At the very outset, it must be stated that the Supreme Court Winter vacations have a tendency to induce one into a hibernating lethargy (in my case, lying tucked in bed with two blankets, a book and a halogen heater), which is the reason this post has taken such a long time to finally come to an end and be published. (For those who may not have understood by now, I am a true summer fan and sincerely dislike winter !!)

While this delay has allowed me to observe and note the developments in the past few days which have taken place regarding the issue, i.e., the “Free basics” fight which has broken out between Facebook and internet freedom activists, it has also at the same time forced me to expand this post to include a discussion on “Free Basics” as a service and whether it can actually help the citizens of India or not.

Coming first to the T.R.A.I. Consultation Paper on Differential Pricing for Data Services, the first question which immediately springs to mind is:- WHY ?? This issue was specifically raised and discussed in the previous T.R.A.I. Consultation Paper On Regulatory Framework for Over-the-Top (O.T.T.) Services (see page 98 onwards, specifically pages 106 – 107) wherein the agreement between Facebook and Reliance (earlier known as “Internet.org” and now reincarnated as “Free Basics”) was specifically discussed and comments on such pacts were called for (Question 13 in the earlier Consultation Paper). Therefore, it makes little sense to release another brand new Consultation Paper to exclusively once again discuss an issue, the responses to which are going to be obvious and the same as they were before. Surprisingly, there is absolutely no mention in the Differential Pricing Consultation Paper about the previous O.T.T. Consultation Paper, which again makes no sense considering the similarity of the issue.

Taking the liberty to speculate, there can only be two reasons for this move by T.R.A.I. One, the T.R.A.I. is in a genuine quandary on “Zero Rating” and is hoping for clarity on whether to allow such services, and this might also explain why it has failed to release its recommendations on the O.T.T. Consultation Paper till date. OR two, it has already taken a decision to allow Zero Rating plans by treating them out of the umbrella of network neutrality but which will be subject to regulation by it and the purpose of the present Paper is only to develop a working regulatory model on consensus.

However, whether one likes it or not, a new separate Consultation Paper on Differential Pricing for Data Services does now exist, and therefore warrants a look, even for those who oppose it.:-

1. On reading, one can notice that this Consultation Paper focuses more from a perspective of regulation of tariffs. The first three paragraphs of the paper are a clear indication of the direction which T.R.A.I. wants the debate to take,i.e. the debate is being steered away from the one on network neutrality to that of viability of tariff regulation.:

“1. The Telecom Regulatory Authority of India Act, 1997 empowers the Authority to notify tariff for various Telecommunication Services. In exercise of this power, Telecommunication Tariff Order, 1999 (TTO, 1999) was notified for the first time on 9th March, 1999. Amendments in the TTO, 1999 were issued from time to time to reflect the changes in tariff framework. Initially, the tariffs were regulated. However, as the market matured and competition increased, TRAI gradually moved towards a ‘forbearance’ regime and forborne the tariffs for the wireless and the wire line segment in 2002 and 2003 respectively. Currently, except for the national roaming, rural telephony and leased lines, the tariffs for other telecommunication service are under forbearance. As per the policy of ‘light-touch’ regulation being followed, the tariff framework provides the Telecom Service Providers, which include Internet Service Providers and Data Service Providers (hereinafter referred to as TSPs) the freedom to design the tariffs according to the prevailing market conditions.

2. While the tariff regime has been left to forbearance, regulatory oversight is required so that the tariff framework follows the broad regulatory principles elaborated hereafter. Thus, TRAI needs to regularly watch and review the tariffs prevalent in the market. TTO provides for filing of tariffs by TSPs within seven working days of launch. The tariff filing provision plays a critical role in enabling TRAI to scan the prevalent tariff landscape and effectively intervene, wherever required to ensure that the tariff offers are reasonable, transparent, non-discriminatory and are not anti-competitive.

3. The TSPs have the flexibility to decide various tariff components for different service areas of their operation subject to the reporting requirement and other regulatory guidelines in vogue. Tariffs are offered by the TSPs taking into account several factors including input costs, level of competition, commercial considerations 2 and individual business case for each service provider. Even though tariff forbearance and flexibility to the TSPs to determine the rates are core principles of tariff framework, several regulatory guidelines have been prescribed to ensure orderly growth of the telecom sector and protection of consumer interest. Prevention of discriminatory tariff offers and ensuring transparency in tariff offers are amongst the most important principles which the Authority has consistently endeavored to uphold.”

2. Paragraph nineteen provides a fair and reasonable solution to the problem of differential pricing which should be acceptable to clans both for and against “zero rating”. It suggests de-linking free internet access from specific content, and instead limiting it by volume or time. This is a viable solution to the debate and should be eagerly pursued by T.R.A.I. in order to prevent future disputes and litigation on the issue. (The Airtel offer of fifty percent internet “cashback” if used after midnight is an example of such a scheme.)

3. The Paper obviously focuses on mobile data services, which brings us to the larger issue which even western jurisdictions, particularly the E.U., have had to pay extra attention to with regard to mobile network neutrality. (The link is an excellent paper by Christopher Marsden on the issue published in the European Journal of Law and Technology). In India, this assumes further significance since the trend in internet penetration is now confirmed to progress in the hinterland through mobile connectivity. A more detailed discussion will follow during our analysis of “Free Basics”.

 

In the next post, I will focus on “Free Basics” and discuss the merits and demerits of the scheme being actively promoted by Facebook.