FAQs: Internet Licensing and Net Neutrality

India’s Telecom Regulator has begun a combined consultation on two topics: licensing for Internet apps and content, and Net Neutrality.

An abridged version of the TRAI Consultation Paper is here On the basis of that paper, please ask questions in the comments here, and we’ll

respond by adding the question and the answer. Add questions at the top

Question: What is the rationale for not letting telcos use their pipes to maximize their business goals. If Levers can sell the same shampoo for different prices in different markets; or if Medianama can have different rates for different advertisers. (Alok Mittal on Facebook) Answer(@nixxin):

1. Public utilities are regulated differently: Telecom operators license a public resource: spectrum. In the same way that we regulate how coal mines draw coal, or how toll booths charge cars that go through them, we have to regulate how telecom companies charge users. Levers and MediaNama are private companies, their resources and products are not public property. Differential charging is fine: heavy users (like Heavy Traffic Vehicles) are charged on the basis of their usage. That’s why you have expensive data plans and cheaper data plans. You don’t stop each car, ask where they’re going, and charge accordingly. You don’t stop each vehicle, find out the value of the goods they’re carrying, and charge accordingly. I’m all for businesses getting the freedom to do what they want, but spectrum, and hence Internet access, is licensed public property, not the private property of telecom operators. Structurally, there is also significant market concentration (a point made below). Broadband and Internet access is monopolistic in nature, and telecom operators work like cartels. That’s why Mobile Number Portability is great, because it gives you the freedom. However, not all networks are equal, not all spectrum availability is equal. To protect consumer rights, and indeed (a point made below), the freedom to do business online, regulation has to protect neutrality online, not allow the platform to discriminate and play king­maker. (thanks to this tweet for reminding me about this point) A point made here: Levers doesn’t price shampoo differently based on whether you’re shampooing the hair or the beard.

2. Impact on the Internet ecosystem: For the growth of the Internet (the Digital India

goal), you need a stable platform, and for access to be open. Startups need the stability of the knowledge that just because they launch a service, it will not be slowed down, blocked, sliced into a separate package that a user will have to buy from a telecom operator, and a big competitor like Facebook or Google will not pay off a telecom operator to make their own service free, while a startup can’t afford to make

its own service for free. A level playing field. If the Internet loses this, consumers will not be able to try the latest global service just because they don’t have an interconnect or carriage agreement with an Indian telecom operator. Indian startups will switch to markets where the laws allow more freedom. I know I would, if I needed to (though, I can’t because India is my only market, and I’ve always only wanted it that way).

You don’t know what you’ve got till it’s gone. They paved paradise and put up a parking lot. (watch)

Is this the Internet that you want? (via) Question: Does charging 50 paise/GB to boost investment in internet infra from ALL internet services on outgoing traffic violate net neutrality? Answer @nixxin: It does. The Internet is a one sided market: telecom operators make money only from one side ­ the consumers. This allows kids in college to create app/s without having to sign an agreement with a telecom operator, make money by finding buyers or users for their app. Changing that model changes the principle on which basis the Internet has operated for years, and adds a layer of bureaucracy to the whole thing. Imagine having to stand outside a telecom operator’s office, or filling up a vendor form, just to allow people to access your app or service. It’s not about Rs 0.50 per GB. It’s about the principles that have allowed the Internet to flourish to be changed just because telecom operators are seeing users prefer a more open and democratic ecosystem. In

telecom, you paid for how much you used, and what you use. Online, you only pay for how much you use, not what you use. Look at the vibrancy of a more open ecosystem. I started MediaNama in 2 weeks, and we’re now 6 years old. I paid Rs 500 to register a domain name, Rs 500 a month for hosting, and a Wordpress blog. If I wanted to start a Mobile VAS company (ringtone, ringback tone, mobile radio etc), I would have to go to each telecom operator to give me a short code, and convince each to keep renewing it every year. Telecom operators are losing control over content because of the Internet, and the TRAI paper says that too. Also, this is like charging Hafta. As an Internet company, I’m running a shop and I have consumers. The government wants to charge me for the consumer using a road to come to my store? Question: Carriage fees are norm in cable why not apply that to telecom? (source) Answer: @nixxin: Carriage fees were extortion in the cable business. Because TV channels make money by advertising, DTH and cable companies refused to carry their channels without paying. The TRAI legalized this. Just because it exists in Cable doesn’t mean it should exist in the Internet space. Small startups will not be in a position to negotiate with telecom operators. Something like this happened in Mobile VAS (wallpapers, ringtones, hello tunes, Mobile Radio etc.). In that case, 15­20 companies dominated the entire Mobile VAS space and there was corruption in the telecom operator ranks because someone had the power to allow or disallow a service. The Internet is open, Mobile is not. Imagine if Meerkat or Periscope, both video streaming services launched last month, were not available for you to try out because as a video streaming service, they needed to get approval from Vodafone, Idea, Airtel, Uninor etc. The rest of the world will have it. You won’t. Question: Net Neutrality­> Higher prices­> slower adoption of mobile internet! (source) Answer @nixxin: Three things:

1. What is the Internet you want? Do you want a limited, closed Internet where you can’t explore anything, even if it is free? Would you want a muft Internet if it wasn’t a mukt Internet, one that allows you to explore, learn, collaborate? Do we want to give those coming online an inferior Internet?

2. Prices will come down when there is real competition in the telecom industry. Right now, they’re all collaborating (psst: Cartel). Airtel, Idea and Vodafone have 66% of the active Mobile users in India, and a majority of the Mobile Internet users. Have you seen how they raise prices together, one after the other? Mobile prices only came down when there was competition, when Tata Docomo brought in per­second­billing, because there was real competition.

3. India has poor Internet infrastructure. Connectivity sucks. If there is abundance of connectivity, prices will come down. We have no wireline internet because BSNL and MTNL haven’t been unbundled. The government doesn’t sell spectrum to increase mobile and Internet access, only to pay for its expenditure. This is why we have unreliable, crappy wireline speeds, and unreliable crappy wireless Internet.

Question: What is legal definition of net neutrality and what should be role of TRAI/ govt in your view because we know govt intervention can have serious negative effects? Answer @nixxin: There is no precise or universal legal definition for network neutrality internationally and it is not defined in any convention. It is most commonly identified by a set of principles which have been adopted by several countries in different ways. It is developing as an area of regulation however India with the world's third largest base of Internet users require it urgently. The Internet is built on principles of openness and freedom. At the core of this is non­discrimination at an ISP level. So, three principles of Net Neutrality which have emerged and are reflected in some foreign legislation including the most recent order of the FCC in Open Internet include:

1. No discrimination in terms of speed: no throttling (slowing something down, like Comcast did with Netflix), or speeding it up (like Airtel did with YouTube).

2. No discrimination in terms of access: no gateways like Facebook’s Internet.org,

which only includes a few websites and plays kingmaker. No blocking of certain sites just because they compete with you (for example, some operator could block Saavn.com because it has its own music service… :D).

3. No discrimination in terms of cost: access to one service should not be more

expensive than another. Today, when you access something online, you don’t really think of how much it costs you to access, because it’s all the same. This means that startups compete on the basis of product, not on the basis of cost of access. If there is discrimination in terms of cost, then startups will have to queue up outside a telecom operator’s doorstep, and the telecom operator will play kingmaker. Companies with deeper pockets will pay to make their services free, and this way, kill competition because other services will be paid.

@aparatbar: Timothy Wu, Professor of Law, Columbia Law School who first coined the term, “network neutrality”, stated in his original proposal in 2002 that, “As a general description, the proposal would strike a balance: it would forbid broadband operators, absent a showing of

harm, from restricting what users do with their internet connection, while giving the operator general freedom to manage bandwidth consumption and other matters of local concern.” Question: Which countries have a good model to deal with this? Answer @aparatbar: At present there are several countries which are models of network neutrality legislation. These are segregated on the basis of strong, moderate and proposals.

Country Legislation Key features

Brazil (strong)

Marco Civil da Internet adopted on April 23, 2014. (link)

Art. 9 of the Act guarantees network neutrality in Brazil. It states that the party responsible for the transmission, switching or routing has the duty to process, on an isonomic basis, any data packages, regardless of content, origin and destination, service, terminal or application. The aim of this provision is to prevent operators from charging higher rates for accessing content that uses greater bandwidth, like video streaming or voice communication services.

Chile

Ecuador (moderate)

The Telecommunications Act December 17, 2014 (link)

Clause 18 of Art. 22 dictates that subscribers, customers and users of telecommunications services shall be entitled to, “[...] access any application or authorized service available on the internet network. Providers may not block, interfere, discriminate, hinder or restrict the right of its users or subscribers to use, send, receive or offer any content, application, development or legal service through Internet or networks in general or other forms of information and communication technologies, nor may they limit the right of a user or subscriber to incorporate or use any class of instruments, devices or gadgets on the network, provided they are legal”. However, this has been recently limited by an amendment in Article 64 which permits the establishment of Tariff Plans (link).

Mexico (strong)

The Federal Telecommunications and Radio Broadcasting Act Adopted on July 14, 2014

The law adopts the following principles, (i) free election; (ii) non­discrimination; (iii) privacy; (iv) transparency; (v) traffic management; (vi) quality; and (vii) sustained infrastructure development [link].

[link]

Netherlands (strong)

Network Neutrality provisions adopted on June 14, 2011 [link]

The Network Neutrality provisions are contained in Article 7.4a of the Telecommunications Act which mandated that, “Providers of public electronic communication networks which deliver internet access services and providers of internet access services do not hinder or slow down applications and services on the internet...”. (link)

Question: Government maximises revenues when it auctions spectrum, what’s wrong in telecom companies trying to do the same? Internet is not a public utility, American courts have in the past struck down FCC regulation on Internet companies saying the same. Answer @nixxin: I would argue that the Internet is a public utility. Spectrum is a public resource, leased to telecom operators for a certain period of time (20 years). That doesn’t necessarily give them the right to control whether we can access some services and not others, pay more for accessing some services, not others, have some services accessed at a higher speed than others. We pay for access to certain MB or KB, and that has been the norm. Look at how it has benefited us: is there any space as open, collaborative, competitive and vibrant as the Internet? Businesses and companies are free to operate whatever services they want, reimagine consumer experiences. Features become full businesses. That freedom will get constrained by this approach to maximise revenues by restricting. Telecom operators should be seeking to maximise revenues by making us use more of the Internet. They’re slicing the pie instead of growing the pie. Most core services ­ communications, commerce ­ run on digital infrastructure, and it brings in competitiveness and efficiency. The moment you find that you can’t do some things, the Internet will break. For example: if there is a license for a messaging app in India, would you be able to chat with merchants on a Quikr or Paytm app to negotiate rates? If there is a separate license for video, and you don’t have one, you might download a health app that has both a trainer and exercise videos. You might not be able to interact with the trainer, or watch videos, unless you have a separate license for apps, a separate license for video and one for messaging. This will break the Internet into data packs. Don’t believe me? Read what Airtel said: “We are trying to change the vocabulary away from megabytes and gigabytes in to songs and videos” (source) and what Uninor did: here. @aparatbar: Past arguments in the United States are based on legal technicalities than the ordinary dictionary definition of, “public utility”. This question to a certain degree is moot given the reclassification of Internet and Broadband utilities have been classified as services under

Title II of the Telecommunications Act bringing them under the jurisdiction of the FCC. At present the legal regulations in the US, with the issuance of the Open Internet Order on March 12, 2015 are supportive of network neutrality. Question: One of the arguments that has surfaced is that differential pricing is necessary for telcos to recover the high costs they bear during spectrum auctions and also to improve their networks. Without differential pricing and revenue sharing, there is no apparent incentive for telcos to upgrade their networks. What's your response to that? Answer @nixxin: That’s what happens in a market where there is insufficient competition. Like I said earlier, the top 3 telecom operators have 66% of the active users, the top 4 have 69%. The top three ISP’s have over 95% of the ISP market. If we had more telecom operators, more ISPs, they would be competing for our money. Telecom operators can make more money, and will make more money with data. It’s been growing:

(source behind paywall)

If that kind of growth isn’t incentive to grow networks, then I don’t know what is. India has over 200 million mobile Internet connections. Airtel’s mobile Internet base has grown 2.65 times in two years.

Also, are you trying to tell me they didn’t do their calculations before the auctions, as to how much they can afford? Uninor didn’t win any spectrum because it became expensive. They decided to bail. Airtel, Idea, Vodafone, Jio, Tata Tele continued. How is it the Internet’s fault? Point is, they are going to be forced to improve networks because consumer demand is growing, and they are making more money. Why should the Internet industry, without whom they wouldn’t have a data business, subsidise this? Telecom operators are trying to change the way ISPs have always operated, trying to convert the Internet into a telecom service. Question: Could TRAI and Telecom Operators already have a deal? (source) Answer @nixxin: The TRAI held a seminar on April 5th 2014 in Delhi, which I attended, where the Chairman Rahul Khullar said that telecom operator CEO have been meeting him often and complaining about Internet companies being valued very high, while telecom operators provide them access to consumers (in actuality, telecom operators provide consumers access to the Internet). Lots of Internet companies (Rediff, Hungama, Paytm, Google) spoke against any intention to license the Internet services there. We’ve documented it here. In the regulation paper, there is hardly any information on what Internet companies said at the seminar, only what telecom companies said. The first half of the paper has a heavy slant towards telecom operators, and raises issues over which TRAI has zero jurisdiction (copyright, national security, freedom of speech). I would say that this battle is lost, and the TRAI has is going to find some middle ground. Internet licensing was never a part of that discussion, but has been brought in into this paper. It might be a red herring: it could be that we are glad that the TRAI doesn’t have licensing for the Internet, but allows telecom operators to violate net neutrality by allowing toll­boothing, traffic shaping, zero rating etc. (explained here) Or it might be that Internet companies are okay with Whatsapp, Viber and other communications services being licensed, but not ecommerce or publishing. Either way, the Internet will not remain the way it currently is. There can and should be no middle ground, in my opinion. Question: You say telecom companies will abuse net neutrality due to lack of competition and cartelisation, but govt enforced rules may lead to underinvestment in infrastructure, lack of innovation. Doesn’t lack of competition theory apply there too, which will further decrease network quality? Answer @nixxin: Not sure of how lack of competition applies here, and if there is a cartel in operation, the government needs to step in and break cartels. We haven’t seen less investment in infrastructure in the current scenario, and that is the scenario we want to retain. Question: Why don’t you trust telecoms to maintain current scenario voluntarily?

Answer @nixxin: We can’t trust telecom operators to retain current scenario voluntarily because of what they have said and done. Reliance Communications and Facebook have partnered to offer a gated Internet with Internet.org. RCOM and Twitter, Airtel and Google. Airtel tried differential pricing for VoIP. Check what they have been saying here and here. Question: But airtel backed off due to consumer backlash, isn’t that best kind of market regulating itself? I think market forces won’t let abuse of net neutrality work. Answer @nixxin: Read Airtel’s statement. It said it backed off because the TRAI said it would do a consultation, like it has. The market didn’t regulate Airtel. They got what they wanted: a consultation. I wrote about this here. They now want to use this consultation paper to legitimise their business model where they will charge for selected apps on a differential basis. Question: If the business of companies like Whatsapp, Google and Facebook, is in danger then why are they not coming out fully in support of Net Neutrality? Answer: @RedditIndia: This is one of the dangers of not having Net Neutrality. Without Net Neutrality, there would be a possibility that large corporations, like Google and Facebook, can collude with Telecom Operators to stifle competition in India, a very large market for these companies, and restrain the growth of new startups who don't have deep pockets. (Also, Google and Facebook are members of Cellular Operators Association of India (COAI) which counts multiple TSPs as its members, like AirTel, Vodafone, Aircel etc.) @nixxin: Also don’t forget that companies like Twitter, Facebook, Whatsapp and Google have violated Net Neutrality in India. Twitter was free on Vodafone, Facebook as Internet.org, Whatsapp tied up with multiple telcos for Whatsapp packs, Google had data free with Android One, and a tie up with Airtel for increasing YouTube speeds during the IPL. All of this violates Net Neutrality. Having done this, can they now publicly back Net Neutrality and have the humility to admit that what they did was wrong? I doubt it. Question:I already buy multiple prepaid packs. How is this different? I'm confused and need more simple references. Answer

@RedditIndia: Ist scenario: Let's say you buy a car. You are going to visit a Mall. The road to the Mall has a speed limit of 60 km/hr. But your car maker says that you can drive at 60 km/hr

only if the Mall owner pays the car maker else you drive at 30 km/hr. Then the Mall owner charges you extra for the expenditure.

IInd scenario: Let's say your car has a maximum speed of 60 km/hr. Ideally, you should be able to drive at that speed all the time. You need to visit a doctor. But your car maker says that you can drive at 60 km/hr only if you visit a Shopping Center else you drive at 30 km/hr when going to a doctor. Or you pay the car maker extra every time to drive at 60 km/hr.

source: https://i.imgur.com/Bc9oxyH.jpg Questions. Anyone worried about security/privacy? Aren't the TSPs looking at every bits of data consumed now and hence are working hard to get the most­used data packets turned into add­on packs? Answer @nixxin: We are. India doesn’t have a privacy law. There’s a mandate from the government to bring location awareness down to 50 meters. There’s tracking and recording of calls, GSM sniffers (source), Social Media Monitoring via Netra(will add link), NATGRID(will add link).

What’s more, there is no judicial oversight of surveillance. The Centralised Monitoring System (will add link) is meant to allow governments to tap calls even without telecom operators knowing or receiving orders. Question:Great! I want to support Net Neutrality. I want to send a mail to TRAI. Can I copy and paste a standard reply? Answer @nixxin: These (link) are complicated questions and we need to give intelligent responses. We’ll create a bunch of possible responses to each question by the middle of next week, and you should pick and choose your answers, rewrite them in your own words and send them. The TRAI is likely to reject templated answers, so I’m not sure if it’s a good idea. We’ll have a site up with answers too. Question: Can ISPs block any site without a government order? Answer @nixxin: The way blocking works in India, under Section 69A, blocking is secret. So, typically, without leaks, we don’t even know if the government has gotten something blocked. In case of ISPs, there is an allegation that they have blocked sites. Anonymous, a few years ago, had hacked the servers of Reliance Communications, and found a list of sites blocked, and published them on pastebin. Details here. There’s no telling whether this is true or not, but I wouldn’t say that this may not have happened. Question: Is there some info­graphic that I can share with my peers on social media to make them aware of the importance of Net Neutrality. Answer: @RedditIndia: Here is one info­graphic created by a redditor (source) and he/she has made it license free. You are free to use this to spread awareness. https://i.imgur.com/gazt94B.png Question: Electricity companies already charge based on usage. Above a limit, you are charged differentially, so why should telcos not charge differentially? Answer: Question: Telephone companies are not doing charity, they need to make money. If they are losing revenue because of WhatsApp and other services, isn’t it fair if they charge WhatsApp and others or charge us for different apps? Answer: