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In the last line of its latest letter to the Indian Telecom regulator TRAI, industry lobby Cellular Operators Association of India (COAI), has requested the TRAI to “allow differential data tariffs on the basis of content irrespective of whether such content is provided through the closed network or open internet.” In effect, the COAI is asking the TRAI to scrap its landmark regulation on the differential pricing aspect of Net Neutrality. To justify this request, the COAI has said that a part of the TRAI order which concerns allowing differential tariffs over Closed Electronic Communications Networks (CECN), or Intranet, “may lead to a subjective interpretation” and could be misappropriated.

A CECN is an intranet, and a walled garden, where a company is providing the service only to its own customers, and isn’t the Internet.

This letter follows (and appears to reference) a request from Bharti Airtel earlier this month, where Airtel sought permission from the TRAI regarding offering content from a big global content provider (which we’ve heard is NetFlix), exclusively to Airtel customers.

In February, (TRAI) had ruled that no company (or telco) can enter into any arrangement based on discriminatory pricing.  However, differential tariffs are not prohibited on intranets, networks which are not accessing the internet, and disallowed if the CECN route was used to evade regulation.

Clarifications sought by the COAI

1. Whether Telecom Operators can subsidise/discount content, for exclusivity and possibly advertising revenue shares, when this content will be made exclusive using the CECN route.
2. Whether the content provider offering subsidized subscription of its content to select or all subscribers of all or some telecom operators would constitute a CECN, since data charges would apply.

Says prohibition of differential pricing is unfair

COAI says that data services are on a rise in India through due to “light touch regulation”, availability of telecom products, platforms and other Value Added Services (VAS). The COAI said that developing such products and VAS offerings requires a “significant amount of time, resources, innovation and investments”.

“It would be unfair, if such products are found to be in violation of TRAI’s regulation inadvertently. In such cases, TSPs (Telecom Service Providers) and/or developers’’ huge investments, time resources will go waste,” COAI said.

Note that it had made the same argument in its filing during the consultation, and this is something that the TRAI has already ruled on.

Full Text of the letter from COAI to TRAI

RSM/COAI/2016/093
May 16,2016

Shri Sudhir Gupta,
Secretary,
Telecom Regulatory Authority of India,
Jawaharlal Nehru Marg (Old Minto Road),
New Delhi-110002

Subject: TRAI Regulation on Prohibition of Discriminatory Tariffs for Data Services Regulations,2016 (No.2 of 2016 dated 8th February 2016

Reference:

1. Joint Industry letter no. JAC/2016/022 dated February 17,2016.
2. Joint Industry letter no. JAC/2016/035 dated March 14,2016.

Dear Sir,

This is with reference to TRAI’s regulation on “Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016” dated 8th February 2016. This letter is in continuation to our above captioned letters where we had requested clarity on aspects related to this regulation.

In this regard,we wish to respectfully submit that in the said regulation,TRAI has introduced a new terminology “Closed Electronic Communications Networks (CECN)”.While TRAI has prohibited TSPs to offer differential tariffs for data services on the basis of content,it has allowed the same over CECN network.

Our member operators are deliberating various business models with content providers and it appears that this terminology may lead to a subjective interpretation and could be misapplied.Furthermore,the regulation has also stated that if such a closed network is used for the purpose of evading this regulation,the prohibition will nonetheless apply,which is again open-ended.For example:

  1. Some of our member operators have been approached by content providers to subsidize/discount their content but provide exclusivity using the CECN provision to their customers. In return some of these content providers may share advertising revenues.Is this allowed?
  1. Further,if a content provider decides to offer subsidized subscription of its content to the select/all subscribers of a particular/some telecom provider(s)then would that constitute a CECN or would that be excluded from prohibition of Differential Data charging since customer’s respective data tariff charges apply in such case?

Hence, a transparent understanding with adequate illustrations and clarity,is necessary on the concept of CECN enunciated in TRAI’s regulation.

You would appreciate that the growth of data services in India has been made possible due to light touch regulation,private entrepreneurship and tremendous innovation across a large ecosystem of networks,devices and applications/VAS.Developing various applications/VAS/platforms(herein called as “Products”)requires a significant amount of time, resources,innovation and investments and it would be unfair,if such products are found to be in violation of TRAI’s regulation inadvertently.In such cases,TSPs and /or developers’huge investments,time,resources will go to waste.

Therefore,we earnestly request the Hon’ble Authority to review its decision over the CECN network and allow differential data tariffs on the basis of content irrespective of whether such content is provided through the closed network or open internet.

Thanking you,
Yours faithfully,
Rajan S. Mathws
Director General
COAI