by Vishal Misra (@vishalmisra)
The issue of Network Neutrality has really heated up in India, and two posts published in the last couple of days caught my attention. First there was an article by Mahesh Uppal stating Mandating US-Style Network Neutrality Makes Little Sense For India. Secondly, there was a press release by Airtel as a response to the negative public reaction to the AirTel Zero plan. I have put down a quick response to the points made in those two posts, pointing out what the flaws in their arguments are in my opinion.
Response to Mahesh Uppal
Mahesh says Network Neutrality is more a commercial issue and he will find me in violent agreement with him. While I agree with his larger point, there are many details that I have issues with. Let me address some of them.
Difference between the US market and India and the FCC ruling
Mahesh states that “The problem for US internet and broadband markets is abuse of monopolies”, which is absolutely right. However the recent FCC rules regarding Net Neutrality do little to nothing about breaking those monopolies (regulatory tools to increase competition like unbundling or promoting municipal broadband are absent). Crucially, and this is what’s most relevant to the debate in India, the FCC rules are completely silent on the issue of “Zero Rating” (e.g. the Airtel Zero and Flipkart deal). The FCC has maintained a wait and watch attitude on the issue of Zero Rating while the problem is here and now in India.
Electricity and data plans
Mahesh draws an analogy between charges for electricity and charges for data. This analogy with utilities, which is repeated by people on both sides of the Net Neutrality debate, does not apply for many reasons, but the two main ones are the following:
- We do not care where the electricity comes from, solar/hydroelectric/coal/nuclear, as long as it supplies the voltage and current to drive our appliances. With data, we definitely care whether the bits are coming from Google or Bing, Flipkart or Amazon, CricInfo or Cricbuzz. The bits are not interchangeable.
- The “quality” of electricity required by our televisions vs. microwave ovens vs. refrigerators doesn’t change but the latency and throughput requirements of different apps (or “OTT services” as they have come to be called) definitely varies – Voice over IP requires low latency, video streaming requires high throughput while conversely messaging/web/file download are a lot more elastic with their requirements.
The article makes the point that although the average data plans in India provide much lower bandwidth than ones in the US, consumers in India have a choice of 8-10 providers so competition is strong and thriving. Hence the problems that exist in the US don’t exist in India and Net Neutrality rules are not needed. This might be true in theory, but the situation on the ground resembles a cartel a lot more than that of a competitive market. As a contrasting example, in the broadband market of UK most ISPs were doing some sort of traffic management, throttling customer traffic during different times of the day and slowing down P2P traffic etc. One ISP, Sky, bucked the trend and said they won’t do any traffic management and provided unfettered access to their customers. All other ISPs were forced to follow suit and now there is very little traffic management in the UK. That’s competition at work. With so much public sentiment favoring Net Neutrality in India, one would imagine it makes business sense for some of the telcos to voluntarily implement the tenets of Network Neutrality and attract customers. They however appear to be unified in their opposition to it. Competition is not working in India.
Scarcity of Spectrum and Zero Rating
One of the points made in the article is that spectrum is scarce in India and hence different rules should be applied. However, in that scenario Zero Rating frameworks like Airtel Zero make no sense at all. It is easy to show using simple mathematical models that with Zero Rating in place, bandwidth usage will strictly increase and tax the already scarce spectrum even more. So to use the scarcity of spectrum as a reason to do Zero Rating seems completely counter intuitive and in fact makes the problem even worse.
I now want to address some of the points that Airtel has made.
Response to Airtel Statements
There are some statements that Airtel has made in its press release that are inaccurate, confusing or just plain wrong. Here is a selection of the most egregious ones:
“As a concept Airtel Zero has nothing to do with Net Neutrality”
This is completely untrue. As a concept Airtel Zero has everything to do with Net Neutrality. The point has been made by many that the issue of Net Neutrality is all about money. Preferential treatment of traffic is not restricted to just quality of service, but also includes discriminatory pricing. If there are two services that have equal performance but there is no (bandwidth) charge to use one over the other then one service starts with a clear disadvantage. Zero Rating is in clear violation of the principle of Open Internet, non-discriminatory access to all.
“Airtel Zero and Toll Free voice services are the same concept”
This is a creative stretch. Businesses typically offer toll free lines as a support mechanism; they do not operate their businesses entirely on toll free telephone lines. Customers call the toll free line when they have a specific issue with a particular business, the situation is not analogous to choosing a Zero Rated service or not.
“Start-ups will be able to afford to pay for the data charges”
Airtel cleverly equates marketing costs with bandwidth charges and make the claim that bandwidth charges are a lot more affordable so start-ups will prefer that. This statement is so absurd that it is hard to take it seriously, but still let me try and address it.
Schemes like Airtel Zero will lead to an arms race where just to remain competitive with existing services every start-up will be forced to sign Zero Rating deals. Not only that, they will be forced to sign such deals with all ISPs. Imagine a world where there are thousands of Zero Rated services available to consumers with every provider. How does this translate to differentiation, targeted marketing and customer acquisition? This would be strictly an additional expense to bear for start-ups and deep-pocketed incumbents will bleed the start-ups to death with these expenses.
“Airtel Zero will drive innovation by providing a cost effective and non-discriminatory platform”
Having traversed the start-up path multiple times, I can assure you that Zero Rating will be a hindrance to the innovation process. Today to create a service on the Open Internet (the existing platform), a start-up simply needs to get one Internet connection and access to their service is guaranteed and non-discriminatory. With Zero Rating, start-ups will have to go through the time and money consuming process of getting Zero Rating deals done with all ISPs before they have a viable service that can compete with incumbents. How this will increase the pace of innovation is beyond my comprehension.
What’s next for Net Neutrality?
There is a lot of confusion over the principles of Net Neutrality, on that I agree with both Mahesh Uppal’s article as well Airtel’s press release. A big issue has been the confusing of Quality of Service with Network Neutrality. A recent article made the argument that since the “founding fathers of the Internet” designed Quality of Service mechanisms in the Internet architecture, the network was never neutral to begin with. That argument is misleading. Quality of Service pertains to providing differentiated services to classes of applications, e.g. prioritized service for voice or video chat applications. Differentiated services based on what the content is fine under the principles of Network Neutrality and come under the purview of reasonable network management, as long as it is applied in a non-discriminatory fashion to all providers of that class of content. However discrimination of service or price based on who the content is from is anti-competitive, anti-innovation and should be disallowed.
The way forward for India is to create a healthy and competitive marketplace for broadband access. There are some valid concerns about shortage of spectrum but they cannot be used as an excuse to implement anti-competitive schemes; instead they should be solved independently. Another step that India should move towards, is to provide a publicly owned last mile infrastructure for wired access, similar to Open Reach in the UK, where access to the last mile is provided to all ISPs. The ISPs should be competing with each other and bending over backwards to provide their customers with the best service, not using their customers as leverage to get content providers to pay for bandwidth.
About the author: Vishal Misra is a faculty in the Computer Science Department of Columbia University, where he has been looking at the issue of Internet Economics and Net Neutrality for a number of years. He is also a serial entrepreneur, being part of the founding team of Cricinfo and is now the founder and chief scientist of the data center storage startup Infinio.