and Recommendations in May 2015 on the
technical, regulatory and public policy related measures required with respect to the
Net Neutrality issue. The DoT/Government while seeking the views of the
stakeholders on the Committee Report noted that TRAI was also engaged in
consultations on the issue and its recommendations were awaited so that the
Government could take an appropriate decision on the issue. It is reasonable to
presume that the Policymaker, DoT, had taken cognizance of all issues relating to
OTT & Net Neutrality but is awaiting TRAI’s recommendations to take a final decision
in this matter.
f. However, in December 2015, TRAI initiated a Consultation on pricing aspects of data
services that were a part of its March 2015 consultation; and in February 2016,
issued a Tariff Regulation prohibiting differential tariffs based on content.
g. Further, TRAI, in 2016, initiated fresh Consultation and in a pre-consultation Paper
raised issues that were already a part of the earlier consultation viz. core principles
of net neutrality, reasonable traffic management practices, security and privacy
issues related to OTT services. Regarding its earlier 2015 consultation on Regulatory
Framework for Over-the-top (OTT) services, it was stated that the views on the
framework are under consideration by the TRAI.
h. It is submitted that by adopting the piece meal approach, as highlighted above
and not addressing the larger subject in a holistic manner; the TRAI is only
adding ambiguity and uncertainty to the regulatory framework. We note that in
the present consultation, the TRAI has further dropped the security and privacy
related issues pertaining to OTT players that were raised in the pre-consultation and
has now confined itself to traffic management practices and the implementation of
the NN framework only.
i. It is submitted that it is important to first have a final view on the core principles of
Net Neutrality that will be laid down by the Government before engaging in
discussions on how those core principles will be implemented. Needless to say, a
decision on the regulation of OTT players is a critical and inter-linked issue.
j. We, therefore, request the Authority to take a holistic view on the subject of
Net Neutrality and OTT services. All the interim consultation/decisions on
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differential pricing, free data, etc. should get subsumed into the final decision
taken by the Government.
2. Defining the relationship between TSPs and OTT communication providers
a. We note that the TRAI by not dealing with the issues arising out of OTT
communication services is placing licensed entities on a lower footing than
unlicensed entities and allowing the regulatory arbitrage to continue. This is despite
the fact that both the TRAI and the DoT Committee recognize the adverse impact of
OTT communication services and the need to regulate these, which is evident from
the following.
i. TRAI Consultation Paper on Regulatory Framework for Over-the-top (OTT)
services dated March 2015:
“3.3. From the national perspective, the public policy issues can be broadly
classified into the following three categories:
Regulatory Imbalances
Impact on the economy
Security Issues
The TSPs fall under a regulatory regime whilst OTT players are simply bypassing
such a regime
3.19. The revenue losses of the TSPs will also lower various Government
revenues. It will also result in lower accumulation of Universal Service Obligation
Fund (USOF) for the Government, which is a percentage of the revenues earned
by the TSPs. The loss in revenue for the TSPs will also lead to less return on
their network investments which could substantially derail their investment
capability. This will lead to less investment in the infrastructure.
3.20. Communication services that use internet for transmission like VoIP and
instant messaging have security implications primarily because they bypass the
regulatory regime enforced on conventional voice and messaging services
provided by TSPs
3.21…..In terms of regulation, LI reposes an obligation on TSPs to grant Law
Enforcement Agencies (LEAs) access to their network/services. However, no
such provision exists for OTTs.
3.26. Besides security challenges at the national level, OTT communications and
OTT media can pose a threat to privacy.
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3.27. To sum up, national policy issues arising from the rapid growth of OTT
services need to be addressed
6.6 …. There is a need for the Government to ensure proper regulatory balance
to ensure a level playing field in terms of regulatory compliance.”
ii. DoT Committee Report on Net Neutrality dated May 2015:
“8.9 The problem is further exacerbated from the regulatory angle when viewed
in the context of a licensed service provision co-existing with an unregulated
service both competing for the same set of customers especially when the
regulated service provider rides on the network infrastructure of the licensee to
deliver the service. The existence of a regulatory arbitrage in addition to the
pricing arbitrage adds a degree of complexity that requires a calibrated response
to bring about a level playing field.
8.11 In view of the above discussions, the committee recommends the following:
(iv)The existence of a pricing arbitrage in VoIP OTT communication services
requires a graduated and calibrated public policy response. In case of OTT VoIP
international calling services, a liberal approach may be adopted. However, in
case of domestic calls (local and national), communication services by TSPs and
OTT communication services may be treated similarly from a regulatory angle for
the present. The nature of regulatory similarity, the calibration of regulatory
response and its phasing can be appropriately determined after public
consultations and TRAI’s recommendations to this effect.
9.8 The Committee also feels that existence of a regulatory arbitrage and a price
arbitrage between TSPs services and OTT communications services resulting
from a non-level playing field needs to be taken note of. ….Consequently,
ensuring a policy and regulatory level playing field in OTT domestic voice
communications is extremely important at the present juncture.
9.10 To summarize, the Committee favours regulatory oversight on OTT
communication service providers ….”
iii. TRAI- 2016 Pre-consultation on Net Neutrality dated May 2016:
“22….. The absence of a detailed regulatory framework governing OTT
communication services can have a number of implications, including for
telephone number management, public safety, emergency number access and
national security.
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23. Besides security challenges at the national level, OTT communications and
OTT media can also pose a threat to the privacy of individual users…. This calls
for a need to examine the legal and regulatory framework required for governing
the privacy of users of OTT services.”
b. In view of the above, it is a matter of deep concern that OTT communication players
continue to be unregulated whilst the TSPs who hold valid licenses issued under law
and operate under a very strict and rigorous regulatory framework are being treated
on a lower footing. Further, while TSPs are subjected to strict data privacy rules and
confidentiality provisions, however, the OTT communication players are not subject
to such rules.
c. Principles of Equality under Article 14 of the Constitution of India require -
Same Service same Rules
i. We would further like to highlight that services offered by OTT players are a
perfect substitute of PSTN/ Voice Services, but with no prescribed QoS
standards.
ii. OTT players are outside the licensing regime. This disturbs the level playing field;
o Lower consumer protection
o Lower control on illegal/ harmful internet content
o Business models which exist by not paying license fee payments and other
related revenue charges
iii. Article 14 requires all stakeholders who offer similar/ substitutable services to be
brought within the same licensing / regulatory regime. Ref. United Cable
Operators Welfare Association vs. Telecom Regulatory Authority of India Appeal
no. 3 (c) of 2012 dated 19th October 2012 (TDSAT) : The Apex Court in its
judgment in Reliance Energy Ltd. vs. Maharashtra State Electricity Development
Corporation Ltd. reported in (2007) 8 SCC 1. By reason of providing such
level playing field, it is essential to give equal opportunities to the
concerned parties. An atmosphere must be created so as to enable the
players similarly situated to compete with each other....
..... The concept of level playing field, therefore, has been held to attract not
only Article 14 of the Constitution of India, but also Articles 19(1) and 21
thereof. Keeping that point of view this Tribunal will have to consider as to
whether by reason of the Impugned Tariff Order, the Regulation is violative
of the concept of ‘level playing field’ ....
d. In light of above, we request the Authority not to differentiate between One Class of
Service Providers over the others. In this regard, the industry has put forth that
the principle of “Same Service, Same Rules” should apply on OTT
communication service providers.
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e. We recommend the introduction of a light touch and future fit regulatory
framework for all communication services.
3. National Security and Privacy: National security and privacy issues are of paramount
importance, regardless of treatment of net neutrality. Accordingly, the regulatory
framework must ensure their primacy and it is strongly recommended that no exception
should be made for any service provider, including the OTT communication service
providers, while subjecting them to the rules to meet the national security and privacy
norms, i.e. same service same rule should be established for similar service providers.
4. Differential Pricing and Free Data:
a. With respect to the pricing aspects, TRAI issued Consultation paper on 9th
December 2015 and issued a Regulation on “Prohibition of Discriminatory Tariffs for
Data Services Regulations, 2016” on 8th February 2016. In the Press Release to the
Regulation, TRAI submitted that:
“While formulating the Regulations, the Authority has largely been guided by
the principles of Net Neutrality seeking to ensure that consumers get
unhindered and non-discriminatory access to the internet. These Regulations
intend to make data tariffs for access to the internet to be content agnostic”.
b. In this regard, we would like to submit that since the core principles of the Net
Neutrality is yet to be recommended by TRAI and notified by the Government, we
are of the view that the issue of the discriminatory pricing should be taken up again
for discussion under the consultation paper of Net Neutrality.
c. With respect to the Free Data, TRAI issued its Recommendations on 19th December
2016 on “Encouraging Data usage in Rural Areas through Provisioning of Free Data
after having consultation with the stakeholders”.
d. These Recommendations are under consideration by DoT. In this regard, we would
like to submit that both the FCC and the EU do not see all instances of free data as a
violation of Net Neutrality principles.
e. In its statement date February 3, 2017 FCC Chairman Ajit Pai issued the following
statement at the end of the investigation into wireless carriers' free data offerings:
“Today, the Wireless Telecommunications Bureau is closing its investigation
into wireless carriers' free-data offerings. These free-data plans have proven to
be popular among consumers, particularly low-income Americans, and have
enhanced competition in the wireless marketplace. Going forward, the Federal
Communications Commission will not focus on denying Americans free data.
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Instead, we will concentrate on expanding broadband deployment and
encouraging innovative service offerings.”
f. In light of above we are of the view that the aspect of Free Data should be again
reviewed under the present Net Neutrality Consultation.
g. Further, to ensure regulatory consistency, TRAI should amend and merge the Tariff
Regulation on Differential Pricing with its recommendations resulting from the
present consultation. COAI supports the objective of ensuring that consumers have
non-discriminatory access to content on the internet. Differential treatment, however,
is not inherently the same as discriminatory treatment. Differential pricing – more
specifically, zero rating – can be offered in a non-discriminatory manner that is both
consistent with the principles of net neutrality and beneficial to consumers. For
example, it is not discriminatory if a zero-rated offer includes any content that meets
the same, uniformly applied technical requirements. Similarly, it is not discriminatory
if a zero-rating arrangement is available to all content providers on the same terms
and conditions, even if some content providers choose not to participate.
h. As both the U.S. and E.U. have found, zero rating is not a per se violation of net
neutrality. In the U.S., zero rating programs were subject to case-by-case evaluation
under a flexible general conduct rule, and now, with the recent announcement, even
this evaluation is likely to be done away with. The E.U. also has adopted a
permissive regime for zero rating, and has rejected any categorical ban. Similar to
the examples of U.S. and E.U., we submit that TRAI should adopt a flexible
approach, with only ex- post intervention.
i. We believe differential pricing, including zero rating, are powerful tools to promote
the objectives of access and affordability to the users within the ambit of Net
Neutrality.
5. The principles of net neutrality should apply for all stakeholders in Internet
ecosystem:
The consultation paper is dealing with the aspects of net neutrality only in the
context of TSPs whereas other stakeholders have been left out. The Internet
ecosystem is not limited to TSPs only but it involves other critical players such as
content providers, handset manufacturers, OTT players, operating system, cloud
players, CDN players, etc. We believe that all these players should be subject to the
same net neutrality rules to ensure that all entities are treated equally. For example, the
rules of privacy, which is applied on TSPs, should be made applicable on other players
also dealing with customer data. Similarly, throttling can be done by the content provider
as well. Other practices such as preferential access, default messaging applications,
pre-burning etc. needs to be reviewed under net neutrality framework.
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III. NET NEUTRALITY IN INDIAN CONTEXT:
1. Net Neutrality is not a defined concept and while its meaning may remain the same i.e.
consumers free to choose content/ operators however, the principles of implementing
and ensuring Net Neutrality will have to be necessarily viewed in the context of the
relevant internet market. E.g. when Internet was still new in the developed countries
there was no debate on Net Neutrality because the focus was access and exposure to
as many subscribers along with investment for internet expansion. India is at a nascent
stage of its expanding internet industry. While the minuscule digital equipped individuals
have moved on to the debate of freedom to choose content and operators, the digitally
handicapped majority does not even understand the difference in forms of content.
2. Importance of Broadband: As per a Brookings Research Paper1, extending internet
access to levels seen in developed countries today means that long run productivity
could be enhanced by as much as 25% in developing countries. It is estimated that the
resulting economic activity could generate $2.2 trillion in additional GDP, a 72% increase
in the GDP growth rate, and more than 140 million new jobs. As per Analysis Mason, an
increase in broadband penetration of 1% is estimated to have contributed INR 162
billion, or 0.11% to Indian GDP in 2015.
Economic and Social Impact of Improved Internet Access
in the Developing World
Productivity Gains +25%
Total GDP Improvement $2.2 Trillion
GDP Growth Gain +72%
New Jobs 140 Million Jobs
Personal Income Gains $600 Per Person Each Year
Number Lifted Out of Extreme Poverty 160 Million People
Lives Saved Through Improved Health Care 2.5 Million Lives
Source: Brookings, Deloitte, Value of Connectivity: Economic and social benefits of expanding internet access, February 2014.
3. State of Broadband/Internet Penetration in India: India is a market where 70% of the
population still does not have the benefit of mobile data services. In comparison to other
BRIC countries, India ranks the lowest with respect to the Internet adoption rate. The
internet adoption rate in other member-nations of BRIC is more than 3 times that of
India.
4. Priority for India: The immediate priority in India is to ensure that the affordable
broadband services are adopted and utilized by a vast mass of unconnected and low net
usage citizens. The roll-out of Broadband and Internet services requires enormous
investments to the tune of INR 500,000 crores over the next 3-5 years.