The box of Pandora is teetering unsteadily. The worms crawl creepily out of their cans. The open Internet is under attack. Amidst such an overwhelming avalanche of populist outcry, it is hard to stay neutral in a debate on net neutrality, a concept that only recently has found its way into public consciousness. The support from the public is unequivocal, legitimized in the form of one million emails received by the Telecom Regulatory Authority of India (TRAI). While cyber denizens speak out in a voice united for their freedom, a larger picture lurks behind the smokescreen of agitation. In an explicit effort to combat the onslaught of negative opinion, on April 24th the COAI (Cellular Operators Association of India) launched ‘Sabka Internet, Sabka Vikas, an online platform tasked with an initiative to connect the 1 Billion unconnected citizens of India.
Gopal Vittal, CEO of Bharti Airtel South Asia, was clearly a man on a mission. Right from the offset, the attempt to paint a vibrant canvas of vision was apparent. Mr. Vittal announced that, ‘We need to invest 500 thousand crores as an industry if we are to make and fulfill the vision of digital India.’ The investment is justified; Mr. Vittal said because a straight line connects the growth of the internet to the growth of productivity, entertainment, and services. However, a canvas of vision can be carried out only by authorities vested in credentials. This seemed to be the underlying message, as Mr. Vittal spoke of Indian voice rates at 37 paisa per minute, being the lowest in the world.
The punch line, however, came towards the middle of the keynote address. ‘We believe that the same service, and specifically communication service and voice service must be subject to the same rules … As an industry, we support and commit to net neutrality. We also want net equality because the job to be done as a nation is massive.’ This was clearly the crux of the argument presented by the telcos, and remained a consistent theme throughout the rest of the conference. With a cumulative debt of 300 thousand crore and an ROI of just 1%, Mr. Vittal questions whether the industry can accumulate the required investment of 500 thousand crores.
Part of the solution, he claims lies in net equality, i.e. imposing same rules for same services. The telecommunications industry is subject to a complete set of rules, namely contributions to rural development funds, licensing fees, national security obligations, infrastructure for lawful interception, etc. Mr. Vittal argues that OTT players like WhatsApp, Viber, Facebook, etc., are not subject to the same rules, and hence gain an unfair competitive advantage. He says that this has forced telecom players to compete with their ‘hands tied behind their backs.’ While the argument is sound on the surface, one can’t help but wonder whether the financial implications projected by Mr. Vittal are genuine or driven by corporate greed. Where telcos are losing out on mobile and fixed telephony revenues, OTT services drive revenues through data consumption. So is it true then, that if OTT players are not subjected to the same rules, then telcos will not be able to pump investment to keep bandwidth infrastructure intact and kicking?
In its response to the TRAI consultation paper, NASSCOM (National Association of Software and Services Companies) suggested a new revenue model for telcos, suggesting that their revenues be tied more closely to data. In this new model, disruption of traditional fixed and mobile telephony would be rendered irrelevant. Addressing this suggestion, Mr. Himanshu Kapania, Managing Director of Idea Cellular, cited the American model of unified charging of data and voice as a bundled plan. Crucially, however, he added that since voice rates are so low in India, the COAI predicts that the adoption of a similar model would multiply existing data rates by a factor of 6. If this premise is accepted, then we must also accept that the internet will remain inaccessible to a significant segment of the Indian population. The government must now assess the economic reality of such a prediction and whether such a bundled delivery is a feasible solution.
If one accepts the premise of net equality, the next immediate concern is how exactly are these rules to be applied to OTT players. Will innovation driving start-ups now be subjected to dangerous forms of licensing? Mr. Kapania sidestepped the question by squarely placing the ball in the government’s court. He maintained that it was not the endeavor of the industry to seek licensing, and the TRAI consultation paper would run its due course to answer the question. Naturally, the most obvious concern of any such licensing mechanism is that it will choke innovation in a start-up culture dealing with rich internet applications. Mr. Kapania and Mr. Vittal were quick to add that any such licensing mechanism would be applicable only to voice and communication services, and not OTT applications as a whole.
Inevitably, the zero rating platform was raised during the Q&A section. Mr. Kapania pointed out that zero rating was not unique to the realm of the internet. FMCG, toll-free 1800 services, consumer durables, etc. all utilize some form of differential subsidy to cast a wider net of users. So why then should the internet be treated as a different playing field? The answer remains the same. The culture of innovation and growth of online data is of paramount importance and needs to be protected. Sunil Sood, MD and CEO of Vodafone India, also added that the platform is not a game-changing initiative, and the industry will follow in compliance with whatever the government decides.
With such a heavy emphasis on ‘Same Services, Same Rules’, the next obvious question is why telecommunication players are shying away from launching their own VOIP(Voice Over Internet Protocol) services. Considering the competitive advantage, this course of action does seem to be the most obvious business decision. In response Mr. Kapania said, ‘There is no cost arbitrage between running a circuit switched network versus a VOIP network … Circuit-switched networks are far better evolved.’ Mr. Kapania went on to explain that over the next decade, VOIP networks will develop into VoLTE, which is based on the IP Multimedia Subsystem (IMS) network. However, this technology is work in progress, and it remains unclear whether all regulation norms are currently met.
Clearly, the dust has not yet settled on the net neutrality debate. More than ever before, it is vital for all stakeholders to come together and engage in dialog. Because of the nature of the beast itself, debates surrounding the internet tend to become heated and charged. After all, it is the only existing platform for social media and a vehicle for free speech. However, one thing is for certain. The discussion on net neutrality must not be moralistic; rather, it must be oriented towards the development of digital India. Whether or not net neutrality holds a place in the future of the internet, the decision must be made with the consumer’s interest as paramount criterion.