The TRAI has backed off on its proposal to push for allocation of a data subsidy for rural India from the USO Fund, after the Department of Telecom pushed back on such a proposal, as per a document published by the TRAI on its website, here.

The TRAI had recommended that 100 MB per user be made available to smartphone users in rural consumers, backed by the USO Fund, which is collected by the Union Government for the purpose of improving Internet Access. It had  estimated “a cost of approximately Rs. 600 Crore to provide 100 MB of free data to 50 million users for a period of one year.”

The TRAI has also said that data aggregators can only purchase bulk data from third party bulk dealers, and not directly from telecom operators, in this response to queries from the Department of Telecom.

Both the aggregator model and the free data were a part of the Free Data recommendations.

On giving free data to rural users

While the TRAI and the DoT disagree on the idea that the USO Fund can be allocated towards giving free data to consumers, the TRAI agrees that after the entry of the “new player” (Reliance Jio), there has “been a steep decline in data prices during the last one year. To this extent, the concern with regard to availability of affordable data services has been mitigated”, and that the money may be allocated towards infrastructure.

The DoT had made other points like:

  • Users who own smartphones can pay for Internet access,and so is a subsidy of Rs 10 per month really needed?
  • The TRAI scheme does not target the urban poor, and only rural areas, where there is income variation, and so it might be taken those who don’t really need it.
  • That TRAI’s method of estimated cost of data provisioning is higher than estimated and doesn’t take into account user growth, while estimating a cost of around 600 crore.

The DoT has said that the cost of Internet Access is no longer prohibitively expensive: “The tariff of Internet access has already been taken care of to a great extent through competition in the market”

On the aggregator business model

More importantly, though, the DoT has asked for clarifications on the Aggregator business model, raising the following issues:

1. Aggregator business model

  • DoT’s concern: There is a valid ground apprehension that the financial relationship of aggregator with content provides may lead to discrimination of content resulting in fragmentation of the Internet, and may result in companies exercising control over content. “The clarity on this issue is essential to ensure that the open and non-discriminatory nature of Internet is not threatened by the aggregator”
  • TRAI’s response: The recommendations lay down the following requirements:
    • No unfair discrimination against someone who wants to sponsor data
    • Transparency of costs of providing free data to consumers
    • Dealing with a TSP agnostic manner

To the issue of whether a larger content provider can offer more data versus a smaller one, raising competition concerns, the TRAI has equated this practice to cashbacks in the wallet ecosystem, and not pertaining to content discrimination.

2. Contradiction of Differential Pricing ruling:

  • DoT’s concern: the reward model is not possible without any agreement with the telecom operator, since they’re required to purchase bulk data packs from telecom operators. Will this not contradict clause 3(2) of the differential pricing ruling, which states: “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 whatever name called, with any person, natural or legal, that has the effect of discriminatory tariffs for data services being offered or charged to the consumer on the basis of content.”
  • TRAI’s response: the TRAI equates these to prepaid recharge coupons which can be purchased by any person, and says that these can be acquired without any arrangement with an individual ISP, and allows users to access any content of their choice. In addition, the aggregators cannot buy bulk data from TSPs and can only buy them from third party bulk dealers of TSPs data. 

3. Consumer complaints:

  • DoT’s concern: No consumer grievance redressal system in case of aggregator related complaints is outlined.
  • TRAI’s response: The TRAI has not responded to this question about redressal mechanism, and only said that: no TSP can be denied the service of an aggregator; the aggregator cannot discriminate against a TSP; and there needs to be complete transparency by the aggregator in terms of cost of providing free data to consumers.

Read: