This Article is From Jan 12, 2016

It's Not About Facebook, Stupid. Net Neutrality Alert.

In January 2015, over 12 months ago, I first raised the issue with the Government and the Regulator TRAI, of the attempt being made by telcos to violate net neutrality - an issue that forms an important part of the basket of consumer rights that ought to be enshrined, for the Netizens and Digital consumers of our country. Twelve months on, here we are - in yet another consultation by the TRAI - albeit this time asking better questions.

The last year has been, in many ways, significant for Internet consumers. A strong, strident debate has been launched around net neutrality, with plenty of passion and some understanding. It is certainly a debate that is evolving slowly and surely into a mature push for clearly drawn consumer rights - a kind of Magna Carta for the Internet and Telecom consumers that enshrines rights to quality service, free and fair competition, & privacy and freedom of expression, amongst other issues.

While some policymakers are rattled by this stridency, I am happy with the sustained and continued engagement by activists and netizens on the issue. Indeed, it is something much required in this fight for consumer rights. I am, however, disappointed with how some voices have characterized the debate on net neutrality as a rant against Facebook's Free Basics. There is also limited commentary by the leaders of some traditional IT companies who in all likelihood, haven't the faintest clue of what regulation is or must achieve.

The issue of net neutrality, simply put - is about protecting the Internet from being controlled by commercial entities therein giving them the power and influence to determine consumer choice and consumption of content on the Internet. This power could be of two types:

1) The power of telcos to control or influence consumers vis-a-vis which parts of the net they visit (telecoms and Internet providers that provide access to the Internet for consumers).

2) Second, the power of large Internet websites to crowd out competition through unfair means.

Both of these scenarios represent different regulatory challenges.

Take the first case - This involves preventing telcos from using Data pricing or Network management (data rate/speed) to preferentially provide access to preferred parts of the Internet. This creates islands on the Internet through access providers - which in turn slowly and surely creates an irreversible amount of commercial power concentrated in a few telcos. This is what I call 'Cabelization' of the Internet.

Once developed, it is almost impossible to regulate, given the finite competition and players in telcos, and difficulty in creating new competition to telcos. That is precisely the situation we want to avoid vis-a-vis the Internet, where Telcos start influencing users and steering them onto parts of the Internet where they gain more.

There is substantive evidence in India of the market power of cable operators, and of the misuse, pricing abuse, extortionate pricing or poor quality of service that helpless consumers have to suffer when access providers start controlling and influencing access to content. This gate keeping power of the access providers is unique because of the finite number of access providers in competition, and creates permanent distortions which even regulations, as they currently stand, can't manage.

This, in turn, creates a situation where rampant price gouging and/or poor quality is inflicted upon consumers, leaving them hapless except for upgrading to more expensive options. Cabelization of the Internet causes vertical integration which would lead to telcos owning parts of the net and impacting consumer choice and competition in the long term by making web-only entities unviable and unable to compete. There is ample evidence of that in the Indian Television and Media sector where vertically integrated entities have distorted choice and innovation, and have created market power concentration.

My submissions to the TRAI have been very simple and follow the need to 'Protect against cabelization of access TO the Internet' and 'To ensure free and fair competition amongst websites/apps ON the net'. I have submitted to the TRAI that - telcos could be free to zero-rate or offer discounted access to websites as part of promotions or improving affordability or mandated by Government for public service. But this cannot be on the basis of financial arrangements or interests between websites/apps and telcos i.e. No financial benefit must accrue to telcos by providing cheaper tariffs to access some parts of the net. Telcos must also have no financial interest (including direct or indirect equity/ownership) in the sites that are being offered price-offs or any form of evidence or action of subsidy. In the Free Basics case, it is about Reliance offering free access to a part of the Internet, and is therefore open to being examined for any commercial benefits accruing to Reliance directly or indirectly from Facebook.

With regards to Differential Pricing, I have submitted that it cannot be permitted if used to increase data rates for certain apps or create preferential access to part of the net or its inverse. This is an inverse form of predatory pricing.

Further, for purposes of clarity, telcos cannot be allowed to increase tariffs to access some parts of the web or apps. This is a deliberate effort to make access more expensive to or faster/slower to some parts of the Internet, thereby pricing out the app/site from the consumer. This is the gate keeping and abuse of power by telcos to discriminate against certain apps that leads to cabelization and creating islands on the internet.

The second case - free and fair competition or the issue of large websites trying to get bigger or promote some parts of the web - is not as serious as an issue as it's been made out to be. Because there is almost infinite competition on the Internet and its difficult for any one web entity to corner the Internet - and impossible. But the issue of free and fair competition on the Internet is a legitimate expectation of consumers - be it Flipkart or Facebook or Google or Yahoo or anyone running a large app. But these can be easily examined by Competition Commission whose mandate is precisely this - i.e. to ensure free and fair competition in all marketplaces including the web.

The current debate about net neutrality, whilst it has many reasoned views, has been dominated by a growing cacophony or rant against Facebook and its Free Basics, when apps and websites like Facebook are easily examined and regulated anytime. This is a dangerous distraction away from where the real problem is emerging from - because the real danger to a free, fair and open Internet is the growing power of telcos and their ability to use financial deals with certain parts of the net to create a fait accompli for the consumer. This is where the danger is to the future of the Internet.

Net neutrality, is ultimately about preventing Telecom Operators from creating, increasing and asserting their power over the Internet. It is therefore obvious that the biggest and most urgent challenge of Net Neutrality ought to be to protect from the 'cabelization of the Internet' and that this is squarely for the TRAI and Government to do with clear unambiguous legislation and laws. Apart from laws to ensure a Net Neutral Internet, it is necessary to improve the TRAI Act and the capabilities within both the Department of Telecom (DoT) and TRAI to regulate technology in India.

(Rajeev Chandrasekhar is a Rajya Sabha MP and Technology Entrepreneur.)

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