DoT (the Department of Telecommunications) has suggested its recommendations on the controversial net neutrality in India.
Net neutrality guidelines in the U.S. have already shaken the telecom industry – impacting the sentiments of telecom operators. AT&T earlier said net neutrality – whereby telecoms cannot control speed to some and offer premium quality at special rates to some others – will impact its broadband investments. US wireless operators are fighting for their rights in the American courts.
Bharti Airtel, an Indian telecom operator, faced criticism for its actions relating to net neutrality.
DoT recommendations on Net Neutrality
# DoT said the primary goals of public policy in the context of Net Neutrality should be directed towards achievement of developmental aims of the country by facilitating affordable broadband, quality broadband and universal broadband.
# Over-The-Top (OTT) application services should be actively encouraged and any impediments in expansion and growth of OTT application services should be removed.
# Specific OTT communication services dealing with messaging should not be interfered with through regulatory instruments. For OTT application services, there is no case for prescribing regulatory oversight similar to conventional communication services.
# In case of Voice Over Internet Protocol (VoIP) OTT communication services, there exists a regulatory arbitrage, wherein such services also bypass the existing licensing and regulatory regime creating a non-level playing field between TSPs and OTT providers both competing for the same service provision. This aspect is under deliberation in other countries as well. European Commission has made a policy pronouncement on May 6, 2015 for a Digital Single Market Strategy for Europe arguing, inter alia, that there is a need to review telecom rules to look at ways of ensuring a level playing field for players in the communications market to the extent that they provide competing services and also for meeting the long term connectivity needs of the European Union.
# Under existing telecom licensing conditions, Internet Telephony is permitted under restricted conditions. However, pricing arbitrage of OTT domestic voice communication services has the potential of significantly disrupting existing telecom revenue models. This may decelerate the pace of telecom infrastructure expansion, whereas the need is to boost investment in telecom infrastructure to increase broadband reach, speeds, bandwidth capacity and enhanced quality of service. With complete transition of Telecom Network to IP Network, the pricing 2 arbitrage between voice communications by TSPs and OTT service providers would be substantially reduced. The key public policy imperative is to manage the transition from voice-centric to data-centric networks with the concomitant change in technology.
# The existence of a regulatory arbitrage in addition to the pricing arbitrage adds a degree of complexity that requires a graduated and calibrated public policy response to bring about a level playing field. In case of OTT VoIP international calling services, a liberal approach may be adopted. However, in case of domestic calls (local and national), communication services by TSPs and OTT communication services may be treated similarly from a regulatory angle for the present. The nature of regulatory similarity, the calibration of regulatory response and its phasing can be appropriately determined after public consultations and TRAI’s recommendations to this effect.
# Legitimate traffic management practices may be allowed but should be “tested” against the core principles of net neutrality.
# Tariff plans offered by TSPs/ISPs must conform to the principles of net neutrality set forth in guidelines issued by the Government as Licensor. TRAI may examine the tariff filings made by TSPs/ISPs to determine whether the tariff plan conforms to the principles of net neutrality.
# A clause, requiring licensee to adhere to the core principles of net neutrality, as specified by guidelines issued by the licensor from time to time, should be incorporated in the license conditions of TSP/ISPs. The guidelines can describe the principles and conditions of net neutrality in detail and provide applicable criteria to test any violation of the principles of net neutrality.
# National security is paramount, regardless of treatment of net neutrality. The measures to ensure compliance of security related requirements from OTT service providers, need to be worked out through inter-ministerial consultations.
# An oversight process on Net Neutrality may be set up by the government to advise on policies and processes, review guidelines, reporting and auditing procedures and enforcement of rules.
IIFL’s analysis on Net neutrality recommendations
DoT’s report on net neutrality addresses a key concern: That VoIP being allowed a free rein will impact telecoms. DoT acknowledges that free VoIP would threaten expansion and upgrade of infrastructure by telcos, which even VoIP services depend on. While DoT bats for net neutrality, it makes a distinction between OTT voice service providers and other OTT players. DoT advocates a level playing field between telecoms and OTT voice players (including bringing them under a licensing regime). The next steps will be TRAI recommendations and the DoT final guidelines.
IIFL said that DoT has taken a pragmatic view, just as we had predicted in our note last month (VoIP Threat – Not what it seems), and we expect regulation around OTT voice service providers.
DoT says the obligatory words – that principles of net neutrality must be adhered to. It also argues that the need for affordable access and investment in broadband infrastructure are not counter-posed against the core principles of net neutrality.
DoT highlights regulatory arbitrage – VoIP services bypass the existing licensing and regulatory regime resulting in a non-level playing field between telcos and OTT voice providers. It also mentions that pricing arbitrage of OTT domestic voice services (they are currently largely free) may impact the pace of telecom infrastructure growth.
It recommends that, for domestic calls, telcos and OTTs may be subjected to similar regulation for the present. The nature of regulatory similarity, the calibration of regulatory response and its phasing can be appropriately determined after public consultations and TRAI’s recommendations on this subject.
DoT has analysed the legislation and implementation of net neutrality in international markets, it cites the EU call for a level playing field between OTT voice providers and telcos.
DoT recommends that TRAI should examine the tariff filings made by telcos to determine if the tariff plans (including zero-rating plans such as Airtel Zero) conform to the principles of net neutrality. Legitimate traffic management practices may however be allowed. But on Internet.org, pioneered by Facebook and of which Reliance Communications is a partner, DoT’s view is that content gatekeepers cannot be permitted to extract value, and hence even if it is for an ostensibly public purpose, it should be discouraged.
It recommends inter-ministerial consultations for security compliance from OTT service providers. Further that security considerations will over-ride net-neutrality principles.
Baburajan K
[email protected]
