cmn-Telecom

The TRAI’s Net Neutrality regulation on Differential Pricing “is one of the most stringent regulation on net neutrality and zero rating across the globe, completely prohibiting the same for TSPs/ISPs, irrespective of the effect of such service/platform on the public” FMCG major Hindustan Unilever has said in its submission (pdf) to the telecom regulator TRAI. HUL, ignoring some of the countries, like Chile and The Netherlands, where Zero Rating is banned, cites the US, UK, South Korea, Israel, Belguim and France, where zero rating is allowed “in some form or the other”.

Readers should note that Zero Rating has come up for intense criticism in the US, where the Indian regulation is being cited to push for a change in their regulation, and that most countries haven’t explicitly allowed Zero Rating: they’re merely taking a wait-and-watch approach. Investors, civil society groups, business, have all written to the FCC asking for a ban on Zero Rating. Here’s a photo of 100,000 letters of complaint sent to the FCC to ban Zero Rating (source):
fcc-zero rating

Oddly enough, later in the submission, HUL itself acknowledges that “the concerns of adversely affecting the public on restricting access, pricing, speed etc” would only be possible with telecom operator involvement, which has now been restricted.

HUL is factually incorrect about telecom operator ARPU

HUL appears to know a great deal about the declining telecom operator ARPU, saying that it is “declining due to the consumers capability and willingness to spend on different types of internet data.” This is factually incorrect, and HUL provides no data to support it. In fact, telecom operators have shown an increase in Data ARPU and an increase in customers, across 2G, 3G and 4G over the past few years. The truth is, in fact, exactly the opposite: for Airtel (KPI, Excel file), for example, Data ARPU was in fact as high as Rs 198 per customer at the end of March 2016, and has increased year on year from Rs 176 in March 2015. If the overall ARPU has fallen marginally from Rs 196 in March 2015 to Rs 194 in March 2016, it is clearly not because of data. Maybe HUL should have checked up on this with a former employee: Airtel CEO Gopal Vittal, who spent much of his career, at HUL. Data is keeping ARPU up for most of the major telecom operators.

HUL wants toll free data

HUL has also supported the telecom operator demand for “toll free data”, wherein a website is allowed to make itself free by paying a telecom operator. The company says that “Allowing reimbursements and toll free data shall introduce advertisers using such facilities as incentives to attract subscribers/consumers on the Internet, subsidizing costs of internet access for consumers to their platform and allowing them to utilize the savings (reimbursement/free data) for more access within the same costs. Further, this will also help increase revenue for the telecom sector allowing them to expand and increase infrastructure for better internet access without solely depending on subscriber revenue. This is a very effective model to allow private entities, particularly advertisers to share costs towards internet access for the public.”

HUL supports reimbursements of data via data agnostic platforms

HUL wants to be able to reimburse users, whether “partial of, whole of or more than the actual cost of data consumed, depending on the purpose of the activity”. It says that Telecom Operator agnostic Internet data provisioning by any company is “identical to traditional marketing/consumer incentives or promotions to invite consumers/subscribers to purchase or use their product/service (in this case, on an Internet based platform/website/application) and present across industries for long.”

“Further as the companies granting free data or reimbursement of data cannot discriminate or restrict access to other internet platforms/websites or content, the public is free to access any other website/platform or content or the companies with internet data incentives, a freedom similar to any consumer purchasing a normal bottle of milk or a bottle of milk with 25% more in quantity or 25% discount in price. “

This ignores the fact that reimbursements can be the same as Zero Rating, which has been banned: the impact of reimbursing data post usage is the same as reimbursement during usage. If I give you 20 mb of data for every 20 mb you use, it is zero rating, whether that data is given to you before or after usage. The giving of data should not be linked to an access related activity.

HUL compares Internet access with soap, milk, gym membership

It compares, at different places, provisioning of Internet access with:

  • Soap: “free soap on purchase of a body wash product”
  • Gym membership: “get 1 gym bag free with membership to the XYZ gym”
  • Products: “25% more quantity/volume of the product for the same price, 5% discount on purchase of a car from ABC dealership”
  • Talktime: “Free Talktime to consumers”
  • Cashback: “Cashback offers on E-commerce”
  • TV: “free TV channels without subscription fees.”
  • Milk: normal bottle of milk or a bottle of milk with 25% more in quantity

On TV Channels, the correct comparison is with carriage fees, not subscription fees, and Network18 and Quint founder Raghav Bahl has written about the harms of that model. On cashback, as long as it is not access linked (explained above), there shouldn’t be an issue. In the other cases, the comparison is not valid because of many reasons, the key reason among them: the comparisons assume that consumers are being given a product, which is access. However, access is not a product, it’s a means of available a product, and telecom operators and telco-agnostic platforms can perform gatekeeping functions. This allows them, as an access provider, to discriminate between different types of creators, whether business or non-business creators. The Internet is a platform where the telecom operator or platform does not discriminate or have different rules for consumers and creators, which creates the potential for every consumer to also be a creator: hence, the potential for a billion creators in India.

HUL wants this to go to the competition commission

Again, something that the telecom operators and Facebook have been saying for a while, and this makes us wonder whether the telecom operators have had an influence over this submission: HUL says that “Any such concerns with respect to competition law of such free data/ reimbursement of data activity/platform can, should and would be addressed under the competition act, not requiring further regulations by TRAI.”

This is myopic, because it views the Internet purely as a business medium where competition might be a concern. The fact is that a majority of the content and services on the Internet are user generated, and generated not as a business, but as freedom of speech and expression. Thus, to limit this merely to the idea of competition is false.

Disclosure: MediaNama has taken a strong position on Net Neutrality, and I’m a co-founder with SaveTheInternet.in movement for Net Neutrality.