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Net Neutrality in India
April 19, 2015, 4:46 pm

The failure to impose a tiered internet system in the United States, by wireless communication service providers there, has not stopped their Indian counterparts from making the same attempt in India.

Telecommunication service providers (TSP) in India have appealed to the Telecommunications Regulatory Authority of India (TRAI) to introduce a service model that would allow them to charge users for ‘Over The Top’ (OTT) services such as Skype, WhatsApp, YouTube and others, separately from existing internet usage charges.

On 27 March, 2015, the TRAI put out a consultation paper called ‘Regulatory Framework for Over-the-Top services’ and requested feedback from citizens on this issue before 24 April.

The term OTT service refers to delivery of any content, whether audio, video or any other media, over the internet without the TSP controlling the viewing abilities or redistribution of that content. OTT specifically refers to content that arrives from a third-party to the end-user, with the ISP currently only serving the role of transporting the content ‘over the top’ of their network. For instance, you watch clips on YouTube, speak on Skype, message using WhatsApp, visit Facebook or buy from Amazon, using over-the-top of wireless or cable network provided by your TSP.

The issue at the core of net neutrality discussions is the complaint by TSPs that people are opting to use the free services of third-party vendors such as Skype or WhatsApp over their own voice or SMS offerings. Net Neutrality advocates point out that TSPs are already charging customers for their data plans and should not be allowed to decide the sites that customers choose to visit or determine what Apps the end-user prefers to use.

Seeing that it would be difficult to charge the customers for OTT services, TSPs are now attempting to grab a share of the revenue that OTT service providers receive. However, these charges placed on OTT services will ultimately percolate down to the subscriber making internet access even more expensive and restricted while also stifling competition and innovation.

For instance, TSPs could reach an understanding with YouTube or other large companies to provide their content at faster download speeds, while slowing down the speed of websites that offer competing services.  This could also lead to major e-commerce companies and other vendors with large revenue monopolizing and dominating the markets, driving out small players and startups who would find it difficult to cope with the additional charges being demanded by TSPs.

Upholding net neutrality is important to internet users everywhere, especially in developing countries where internet penetration is still very low. In India, which has the third largest number of internet users after China and the United States, the rate of internet uptake, or the percentage of the population with access to the internet is only a paltry 20 percent. By contrast, the United States has a penetration rate of 86 percent, China has 45 percent and, in South Korea and the Scandinavian countries, which have among the world’s highest percentage of internet users, the penetration is over 92 percent. 

India clearly has a long way to go in internet uptake, but the silver lining is that that India currently has one of the most affordable internet charges in the world. But this could change rapidly once TSPs are allowed to charge additionally for OTT services or permitted to shape the end-users internet access and experience in any other way. This would also have an impact on India’s continued economic growth; the country cannot afford it, we cannot allow it.

Net Neutrality and Appu’s teashop – a parable

Meet Appu, a young teenager who owns a teashop by the side of a bus-stop, in a rural Indian village. Every day he sells hot tea, idlis and samosas to passengers waiting or alighting from buses there.

Because of the great taste of his idlis and samosas, and the quick, clean services he offered, Appu’s teashop grew in popularity. Soon people from nearby villages began taking the bus to have tea and snacks at Appu’s teashop.

One day, one of the bus drivers called Appu aside and told him: “The bus is getting too crowded with people coming to your teashop, so from now on, you must begin paying us a small fee for transporting these customers to you.”

Appu was taken by surprise and replied, “But passengers are already paying you a fare for riding on your bus and coming here. Also, you make more money when more passengers come here.”

But the driver was adamant and warned that if Appu refused to pay, he and other bus drivers would no longer stop their bus at that particular stop.

Appu was indignant at this blatant hustling and refused to pay the driver.

The next day onwards, buses no longer halted at the bus stop beside Appu’s teashop. The passengers waiting to board buses grew in number and eventually spilled out on to the streets stopping all traffic on the road.

Soon a representative of the bus owners association arrived to mediate with Appu and the passengers. He told the crowd that the buses could no longer stop there because people coming to the teashop were overwhelming the capacity of the buses. “However, if Appu agrees to pay us a share from his earnings, then we will once again begin stopping here.”

One of the passengers then replied, “Your business as a bus operator is to take us to our destination, irrespective of whether it is to our work, our home or to the teashop. You bought the license to run this route from the government and we paid the government to build the road on which you run this route. Neither you nor the government can tell us which stop we should get down at.”

Undeterred by this reason the bus operators’ representative continued, “You need to understand that Appu is running his business profitably ‘over the top’ (OTT) of the service provided by bus operators. Without the bus service there would be no teashop for Appu. So, it is only fair that Appu should pay us a fee for this service. Besides, passengers pay only a small fare for coming here, while they pay Appu a much larger amount for his tea and snacks.”

A woman passenger then said: “Bus and food are different products and we pay each product the market price based on the value we attach to it. I buy cloth for my dress from one shop and get it stitched with a tailor at another shop, paying each person the market price for their product or service. Based on your ridiculous logic, the cloth merchant could ask a fee from the tailor, because without the cloth there would be no tailoring.”

The bus operators’ representative realized that things were not going as he planned. His intention had been to get the passengers on his side of the argument and turn them against Appu. So he tried a new tack: “Our only concern is the safety and comfort of passengers. When buses become crowded, it causes inconvenience to passengers and we cannot offer them the same level of services as before. We also have to buy new buses to meet the increase in passengers; all of this costs money.” He added, “Do you know how much money we pay at government auctions to buy route operating licenses?”

One passenger then retorted, “When you bid at the license auction, you knew you would have to recover that money from bus fares. Why did you bid higher than what you estimated you could recover? And, if you do not make money from this business, how is it that all the bus owners have now become billionaires?”  

As the passengers began to get restive, the bus operators’ representative knew he was beaten and made a hasty retreat.

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