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Breaking the Internet

Published on Sat, Apr 18,2015 | 16:26, Updated at Sat, Apr 18 at 16:26Source : 

“Breaking the Internet”: Issues with TRAI’s Internet Consultation

By: Chaitanya Ramachandran, Associate, Amarchand Mangaldas

The Telecom Regulatory Authority of India’s “Consultation Paper on Regulatory Framework for Over-the-Top (OTT) Services”, has ignited an unprecedented national debate on “network neutrality”. At the time of writing, nearly 8 lakh ordinary Internet users (and counting) had emailed responses to TRAI through the online platform This is, by some distance, a national record for public engagement with TRAI, which typically deals in such arcana as “Review of the Reporting System on Accounting Separation Regulations, 2012” (another ongoing consultation).

TRAI’s paper comes at a critical time. Telcos (which are effectively India’s biggest ISPs) have been mulling new mobile Internet business models that effectively discriminate between different types of content. Airtel in particular has faced much criticism for its (now aborted) plan to charge mobile Internet subscribers extra for using voice-over-IP (VoIP) services like Skype, and the new “Airtel Zero” platform, on which users may access sponsored services for free. Telcos have also long been lobbying for a regulatory framework for Internet apps and services, especially those they see as competition; Skype and WhatsApp are prime examples. Telcos and TRAI both refer to Internet apps, services and content using the outdated, somewhat confrontational term “Over-the-Top” (OTT) services, implying that Internet services are merely free riders on telcos’ networks.

The TRAI consultation brings these two issues together; whether Internet apps should be regulated, and whether telcos/ISPs can discriminate between different types of Internet traffic based on content, ownership, or source. These issues are related inasmuch as they represent two paths to the same goal: telcos preventing or limiting competition from Internet apps. Telcos would love the freedom to deal swiftly with competition by blocking, throttling, or charging higher prices for competing services – that is, by violating the principle of “network neutrality”. If prevented by law from doing this, they might instead settle for Internet apps being hamstrung by the same regulations they themselves face, including licensing and revenue sharing – the proposed “Regulation of OTTs”.

Although such consultations are intended to be neutral, fact-finding exercises, TRAI has faced substantial criticism for its apparent lack of objectivity in dealing with these issues. For an independent regulator, TRAI’s paper shows a worrying bias towards telcos, thereby prejudicing the interests of Internet companies and, more importantly, Internet users.

Net Neutrality
Amidst the raging national debate over “net neutrality” ignited by the TRAI paper, it’s worth pausing for a moment to revisit the idea’s provenance and history. “Net neutrality” is a retrospective term that describes a core design principle of the early Internet – that the network would make the best effort to transmit all packets of data from origin to destination, regardless of content. This idea is closely associated with the classic “end-to-end” principle of computer networking: applications (like Viber or Snapchat) run on end hosts (like a laptop or smartphone), while the network (here, the Internet) only provides very general services that can serve all applications – it’s application-blind. Over time, the rule of neutrality has become somewhat less strict and literal, as competing needs, such as managing traffic at peak times, have necessitated tradeoffs. Even so, the core idea of neutrality survives in the user choice that we all take for granted – the idea that once we’ve paid for an Internet subscription, we can do whatever we want online.  This “neutrality” of the Internet has always meant that anyone with a computer and an Internet connection can write Internet-based applications without seeking a licence or approval from anyone. Law professor Jonathan Zittrain succinctly describes this quality of the Internet as its “generativity” – its “capacity to produce unanticipated change through unfiltered contributions from broad and varied audiences”. It is sobering today to look back to the origins of companies like Google and Facebook – ideas dreamed up by college students in their dorm rooms. Without the Internet’s historic neutrality and generativity, they probably wouldn’t exist today.

Telcos now threaten to upend this principle by effectively deciding which online services their users access and how. Different proposals contemplate discrimination at either the user or content ends of the network, but are united in their purpose of maximizing revenue at the expense of users and Internet apps. At the user end, plans (such as Airtel’s) to charge extra for Skype would push users towards voice calling or other apps. At the content end, proposals to create paid “fast lanes” or charge Internet apps “termination fees” to access telcos’ users would also affect user choice, whether by driving users away from “dirt track” services that can’t/don’t pay for the “fast lane”, or by forcing apps to pass “termination fees” on to users. It is clear that such discrimination would benefit telcos alone.

A much thornier issue is whether “zero-rating” – telcos partnering with content providers to give customers free access to selected content – violates net neutrality. Opponents argue it drives users away from services that aren’t on zero-rated platforms; had Flipkart been available for free on “Airtel Zero”, wouldn’t it attract users away from, say, Amazon? The problem with this argument is its failure to appreciate the complexity of India’s potential market for Internet users. The majority of Indians – nearly a billion people – are not only unconnected to the Internet, but also unaware of why they need to connect at all. Free basic online services would, at least in the short term, bring many of these people online and give them a glimpse of what the Internet can do. Zero-rating programs come in many different flavours, and it is worth first experimenting with safeguards such as transparency, non-discrimination, non-exclusivity, and non-prioritization to see if the colossal task of connecting India’s unconnected can be balanced with protecting the choice of users who can afford Internet access. It would be unwise to make a conclusive decision based on the scant evidence we currently have.

In choosing whether or not to recommend or enact regulations preserving net neutrality, TRAI should remember that, as an independent regulator, it is bound to act in the public interest above all else. The tidal wave of support from citizens for net neutrality leaves little doubt as to the public’s perception of where its interest lies. Were India to formulate net neutrality regulations, it would join a small but growing number of countries that have preserved net neutrality through law. In February, the US Federal Communications Commission adopted a new “Open Internet Order” that includes “bright-line rules” against blocking, throttling, and paid prioritization of Internet traffic. Last year, Brazil (a fellow developing country and BRIC member) enacted the historic “Marco Civil” (often described as an Internet bill of rights), which requires ISPs to process all data packets “regardless of content, origin and destination, service, terminal or application”.

Internet Regulation
The other issue examined by the TRAI paper is whether to create a regulatory framework for Internet apps, services, and content. While not a new idea (especially as applied to VoIP), it has gained added momentum with telcos’ complaints about competition from online voice calling and messaging apps. The telcos’ interest in whether or not Internet apps are regulated is rooted in their perception of a non-level playing field. If telcos cannot disadvantage Internet apps on their networks because of net neutrality, the next best outcome for them would be to encumber Internet apps with a licensing and regulatory regime similar to their own. Apart from “misery loves company” being an exceedingly poor justification for regulatory action, it would be perilous for TRAI to entertain the idea of Internet licensing.

For one thing, it completely disregards the Internet’s history. The “generativity” that has brought worldwide fame to homemade apps like Flappy Bird is inherently incompatible with the idea of licensing or other ex ante regulation. Imagine if Mark Zuckerberg had to get a license from the FCC before his classmates could use his “Facemash” page! The magic and beauty of the Internet is that anyone, anywhere can dream up an idea, code it into reality, and release it to the world on their own. This proposal also blissfully ignores the logistical hopelessness of implementing a licensing scheme for Internet apps, thousands of which are released daily. How the Department of Telecom could even contemplate dealing with this is anyone’s guess! The TRAI paper does suggest at one point that licensing should focus on “communications” apps. But as anyone with an Internet connection can imagine, classifying apps based on whether they relate to “communications” is easier said than done. If I exchange text messages within a Google Doc with a colleague, or discuss tactics with a friend using voice chat within Call of Duty, am I using a “communications” service?

Even if the central government were to be completely unmindful of its futility and impose a licensing regime for the Internet, it wouldn’t really affect innovation or stem the flow of new apps and services – it would just keep them away from India (why bother dealing with a cumbersome and opaque licensing regime in one country when you can freely access 200 others?), or in the case of Indian entrepreneurs, force them to seek greener pastures elsewhere.

Apart from telcos, no one has any reason to support a licensing regime for Internet apps. Consumers will lose out on new and innovative apps, and the government’s vision of a “Digital India” interconnected to the global Internet will turn into the nightmare of a “Digital hermit state”. In fact, even telcos will ultimately suffer – a drop in availability of apps will depress user demand for Internet access.

A Muddled Process
As briefly alluded to above, a major issue with the TRAI paper is its perceived pro-telco bias. A classic example is its endorsement of telcos’ complaints about “losing revenue” to apps like Skype and WhatsApp, even in the complete absence of evidence from telcos that their revenues are suffering. In reality, major Indian telcos have been reporting substantial growth in revenues and profits, which some of them explicitly attribute to a massive surge in demand for mobile Internet access! So while telcos themselves are effectively admitting to investors that Internet apps are driving their revenues by generating user demand for Internet access, TRAI seems to have fallen for the red herring of “revenue loss”. The lack of understanding of the market for Internet access evidenced by such passages in the paper fuels concern about TRAI’s independence in exercising its judgment on the issues raised.

It is also worth noting that IT Minister IT Ravi Shankar Prasad has, confusingly, announced the formation of a separate central government committee to examine net neutrality and make recommendations to the government by mid-May “independently of TRAI”. That last phrase says a lot about the seriousness with which the government plans to take the advice of TRAI, which was ironically created as an expert body to aid better policy- and decision-making by the government.

This is not to disregard the various missteps of TRAI and its officials in what should have been a neutral consultation process. Unnamed TRAI officials have offered views in the media on zero-rating plans, which they say “seem to violate net neutrality”. If the point of the consultation is to seek diverse views on what net neutrality is and whether it should be protected, on what basis is the regulator already sitting in judgment over what violates net neutrality when more than a week remains before the deadline for comments? TRAI’s outgoing chairman Rahul Khullar has aired unsubstantiated conspiracy theories of the net neutrality debate being influenced by “a corporate war…between a media house and a telecom operator”. Given their association with an independent regulator conducting an ongoing, supposedly neutral fact-finding process, these officials should have kept their counsel. Instead, by publishing a lop-sided paper and prejudicing public opinion with irresponsible and untimely statements, TRAI shares responsibility with the central government for rendering this consultation a muddled, deeply compromised process.


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