India’s net neutrality and zero rating debate culminated couple of days ago with the release of a regulation prohibiting differential pricing by the Telecom Regulatory Authority of India. The Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016 (Regulation) precludes service providers from differentially pricing data packets on the internet on the basis of content. With the regulation, India joins countries such as Chile and the Netherlands in imposing a complete prohibition on zero rated platforms. The decision by TRAI comes at the heels of a massive social media campaign by Facebook for its Free Basics service and an even bigger campaign by civil society and startups against such platforms. While being touted as a major victory for net neutrality and an open Internet, the Regulation largely remains unsupported by empirical data, especially with regard to the adverse effects of zero-rating. The cherry on the cake is that the regulator also offers very little advice as to how we should solve India’s ‘access to the Internet’ conundrum.
The Regulation is accompanied by an explanatory memorandum that helps understand TRAI’s justifications for its declaration. From the memorandum, it is apparent that the regulator has undertaken a thorough examination of the stakeholder inputs to its consultation paper on differential pricing. And yet, many of the nuances of the effects of zero rating that had been brought to its notice have not been addressed. For instance, service specific data packs that are provided without collusion or compensation from content providers — and thus would not outrightly harm the concept of an open Internet — have been deemed illegal under the Regulation.
The only instance where the Regulation seems mindful of huge lack of Internet access in the country seems to be in its allowance of “providing limited free data that enables the user to access the entire internet” or colloquially, equal rating. However, other such alternatives that are net neutral and may be attractive to profit-making enterprises are now seemingly illegal. For instance, TRAI has banned data refunds or any kind of service that enables a content provider to refund or sponsor some amount of data if a user has spent time browsing the content provider’s application. Therefore, services like Gigato that enable the sponsoring of some data — to access the full internet — by a content provider would be deemed illegal under the Regulation merely because this sponsorship is contingent on the user having accessed the content provider’s app.
Technical standard nuances
The Regulation, also lacks nuance in its broad strokes approach to zero rating. Reiterating TRAI’s consultation paper, the memorandum targets platforms where TSPs favour certain content providers or charge lower rates for accessing their own services. There are, however, existing zero rated platforms (such as Free Basics) that are open to all, do not discriminate on the basis of content and require adherence only to certain technical standards for operational efficiency. Many net neutrality proponents have argued that the very act of a private corporation setting technical standards is non neutral. The regulator seems to have favoured this argument while ignoring the fact that without technical standards to enable the unhindered transmission of low bandwidth content, the experience of the users connecting via the zero rated platform would be abysmal. No Internet user who came on to the platform would continue using it for poor internet service and it would not make commercial sense for an enterprise to offer it in the first place. The regulation also leaves no room to manoeuvre, by, say, suggesting that if such platforms are to be allowed then the standards should be set by a multistakeholder technocratic body like the Internet Engineering Task Force.
The memorandum also ponders over the question of ex ante regulation v. ex post regulation. Apparently, the only alternative available to TRAI was an ex ante case-by-case analysis of differential pricing. There are, however, many other forms of regulation that lie between complete forbearance and the complete prohibition that TRAI has adopted. A better alternative perhaps may have been an ex ante declaration of net neutrality and non-discrimination principles and an ex post antitrust analysis of zero rating practices. What is incomprehensible, however, is the regulator’s assertion that a complete prohibition was necessary because any further market analysis would be resource intensive and would favour well-financed actors. This market intrusive regulation, therefore, betrays a lack of regard for evidence-based adjudication and a lack of trust in India’s regulatory institutions.
The reason why zero rating and net neutrality have become key buzzwords in global internet governance debates is because of the complexity of issues involved. This complexity has been exacerbated in India due to the continual lack of public infrastructure that can enable access to the disenfranchised. Users, TSPs and content providers represent only a part of the numerous actors involved in the internet ecosystem. As Professor V. Sridhar of the Indian Institute of Information Technology, Bangalore explains it, differential pricing can occur at many different levels: between content provider and end user, between content provider and hosting service provider, between TSP and end user and between the content provider and TSP. Only some of these practices are antithetical to net neutrality. The regulation, however considers only differential pricing involving a TSP and stops short of declaring which differential pricing practices may in fact be net neutral.
The Internet is the fastest growing medium of our times. It is perhaps the only medium that presumes a certain agency on the part of the users and helps them evolve from mere consumers of information to its curators. The fabric of an open Internet is not threatened by zero rating, it is threatened by zero rated applications that are discriminatory, exclusionary and favour either a certain class of content providers or a particular TSP. The best case scenario in this situation would have been a declaration by the regulator reaffirming these principles of non-discrimination, non-exclusion and transparency while reserving the right to ban differential pricing should there be any adverse effects on the market. The regulation, however, is unsurprising, given the massive online and offline net neutrality campaigns that steered focus away from any empirical analysis. Considering the role that both civil society and industry played in making this debate louder but not more meaningful, this regulation may just be what we deserved but not necessarily what we needed.
This commentary originally appeared in The Wire.
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Cledwyn Fernandez Fellow Indian Council for Research on International Economic Relations
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