India: Moving Towards An Effective Net Neutrality Regime In India

Last Updated: 29 July 2015
Article by Jahnavi Mitra

The innocuously titled issue of network neutrality (net neutrality) has rapidly polarized the ongoing debate on the regulation of the Internet, in India as well as globally. While the overwhelming public interest garnered by net neutrality is unsurprising, given the growing recognition of the significance of the Internet, there appears to be some degree of ambiguity as to the implementation of the principle, and the effects which would follow such implementation.

Though India has no set net neutrality regulations in place as yet, the debate on fixing a net neutrality policy has been set in motion by the Telecom and Regulatory Authority of India's (TRAI) somewhat obscurely titled Consultation Paper on the issue (the TRAI Paper)1 and the Department of Telecommunications (DOT) recent recommendations for implementing net neutrality in India (DOT Report).2 Among other things, both these documents consider the possibility of agreements between Internet Service Providers (ISPs) and content providers within the net neutrality regime.

Notably, deviations from net neutrality may often take the form of 'vertical agreements' (as recognized by the TRAI as well as DOT), which would typically fall for assessment by the Competition Commission of India (the Commission).3 Additionally, the Commission would also typically assess the conduct of dominant ISPs involving discriminatory or unfair market practices.4 Despite this, there is a disconcerting absence of any meaningful discussion on the competition law implications of net neutrality and the Commission's jurisdiction to address these issues.

What is a neutral net?

Simply put, the principle of net neutrality mandates equal treatment for all content/ data routed and accessed through the Internet. Net neutrality has been recognized to entail three primary norms – ISPs must operate in a transparent manner, ISPs cannot block access to any content, and ISPs cannot discriminate against any Internet traffic in any manner.5 The practice of non-discrimination includes positive discrimination such as prioritization6 of certain data, as well as negative discrimination such as throttling7 of certain data. It thus requires all ISPs to route all traffic on a 'best efforts' basis and deems any departure from this to constitute a per se violation. While the first norm, requiring transparency by ISPs, enjoys a fairly undisputed position, the second and third, dealing with blocking and discrimination, have become the object of much debate.8

Strict net neutrality proponents decry any deviation from these norms, arguing that a non-neutral internet would impede the freedom of speech and expression9 and create 'walled gardens' encumbering the ability of users to access information on the internet freely.10 On the other hand, net neutrality opponents argue against the blanket 'one size fits all' ban advocated by strict neutrality proponents. Net neutrality opponents argue that the imposition of rigid net neutrality rules would likely deter innovation, and prevent consumer efficiencies from being realized.11

Net neutrality's Intersection with competition laws

Several opponents have recommended antitrust/competition laws as a tool to assess deviations from net neutrality. They argue that the conduct banned by net neutrality is often in the nature of vertical agreements, which could have the effect of generating various pro-competitive results, including lower prices, greater access, improvements in technology.12 Competition law proponents have specifically noted net neutrality to be limiting, inasmuch as it expressly prohibits any data discrimination, even though it may be a technically efficient approach.13

Contrary to the adoption of strict net neutrality principles which recommend an ex ante prohibition of all deviations, competition law contemplates a framework to assess different agreements in terms of their potential efficiencies and potential harms to customers and the market.14 Thus, under competition laws, agreements that seemingly deviate from net neutrality would be afforded an ex post assessment, based on the tangible effects likely to follow them.

Interestingly, net neutrality opponents argue that that the Internet has not evolved as a neutral market place,15 and the imposition of rigid neutrality would constrain and hamper its growth.16 It would be safe to say issues relating to the market structure and market practices intrinsically belong in the domain of the competition regulator, and at the very least, merit a detailed discussion on the issue of its jurisdiction in the matter.

The net neutrality landscape in India – where does the Commission stand?

The very nascent net neutrality regime in India, with no set regulations in place as yet, leaves a lot of ambiguities as to what is and isn't permissible in the transmission of data through the Internet. The (in)famous Airtel Zero plan17 has brought attention to the issue of discrimination favouring certain traffic, while the Internet.org scheme18 has brought to the fore issues of providing access to limited content, thereby blocking certain content. While both issues have been addressed by the TRAI and the DOT, even if not comprehensively, there is still a lack of clarity on the parameters within which to assess such agreements. Further, there is no deliberation on the Commission's jurisdiction to consider these issues. Moreover, Mr. M.S. Sahoo, a Member at the Commission, has recently stated that the issue of net neutrality is 'not yet on the Commission's radar', and it is 'awaiting the TRAI's decision in this regard'.19

The TRAI Paper, which invited public comments for a regime for internet regulation, has engendered high levels of skepticism20 for closely following Airtel's controversial proposal to charge higher data usage rates for the use of Voice over Internet Protocol (VoIP) services.21 The TRAI Paper has largely been perceived to favour the practice of discriminatory transmission of content by telecom companies.22 As such, the TRAI Paper has merely raised questions on the possibility of data/price discrimination by ISPs without providing clarity on the manner of regulation.

The DOT Report adopts a more concrete albeit conflated approach towards net neutrality, by calling for a 'flexible' policy involving an adoption of the 'core principles of net neutrality' while simultaneously excluding the prospect of actually defining 'net neutrality'.23 Replete with contradictions, the DOT Report entirely rejects the internet.org scheme (which is but a form of zero rating),24 while maintaining that the practice of zero-rating25 must be afforded by a case-by-case evaluation.26 The DOT Report confines its evaluation to the role of the TRAI in adjudicating the matter, without affording due consideration to the Commission as an appropriate authority to review the competitiveness of the agreements.

The entire debate overlooks the fact that the crux of the issues being debated lies in different types of agreements executed between ISPs and content providers. Indeed, it may be argued that the entire debate can be reduced simply to the impact of these agreements on the markets in which the parties operate, and on the customers of the services offered by them. The Commission is likely to have a more nuanced perspective to this debate, through a comprehensive consideration of the market effects. Moreover, it appears to overlook the necessity of tailoring the net neutrality regime to suit the needs of the Indian market, such as the pressing urgency to improve internet penetration in India.27

An assessment accounting for these factors may lead to the conclusion that the internet need not necessarily be strictly 'neutral'. In India, the Commission is well-equipped to conduct this assessment in a wholesome manner.28 The Commission has the powers to effectively rule on the competitiveness of non neutral platforms such as internet.org and Airtel Zero on the basis of their actual and/or likely effects on the Indian market and consumers. Arguably, zero-rating platforms such as internet.org, though ex facie rejected by DOT Report, may be found to have some efficiencies and benefits in India upon an assessment of the operation of the vertical agreement. This evaluation would, however, call for the Commission to exercise its jurisdiction over the matter.

Conclusion

While the verdict on the principle of net neutrality is not yet out, its operation in the Indian context will require a detailed scrutiny, it still remains crucial to decide the Commission's jurisdiction. There is an undeniably significant overlap between the substantive jurisdiction of the Commission and the TRAI to address the issue of net neutrality. As described above, subjecting these arrangements to the Commission's jurisdiction is likely to enhance the understanding of the Indian internet marketplace, and thus provide clarity as to the proper implementation of net neutrality.

Footnotes

[1] The TRAI Consultation Paper on the Regulatory Framework for Over-the-top (OTT) services'.

[2] Net Neutrality, DOT Committee Report, May 2015. The DOT Report suggests the adoption of a flexible network neutrality policy including ex ante prohibitions along with ex post assessment.

[3] Section 3(4) of the Competition Act, 2002 (the Act) prohibits vertical agreements, which are likely to cause an appreciable adverse effect on competition (AAEC) in the market.

[4] Section 4 of the Act prohibits a dominant undertaking from 'abusing its dominance'. Abusive conduct generally includes discriminatory pricing practices.

[5] Federal Communications Commission, Open Internet Order, 12 March 2015, at paragraphs 15-19.

[6] Prioritization refers to the practice where ISPs ensure that certain data reaches end consumers with limited delay. Prioritization may be paid for by a content provider, or an unpaid measure undertaken by the ISP to ensure the quality of service. For example, an ISP may prioritize data for video streaming over data used to access a mail, since the former are more prone to latency and jitters (the loss of quality caused by the lag in the transmission and receipt of data packages).

[7] Throttling refers to the practice of reducing the speed of certain data.

[8] The US House of Representatives (US HOR) has been conducting numerous hearings on net neutrality wherein it has considered the possibility of the Federal Trade Commission (FTC) as the authority to consider deviations from net Neutrality. See Hearing: Net Neutrality: Is Antitrust Law More Effective than Regulation in Protecting Consumers and Innovation?, 20 June 2014 and Hearing: Wrecking the Internet to Save It? The FCC's Net Neutrality Rule, 25 March 2015.

[9]See Professor Tim Wu's Testimony before the US HOR in, Hearing: Net Neutrality: Is Antitrust Law More Effective than Regulation in Protecting Consumers and Innovation?, arguing against the FTC's jurisdiction for its limited focus on market related issues, ignoring factors such as freedom of speech.

[10] See Parminder Jeet Singh, From a Public Internet to the Internet Mall, Economic and Political Weekly, Vol XLV No 42, 16 October 2010.

[11] See Commissioner Joshua D. Wright's testimony before the US HOR in Hearing: Wrecking the Internet to Save It? The FCC's Net Neutrality Rule arguing that deviations from net neutrality often take the form of vertical restraints, which have been empirically found more likely to cause consumer and market efficiencies rather than harms.

[12] Ibid.

[13] See supra n. 7 discussing the data discrimination to reduce losses to consumers caused by jitters and latency.

[14] See supra n. 3. The Commission, in its assessment of vertical agreements, considers the possibility of any AAEC being caused by such agreement. Section 19(3) of the Act provides an illustrative list of factors which may be considered by the Commission while assessing the likelihood of AAEC. These include aggravating factors, such as the creation of entry barriers, driving existing competitors out of the market and foreclosure of the market to competitors, as well as mitigating factors, including accrual of benefits to consumers, improvements in production/distribution of goods or provision of services and promotion of technical, scientific and economic development in the market. Further, as per the international practice, an AAEC in vertical agreements, typically considers factors such as the market share of the parties to the agreement, the levels of concentration of the market, and the duration of the agreement. This framework provides for a fairly comprehensive assessment of agreements with respect to the market as well as the consumers of the concerned products.

[15] Even though net neutrality has become a topic of discussion in India only recently, the Indian internet history is marked by such agreements. For example, in 2010 Airtel and Youtube entered into an agreement for superior quality of streaming of Indian Premier League Cricket matches; MTS and Tata Docomo have offered specific content for free, ISPs such as Airtel and BSNL have been known to throttle speeds on BitTorrent clients.

[16] See Commissioner Wright's testimony, supra n. 11.

[17] Airtel Zero is a proposal floated by Airtel whereby its users would be able to access certain content on the internet without incurring data charges, since the consideration for the same was to be paid to Airtel by the featured content providers through agreements between them.

[18] internet.org is a platform which offers Reliance users access to certain content on the internet, even if the users do not otherwise have internet connectivity.

[19] See Net Neutrality Not on Our Radar Yet, Says Competition Commission of India, 20 July 2015 http://gadgets.ndtv.com/internet/news/net-neutrality-not-on-our-radar-yet-says-competition-commission-of-india-717684; Competition Commission of India awaits TRAI's stand on net neutrality, 21 July 2015 http://economictimes.indiatimes.com/industry/telecom/competition-commission-of-india-awaits-trais-stand-on-net-neutrality/articleshow/48151349.cms

[20] The TRAI paper received an unanticipated level of public comments, with around 10 lakh people writing their responses to the TRAI Paper. This public interest may be attributed to the coalition, www.savetheinternet.in, which spread awareness about the TRAI Paper, almost as if symbolically, through a mobilization of forces over the Internet.

[21] Airtel proposed charging higher data tariff for using services such as Skype or Whatsapp Call for which it faced significant levels of public flak. Consequently, Airtel did not implement it, and instead stated its willingness to await TRAI regulations in this regard. These statements have somewhat tinted the motives behind the TRAI Paper and caused the public to question the intent behind it. See Bharti Airtel withdraws controversial VoIP tariff plan, 30 December 2014, available at http://articles.economictimes.indiatimes.com/2014-12-30/news/57528969_1_voip-airtel-s-tariff-plan; Sanjay Vijayakumar, Raising voice over net neutrality, The Hindu, 04 January 2015, available at http://www.thehindu.com/business/Industry/raising-voice-over-net-neutrality/article6751797.ece.

[22] The TRAI Paper raised numerous questions to the public, relating to the possibility of permitting telecom companies/ISPs to charge differential prices to content providers, especially noting the current and potential losses in the revenues generated by telecom companies, on account of cheaper competing services offered by contents providers. Illustratively, the TRAI report noted the competition offered by VoIP services such as Skype or Whatsapp Calls to incumbent telephone carriers India, and explored the possibility of permitting ISPs to charge content providers for using their platform to provide these services.

[23] See paragraph 2.8, the DOT Report.

[24] See paragraphs 12.7-12.8, the DOT Report.

[25] Zero Rating essentially refers to the practice of permitting customers to download and upload specific content without incurring data usage charges or having their usage counted against data usage limits.

[26] See paragraph 12.6, the DOT Report arguing for a case-by-case assessment of zero-rating tariff plans through an ex ante notification to the TRAI as well as an ex post assessment through an adjudicatory authority, including provisions for an appellate authority.

[27] For example, India reports only 15.1 of 100 persons (in 2013-14) in India to have access to the internet, which is clearly distinguishable from the US where 84.2 of 100 persons (in 2013-14) have been reported to have access to the internet. See http://data.worldbank.org/indicator/IT.NET.USER.P2. An assessment of net neutrality in India must necessarily consider such factors, since agreements which may be perceived to limit choice in a country such as the US, would likely have the effect of facilitating access to the internet in India. While prudence would dictate some reliance on the best practices followed in more matured jurisdictions such as the US, it is imperative to consider the specific requirements of the Indian society.

[28] See supra n. 14 discussing the factors considered by the Commission while assessing vertical agreements for anti-competitiveness. Further, Section 18 of the Act specifically lists the protection of the interests of consumers as a duty on the Commission. The Commission has further demonstrated its intent to account for this factor. For example, in Shri Shamsher Kataria v. Honda Siel Cars India Ltd. & Ors., Case No. 03 of 2011, Order dated 25.08.2015, the Commission considered the effects of the unfair pricing followed by various car companies on their end consumers.

Jahnavi Mitra is an Associate in the Competition Law Practice Group at Luthra and Luthra Law Offices. She graduated from National Law University, Delhi in 2014 with a degree in B.A.,LL.B. (Hons.). At the Firm, she has been engaged in a number of complex competition law litigations before the Competition Commission of India, the Competition Appellate Tribunal as well the High Court of Delhi. Jahnavi has acted for clients engaged in various fields, including real estate, media, payment technology services, technology markets, and the pharmaceutical sector.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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