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Update: We reached out to Facebook for a comment and the company said, “Our goal with Free Basics is to bring more people online with an open, non-exclusive and free platform.  While disappointed with the outcome, we will continue our efforts to eliminate barriers and give the unconnected an easier path to the internet and the opportunities it brings.”

Earlier today: The Telecom Regulatory Authority of India (TRAI) has ruled (pdf) that no company can enter into any arrangement based on discriminatory pricing. It has further stated that telcos can offer their own content and generic emergency services at lower prices. It also states that if these norms are violated, companies will have to pay a penalty of Rs 50,000 to Rs 50 lakh. 

The TRAI had issued a second consultation paper in September last year (the first paper here) asking for comments specifically on differential pricing. Today, the outcome of this paper states that, “Based on the responses received and the internal deliberations, the Authority has issued these Regulations. While formulating the Regulations, the Authority has largely been guided by the principles of Net Neutrality seeking to ensure that consumers get unhindered and non-discriminatory access to the internet. These Regulations intend to make data tariffs for access to the internet to be content agnostic.”

It mandates:

1. No service provider shall offer or charge discriminatory tariffs for data services on the basis of content

2. No service provider shall enter into any arrangement, agreement or contract, by whatever name called, with any person, natural or legal, that has the effect of discriminatory tariffs for data services being offered or charged by the service provider for the purpose of evading the prohibition in this regulation.

3. Reduced tariff for accessing or providing emergency services, or at times of public emergency has been permitted.

4. Financial disincentives for contravention of the regulation have also been specified.

The TRAI will follow the implementation of the mandate by service providers and review it after 2 years or earlier as it sees fit.

Notes from the press conference:

– Plans which currently offer differential pricing have to be phased out in 3 months.

– It further cited: “Pipe should be agnostic to package… we will make an exception to differential pricing in emergency cases and closed internet (anything on the internet cannot be differentially priced).. this will disallow any sort of program or project which works on differential pricing. If such plans are in action, we should allow those tariff plans to expire.”

– If someone tries to breach this regulation claiming that the content is not on internet, then the clause states that TRAI will examine and intervene in such a case. The TRAI will determine whether this is discriminating or claiming to be not on internet, but if its a purpose to defeat the regulation and has the intent to violate differential pricing, the TRAI will intervene.

– Zero Rating is only one example of differential pricing. There could be 50% rating for example.

– The TRAI regulates the telecom and internet service providers, for whom these regulations have been laid down. We (the TRAI) have no authority on the internet companies.

– On how unconnected people should get online: The logic and argument that a particular program connects people to the internet please check the regulation issued (pdf).

– On network speeds: This is a larger issue. People had said that net neutrality is a larger issues, though we did not go into that issue. We say that differential pricing is looking at net neutrality from a differential perspective. But that also includes throttling and other issues so we’re not touching on those.

– Anything on the internet cannot be differentially priced on the basis of source, destination, content or application.

– The TRAI has not yet determined what ‘grave emergencies’ are and these are one off situation (for example Chennai Rains, if someone says that they will offer internet, but they have to report to us (TRAI) after 7 days of introducing us, and submit to us every plan).

Find our network neutrality and zero rating coverage.

Disclosures: MediaNama has taken a strong position in favor of Net Neutrality and against price discrimination; Founder and editor of Medianama Nikhil Pahwa is a volunteer with the SaveTheInternet coalition.