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The Net Neutrality Dilemma!

Published on Wed, Feb 18,2015 | 17:01, Updated at Wed, Feb 18 at 17:01Source : 

By: Jyoti Pawar, Partner, Economic Laws Practice

Since the inception of the internet in India, it has enabled various functionalities relating to communication, entertainment, retail, transportation, education, news, jobs and business opportunities. It has also contributed significantly towards bridging the gap between urban and rural India. The unprecedented demand and growth of internet has triggered an ongoing debate on open internet access or net neutrality.

Net Neutrality: What Does It Mean?

Currently, the term net neutrality is not defined under any Indian law. However the concept of net neutrality, as coined by its proponents globally, means the provision of internet access by internet service providers (ISPs) in a manner where the network infrastructure is “dumb” or “neutral” and the ISP is incapable of regulating, distinguishing, controlling or prioritizing the packets of data that flows through its network. The analogy that best explains this theory is that the internet should function like the power grid system, i.e. the power grid would deliver the same outcome of electricity irrespective of whether the device that is plugged is a geyser or a light bulb.

However, this is net neutrality in the abstract and given that the internet involves various interested parties, our intent with this article is to observe the perspective of each of the relevant groups on this issue.  

The ISP Perspective

The availability of diverse content, innovative applications and services has led to the phenomenal growth of the internet and also an increase in the consumer’s appetite for high speed internet, bandwidth and reliable network infrastructure. On the other hand, the revenue generated by the ISP is insufficient for the maintenance and expansion of the network infrastructure. In fact, the average revenue per user is on the decline. ISPs are also concerned that content providers like Skype, Facebook, etc who provide service through the internet(“Content Providers”): (i) tend to utilize large amounts of the available network resources and bandwidth, often creating congestion and consequently poor quality of service; (ii) do not pay connectivity charges either  to the ISPs or to the government for using the network,  (iii) make no investments towards the underlying network infrastructure; and (iv) impinge upon the revenues of the ISPs by shifting the customer base from the native services provided by the ISPs. For these reasons the ISPs have been consistently concerned about the impact of net neutrality.

Further, ISPs believe that there is limited financial incentive for ISPs to maintain and expand their networks unless they can tap additional revenues by way of either levying fees or entering into priority arrangements with Content Providers for use of the network infrastructure.

Net Neutrality Proponents’ Take  

The ‘net neutrality’ proponents believe that if  ISPs are allowed to charge Content Providers for use of the network infrastructure: (i) ISPs would have the power to prioritize their own services over the services provided by third parties; (ii) traffic could be categorised into ‘fast lanes’ and ‘slow lanes’ based on commercial incentives; (iii) data over the network could be blocked, controlled or throttled; (iv) such arrangements could result in a non level playing field for start ups and hinder competition; and (v) permitting such arrangements will challenge the entire edifice of the internet structure which is built on the premise that the “internet is a neutral network”. Net neutrality proponents have also been concerned about the ability of broadband providers to use their last mile infrastructure to block content.

What Do The Indian Consumers Want?

Internet access in India has created an avenue of opportunities for the consumers such as access to online education from remote areas, retail opportunities/online shopping, medical advisory, source of entertainment content, etc. In this backdrop, the need of the end consumer is essentially open access to internet at affordable prices and quality of service.  

Net Neutrality Around The World

Chile: In 2010, Chile became the first country in the world to adopt and implement statutory provisions for net neutrality. The law prohibits ISPs from ‘arbitrarily’ blocking; interfering, discriminating, hindering, and restricting the right to use the internet to send, receive, offer any content, application or legal service. Subsequently in 2014, Chile prohibited any ‘zero-rating access’ i.e. the practice of network operators to not charge end customers for a well defined volume of data by specific applications or internet services through the network operator’s network in limited data plans. This move has bought Chile into the lime light among both net neutrality opponents and proponents who believe Chile’s blanket ban can increase the digital divide in a country where internet penetration is still a matter of concern.

Vietnam: In 2014, Vietnam banned foreign Content Providers from operations due to network congestion and loss of revenue by ISPs. The Vietnamese government subsequently revoked the ban and is now devising a legal framework wherein Content Providers will be regulated and could impose obligations upon Content Providers to set up domestic servers or alternatively, enter into arrangements with the local ISPs for use of their networks for a consideration.

Philippines: In the Philippines, two of the top ISPs have announced their plans for providing its subscribers free internet services by allocating larger bandwidth and free access to Facebook.
USA: The US communications watchdog; the Federal Communications Commission (FCC) previously introduced  two proposals to protect net neutrality, but they were struck down by U.S. courts. In its third attempt, the current chairman of the FCC; Tom Wheeler has proposed a new set of draft rules and the members of the FCC are slated to vote on the draft rules in February 26, 2015.

The key features of the draft rules proposed are: (a) internet to be an open platform for innovation and free expression (b) no blocking (c) no throttling i.e. ISPs should not be able to intentionally slow down some content or speed up others based on the type of service or ISPs preferences (d) no paid prioritization or “fast lanes” including no prioritization of content or services of the ISPs’ affiliates (e)  greater transparency; and (f) grant FCC the power to hear complaints and take appropriate enforcement action, if necessary.

European Union: The EU has acknowledged and endorsed the principles of net neutrality however; the European Commission is yet to release its draft proposal on this principle.

What’s Next For India?

In India, currently there are no regulations governing net neutrality. However, global precedents suggest a way forward ranging from:

(a)    Adopting net neutrality as an absolute concept i.e. unrestricted internet where ISP shall have no control over the content/packages of data travelling through its network.
(b)    Adopting a legal and regulatory framework for Content Providers requiring them to contribute towards the various costs incurred by ISPs for maintenance of the network infrastructure
(c)    Allowing priority arrangements between Content Providers and the ISPs.
(d)    Allowing ISPs to introduce data plans and also manage or prioritize traffic depending upon the size of data being transpired or the nature of the service being provided (for eg: real time voice or medical services receiving priority).

The above approach amongst others could be considered by Telecom Regulatory Authority of India (TRAI), who has recently indicated that it will soon be releasing a consultation paper on net neutrality. While TRAI’s approach on this issue is anticipated by all, the critical point will be to ensure protection of the consumer’s interests.

(Disclaimer:  The information provided in the article is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein.)


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