India: TRAI Prohibits Discriminatory Tariffs For Data Services

Last Updated: 29 February 2016
Article by Trilegal .

TRAI has issued specific regulations to prevent telecom service providers from offering differential pricing of data services based on content. These regulations demonstrate the regulator's commitment to uphold non-discrimination and transparency in the context of data tariff offers.

The Telecom Regulatory Authority of India (TRAI) issued the Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016 (Regulations) on 8 February 2016 to prevent telecom service providers from offering differential pricing plans based on content. The Regulations have come after an extended and animated public debate that was sparked by two consultation papers issued by the TRAI - one on over the top (OTT) services in March 2015 and the other on the differential pricing of data services in December 2016.

The key features of the Regulations have been discussed below.


Regulation 3(1) prohibits service providers from offering or charging discriminatory tariffs for data services on the basis of content. 'Content' has been defined to include "all content, applications, services and any other data including its end-point information, that can be accessed or transmitted over the Internet". In its explanatory memorandum, the TRAI has justified this prohibition by reasoning that differential pricing violates the principle of non-discriminatory tariff, disadvantages small content providers and leaves open the possibility for service providers to favour their own services. However, given the broad definition of 'content' in the Regulations, there is likely to be some uncertainty in how the Regulations should be interpreted.


In a move that will clearly stifle commercially subsidised internet access, the Regulations go on to state, in Regulation 3(2), that arrangements that have the effect of discriminatory tariffs for data services being offered or charged to consumers are also prohibited. The TRAI has argued that, given the relatively low level of internet penetration in India, if service providers are allowed to offer zero-rated internet platform, the knowledge and outlook of consumers of these services will be limited to what is made available to them through the select offerings on that platform.


The proviso to Regulation 3 carves out an interesting exception to the general restriction under Regulation 3. It states that the Regulations will not apply to tariffs for data services over 'closed electronic communication networks' unless these differential tariffs are being charged for the purpose of evading the Regulations. The term 'closed electronic communications network' has been defined to mean a network where data is neither received nor transmitted over the internet. One would imagine that this relates to intranet services used by an organisation to connect computers in an internal network. However, purely private intranets are outside the purview of the TRAI to regulate since this does not constitute a telecom service. It seems strange that the TRAI would go to such lengths to clarify something that doesn't need re-stating.

What is not covered by this exception are CUG and MPLS services, both of which are essentially private corporate networks that use the internet to carry traffic but do so by creating a virtual private network. Since these services use the internet, they are not exempt from the general prohibition on differential pricing.

The TRAI has also provided a specific exemption to the general rule against discriminatory pricing in the case of a grave public emergency where reduced tariffs are provided in order to access or provide emergency services.

These Regulations will not apply to packs, plans or vouchers that have been subscribed to before the date of these Regulations provided that none of them shall be valid after 6 months from the said date.


The TRAI can impose a penalty of Rs. 50,000 for each day of contravention by errant service providers, subject to a maximum penalty of Rs. 50 lakhs, in addition to directing them to withdraw the discriminatory tariff.


The rationale behind prohibiting differential pricing is in line with the general principle of non-discriminatory access that is central to Indian telecom regulations. It's interesting to note that the Regulations include a (rather non-standard) review provision allowing the TRAI to carry out a review in 2 years time or sooner - though it is unclear what purpose this review will serve and what outcomes one should expect from such review.

While the net neutrality debate is far from settled, this is a firm statement from the telecom regulator against zero rating plans that allow content providers to subsidise access to their platforms. It remains to be seen how the Department of Telecommunications will take this forward in regulations relating to quality of service, throttling of access and related neutrality issues. At the same time, there is a crying need to find an effective way to ensure that India's 1 billion unconnected souls get access to the internet.

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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