Tech mahindra
Tech mahindra

Net-Neutrality & Digital Service Regulation

Posted by: Balaji T S On May 15, 2015 04:48 PM

In the last few weeks, there has been public debate on the subject of “Net Neutrality” in India. At the heart of this debate are zero-priced bundles offered by two operators to certain qualified consumer segments in collaboration with a set of providers of Internet based services (let’s call them IBSPs for short).

In my view, the issue at the core is not about “Net Neutrality” at all by definition. It is as much about unsatisfied needs of current subscribers as it is also about what IBSPs have been building on as part of their business plan.

Defining Net-Neutrality

Net-neutrality is a term used to enable access IBSP services without being blocked by the intervening network operators except as sanctioned by the Law of the Land (e.g. torrent sites, pornography and VoIP calls to PSTN in India are banned). As a corollary, when a prohibitive tariff is newly introduced or a speed throttling mechanism is newly introduced, discriminating any IBSP service, net-neutrality is said to be violated.

Differential service per user

The current issue does not seem to be a case of barring any access, imposing a new tarriff nor throttling speed for IBSP services. The issue seems to be tied to the provision of “differential service per user”.

Based on their tariff bundle contracts, the network provider is eligible to to allow or disallow users to access certain services by regulation (e.g. differential tariff bundles for SMS, ISD calls and support for conferencing etc.).

In the current case too, the bundle with IBSP service was offered for free (without charges for the underlying data plan) as a Digital Inclusion principle to bring in certain underprivileged consumers. All subscribers with a data plan can access these IBSP services while a few without a data plan would also be able to access these services.

Source of current discontent

From what I have gathered from some protesting friends, consumers feel that they have been saddled with data plans that are too expensive for networks but don’t get a good throughput. They feel that if an operator could afford to provide zero-priced bundles to new prospects, they could provide better service for their current paying subscribers.

Possible IBSP Moves

In the current case, the zero-priced bundles may not be the handiwork of the operators. In today’s environment, we hear news about an IBSP’s fiber rollout plans. It is also possible for the large IBSPs to procure international bandwidth, setup captive CDNs with POPs in the country and offer to subsidize the costs of operators, thereby enabling the operators to offer zero-priced plans. I don't know this for a fact and this is just my conjecture but this is very much in the realm of possibility.

Regulatory needs

This brings me to the following conclusions on what Regulators should ensure in the immediate future.

  1. Net-neutrality conditions should be preserved, without a doubt.
  2. Differential Pricing principles allow customized service bundles at affordable prices should continue.
  3. To uphold a sense of natural justice, regulators should somehow ensure that operators and IBSPs do justice to their existing subscriber base before making aggressive plans for market expansion
  4. It follows from iii above, that a change in Regulatory setup is needed; one that looks comprehensively at the Digital Service Ecosystem rather than in narrow silo of telecom only. I feel that there is an urgent need to set up a Digital Services Regulatory authority.
Tags: Communication Services
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