net-neutrality-india

The Cellular Operators Association of India, a telecom lobby which includes the largest telecom operators in India (Airtel, Vodafone, Idea Cellular), and has inducted Google (read) and Facebook (read) as members in the last one year, has created a paper that calls for regulation of Internet (OTT) services (details), submitted a letter to the TRAI against Whatsapp (read), and asked the Indian government to create a revenue share relationship between Internet services and telecom operators (read). Airtel*, Idea Cellular and Vodafone, which are key members of the COAI, have repeatedly made anti net neutrality statements in the past (read).

Here’s how Rajan Mathews, Director General of the COAI, justified violation of Net Neutrality, while speaking yesterday at the IAMAI India Digital Summit, in a session moderated by Shivam Vij, and with Mahesh Uppal (a telecom consultant) and Vijay Anand (of the Startup Centre and iSpirit) participating:

1: Net Neutrality is a foreign concept, not for India

Rajan Mathews said: “It’s a foreign issue that has been thrust upon us. We need to develop our own vocabulary for net neutrality. It comes the concept of access. The US government has monopolies, and there was a rate of return guaranteed to AT&T and built on public expense. The notion of common carrier status was established under law, and everyone got equal opportunity to access. There was no issue in a voice network built on peak, and there was plenty of bandwidth off-peak. We’re taking this concept and putting it in a situation where bandwidth is scarce, we have government regulatory initiatives, we have must do’s like rollout obligations. We say net neutrality means free (Internet). If we want to achieve the type of broadband vision that the government has set. Net neutrality has to change the context of the discussion.”

MediaNama’s Take: Net Neutrality is an Internet concept, and by breaking net neutrality, you convert the Internet into something like a DTH network, where you pay differently for different channels. You also restrict the ability of Internet businesses to combine types of services, such as apps, video and health tracking (if Goqii were to embed YouTube health videos in its app), by forcing consumers to pay separately for apps, video and wearables/internet of things. You restrict their ability to reimagine consumer experiences, rob consumers of choice.

2. It’s okay to have differential pricing. It’s regular trains vs Rajdhani

Rajan Mathews said: “Charging separately for VoIP, needs to be looked at whether it’s okay to charge for anything on a differential basis.”
Telecom consultant Mahesh Uppal pushed for a middle ground: “We don’t accept toll roads, but accept some of them. We accept (regular) trains, but we accept Rajdhani’s as well”…”The middle ground solution is that first and foremost, you have to determine, the regulators have to determine are there services which require special treatment. Just like you would control the movement of trucks, are there users who need a different road you can’t leave it to a network operator. If our regulatory regime has serious anomalies. We have a situation where you have voice, and you use voice services over VoIP. You can use your SMS services and OTT services like Whatsapp. VoIP services are not just equivalent to but superior to conventional services. You can do much more with VoIP today than you can do with phone calls. We need to understand that we have a deep and serious interest in growth of these networks, and development of data markets. If these data markets don’t grow, then our broadband exercise will be a problem.

MediaNama’s Take: The Internet is unprecendented in its openness and freedom, giving consumers the ability to choose what they want, and giving immense choice. You can’t compare access to knowledge – even free courses like Coursera – with a limited service like a train or even roads. If it’s a choice between cost of access and neutrality, neutrality is more important. Limiting consumer choice will inhibit access to services, or allowing select services to be cheaper than others will ensure that startups don’t get the same opportunity to reach out to consumers as bigger companies, because cost of access will discriminate against those with lower resources.

Vijay Anand pointed out: “It’s saying that you’re going for a business conference, so your ticket should be higher. You’re going for a funeral, so it should be lower. It’s not a problem of network, but of platforms. You have to be a pipe. They (operators) don’t wan to be a dumb pipe. This country has more wireless connections, and this is why this fight is important for all of us. We have 100 mill broadband connections? Do you think they’re going to get PC’s?

3. Our networks and spectrum are stretched (and bandwidth is scarce):
Rajan Mathews said: “There is more demand than we can deal with on our networks. We have one of the largest demands in terms of terabits of data. It’s going to come down to pricing”…”It’s an investment issue. We’re moving to an all data network. All our networks are digitized and it’s IP. We’ve already migrated. You’re constantly mixing the fact that there’s a physical constraint (availability of spectrum). It’s about how you treat bandwidth.”

Mahesh Uppal: “The truth is that we have a limited amount of spectrum, and there is more demand and supply. How will you allocate spectrum without auctioning. you have to design better auctions. But if you think that you can allocate spectrum where demand exceeds supply, you won’t.”

MediaNama’s Take: Then pitch for more bandwidth and cheaper spectrum with the regulator. Don’t break the way the Internet has worked. You invested in telecom networks and have made money via regular voice businesses. Now it’s time to reinvest in data networks, and you’ll make money in the future. Data ARPU has doubled over the last year.

idea-data-arpu

Vijay Anand also pointed out that “Operators have spectrum problems, that’s the nature of the business. As a startup, you have 20 different problems. If my service costs more, and I’m going to ask the customer to pay more. Lets just charge consumers extra.”

4. We have legal and regulatory considerations, Internet services don’t. Treat VoIP and voice same, SMS and Whatsapp the same

Rajan Mathews said: “If someone is offering voice, put them in the same situation as we are. Subject them to the same legal enforcement. I pay a tremendous amount of money on interception. When it comes to tracking someone on the Internet or Facebook, who foots the bill? We (telecom operators) do. We are one of the biggest promoters of these services and applications, but we want a level playing field.”

Mahesh Uppal added: “Charging for VoIP services is exactly the wrong way to go, but by treating these services (Voice and VoIP) which are functionally similar, the mobile operator pays a 30% of his revenues in fees, while a person who competes with the service pays nothing. The point we need to focus on to equate the regulatory burden. We have to make it easier. We have to make sure that they have sufficient incentives.”…”(We have to ensure that) The regulatory burden on people providing similar services are similar. Again, one more thing: there is one unique different between the indian and US situation. US relies on wireline cable or fiber, India has wireless. Even if Mr Mittal had all the money, and the government will not give him spectrum, he will not expand the network.”

MediaNama’s Take: Internet intermediaries are also subject to provisions of the IT Act, so when it comes to interception, they have to respond as well. They have that same regulatory burden.

Telecom operators are licensed spectrum, and not voice, Internet or VAS. They pay for revenues earned on usage of spectrum, not separately for voice, Internet and VAS. Telecom operators pay for revenues earned from providing Internet services, so if VoIP, Messaging, Video services are charged separately, it will amount to double taxation on the same service.

5. Consumers want to pay differently for different services

In response to Shivam Vij said that consumers are paying for data, and not separately for Facebook, Twitter and Web browsing,

Rajan Mathews said: “Our customers are telling us, that if i’m spending most of my time on Facebook, make it cheaper for me. We are looking at analytics, and we have discount packages. What are our subscribers demanding? We’re trying to tailor the pricing points. We don’t make money by taking positions contrary to what consumers are demanding.”

Mahesh Uppal: Airtel withdrew, because of consumer pressure. Companies are testing the waters. They are looking at social media intently. To suggest that such large corporations can somehow forget about consumer opinion is incorrect.”

MediaNama’s Take: Just because consumers use more of a particular service doesn’t mean that there is no demand for other services. Also, what one set of users demand should not determine what is made available to consumers. The Internet is about “the long tail”, and this effectively kills the long tail, and the opportunity for one business to come out of nowhere and dominate the market. For example, when Facebook took over from Myspace globally, and from Orkut in India.

6. There needs to be incentive to develop the networks for data

Mahesh Uppal: “If we create a disincentive to develop the networks, then we will be shooting ourselves in the foot. It would be counter productive. For us, any extreme position, either of saying that owners of networks have to determine what can be carried and what can’t. Or the other extreme, that anything or everything should have the same priority, is not right. Neutrality is very good common sense. If we convert common sense into an ideology, then we’ll have a problem.”

MediaNama’s Take: The internet is built on the principles of neutrality, and lack of prioritization from ISPs. Data revenues for telecom operators are increasing, so where is the disincentive for rolling out networks. The data networks have already been rolled out, and as Vijay Anand mentioned during this session, it’s not about making money, which telcos already are doing, but about greed. Vijay also said that business models get obsolete all the time. “It’s like saying I invested in radio infra, so prevent TV from taking off.”

7. There is sufficient competition in the telecom market, no need to worry
Rajan Mathews: “It’s counter intuitive to argue that operators will do something contrary to the demands of the customer. We have a 95% prepaid market.”
Mahesh Uppal: “Airtel withdrew because of consumer pressure. They are listening very carefully to customers. To suggest that such large corporations won’t listen to customers is incorrect”…”India is the worlds most crowded telecom market. There is not a single city in the world where there is this much competition. If Airtel was to do what you’re saying, it’s at great commercial risk. It costs Rs 19 to move from one network to another.”

MediaNama’s Take: Firstly, Airtel withdrew temporarily after forcing TRAI to a consultation. Secondly, Rajan Mathews speaks for all GSM telecom operators that are a part of COAI, including Airtel, Idea and Vodafone, so where is the competition between them? He’s speaking for them, so they’re speaking in the same voice. They all want violation of net neutrality, and this appears to be a cartel, as Shivam Vij had mentioned.

On consumers, as Vijay Anand pointed out, Airtel is the architect of ‘Fair Usage Policy’, and consumer pressure hasn’t had an impact there. Almost all ISP’s in India have subsequently adopted the ‘Fair Usage Policy’. Competition hasn’t been seen in this case, and consumers don’t have sufficient choice.

To Mahesh Uppal’s point about competition between telecom operators, because of the large number of telcos: there isn’t any. Three telcos – Airtel, Idea, Vodafone – have around 64% of the active connection. They work together, not compete: they have 3G interconnection agreements. COAI speaks for all of them.

8. Some services are more important than others

Rajan Mathews: “Are we talking about net neutrality in terms of equal access? We’re saying that once you’re on our network, is there differential ability to manage it. Are you saying that critical services, versus someone who is downloading more movies, should get the same bandwidth. Lets fight for the things that make sense for the government. The government needs to weigh in, in terms of what you need for broadband. You misunderstand the nature of congestion on networks.

MediaNama’s take: Consumers should have the right to choose what they wan’t, and discrimination between critical services and others, while a valid point, means that other services are being discriminated against. Instead of splitting the bandwidth, we should be talking about increasing the bandwidth. It’s like deciding to stay with a dialup connection and choosing to offer text only browsing, allowing video and images only in special cases. Also, there is already a way to split this: as 2G, 3G and 4G. Why discriminate between services?

9. Because big companies will hog bandwidth

Mahesh Uppal: “There is a limit to how much you can do with the current amount of spectrum. We need to be careful. Look at the situation in most developing countries. most of the bigger players (Google, Facebook) have gotten in bed with telecom operators”…”If the bulk of the traffic is hogged by 2-3 players, and it’s entertainment and video content, particularly for a wireless network. The chances of actually edging out the small player is possible now, when we don’t have net neutrality (in India). Those are guys who can’t do these deals. If you allow large trucks on the road along with bikes, the guy on the bike gets edged out by the big cars. Differential pricing should not be left to the operators, but the regulator. Also, if we punish services like Google and Facebook, it will hamper development. This is also not a trivial issue.”

MediaNama’s take: companies don’t hog bandwidth. Consumers demand services which hog bandwidth. Google and Facebook don’t shove services down our throats – we choose to access them. We can choose to access other services too, so we don’t see why the discrimination should happen at an telecom operator/ISP level.

P.s.: Some statements may be paraphrased, but this was typed out. The audio recording was garbled, so we’re waiting for the IAMAI to upload the video.

Disclosure: Airtel’s music service Wynk is an advertiser with MediaNama