Late last week Prime Minister Narendra Modi launched Startup India, whose success depends on the right to free and fair competition for new entrants. A strong, strident debate has started around a set of consumer rights issues, like freedom of expression (Section 66A), quality of service (call drops and internet access quality), net neutrality , privacy and so on. A debate that is evolving slowly and surely into a Magna Carta for net and telecom consumers that enshrines the right to quality service, free and fair competition amongst others.I am happy to see this engagement by activists and netizens a big help in evolving a new policy framework for the digital age. Last year Indian netizens were at the receiving end of dismal, technically inept regulations with the porn ban, the draft encryption policy and the initial consultation proposing a regulatory framework for Over The Top (OTT) applications.
Each of these cases triggered an uproar. They also exposed the weakness of Trai, and in particular the absence of a legislation to protect consumers when repeated regulations were being challenged and stayed in courts.
Net neutrality is, of course, a vital part of this basket of consumer rights.The internet is a free and open space that’s becoming a valuable market place on one hand and a forum for free expression alternate media on the other. Telecom companies, big businesses and politicians are all naturally impacted by the growing power and presence of the net. There is the tendency of all those associated with the net to gain control of it. That, therefore, is the crux of the fight for net neutrality .
The real danger to a free, fair and open internet is the growing power of telecom companies to `cannibalise’ the internet.Net neutrality is ultimately about preventing telcos from misusing their power over the internet. Their desire to differentially `rate’ different parts of the net trans forms access providers into gatekeepers thus cannibalising the internet.
Telcos want to use data pricing or network management to preferentially provide access to parts of the internet.This creates artificial islands on the net which in turn, slowly but surely and irreversibly , concentrates commercial power among a few telcos. This is what i call `cannibalisation’ of the internet.
Once developed, it is almost impossible to reverse given the finite competition and insuperable entry barriers to it.That is precisely the situation we want to avoid vis-à-vis the internet, where telcos start influencing users and steering them onto parts of the internet where they gain more. Among other things, this will crush new startups.
There is substantive evidence in India of the market power of cable operators, and of the misuse, extortionate pricing or poor quality of service helpless consumers have to suffer when access providers start controlling access to content. This gatekeeping power of the access providers creates permanent distortions which even regulation can’t control.
This second consultation by Trai on differential pricing is key because it addresses an important part of net neutrality where it has unchallenged powers of tariff setting. I have, in my response, suggested that zero rating or differential tariffs be permitted if and only if the regulator is satisfied about lack of any direct or indirect financial interest quid pro quo.
I am opposed to a complete ban on zero rating because it is possible and may be necessary that many governmentmandated sites are indeed accessible to the user, zero-rated or free. But Trai has to test these offerings for any financial benefits interests, direct or indirect, that may exist before permitting these. Any competition and predatory pricing implications of such tariffs should be examined by the Competition Commission before being permitted by Trai.
Any other tariff that involves using network management or differential pricing to parts of the net for commercial interest would be gatekeeping and cannibalisation of access to the internet. This needs to be prohibited by regulation.
But it is important to realise that this consultation by Trai is still only addressing part of the net neutrality issue because tariff caps can easily be skirted by telcos through other commercial deals with websites. Cannibalisation of the internet is an imminent danger that will still require to be addressed as a priority , despite this consultation.
The slow, ineffective and part-by-part response by the government and the regulator has to do with the fact that they both lack legislative tools to rein in telcos. I have been arguing and seeking for several years now to amend the Trai Act and enact a separate legislation for net neutrality which has force over telecom licences. The Trai Act in particular needs a serious revamp to enforce consumer protection issues urgently, before telcos becomes impossible to regulate and the future of the internet is irreversibly lost to telecom giants.
Even my friend Nandan Nilekani, who has been on the opposite side of consumer issues such as privacy, has recently recognised the need for legislation to protect the consumer and internet.Net neutrality is key to Digital India’s success. Here’s hoping that 2016 becomes the year not just of Digital India but of Indians in the digital world.