Net Neutrality for India

Infrastructure investments could be stifled by a sub-optimal treatment of Net Neutrality in India, argues TV Ramachandran, Hon. Fellow of the Institution of Engineering and Technology (IET) London, and President, Broadband Forum of India.

Infrastructure is the critical backbone of any nation. India´s deficiencies in this regard, despite huge subsidies by the government, are very well known – whether it be in respect of highways & railways, housing, ports, power or water supply. The solitary exception is telecommunications where a nationwide world-class digital communication infrastructure is in place without a single paisa of government subsidy or the use of public money. In fact, the telecom sector actually contributes a huge sum of about Rs.70,000 crore on an annual basis to the national exchequer through taxes, levies, spectrum charges and license fee. In the last two decades, the sector has witnessed a humungous investment to the tune of Rs.8.5 lakh crore. The moot question arises as to who has made all this investment and are the investors getting a fair regulatory treatment in the process of dealing with Net Neutrality, both policy and practice thereof.

It is undeniable that it is the telecom service providers (TSPs) who have created world-class communication networks over a period 20 years in some of the most challenging conditions in the world. The TSPs take expensive licences and acquire spectrum at enormous costs through auctions, set up expensive networks across the country facing extremely challenging rollout difficulties and acquire and serve customers in one of the most competitive and price-sensitive mobile markets of the world. The TSPs are at the forefront of network and product innovation and deliver one of the lowest user tariffs in the world, while providing the latest cutting-edge technologies like 4G, M2M, IoT, etc.

But are these TSPs getting their due? Unfortunately, it seems, they´re not. We are actually witnessing a most unfair and inequitable situation wherein the licensed entity is treated at a far lower footing than an unlicensed entity. Sounds incredible? Unfortunately, however, this is the ground reality. As per the Indian Telegraph Act, only licensed entities can provide telecommunication service through voice or messaging. However, if over-the-top (OTT) communication service providers are permitted to provide voice and messaging services without a licence and unregulated, while the licensed TSPs are subjected to onerous conditions and large compliance costs, there is obviously a big problem for infrastructure investments by the latter.

Net Neutrality
The content providers are demanding a version of Net Neutrality whereby TSPs are required to treat all Internet traffic on an equal basis, without regard to the type, origin or destination of the content or the means of its transmission. It is almost impossible to justify this since it is fundamental that the bandwidth requirements for email or browsing are vastly different to that for video content or remote medical diagnosis or disaster-management situations. Obviously, therefore, the basic spectrum and other resources required would be different. To argue that all Internet traffic has to be treated alike without preference or prioritisation, is completely incorrect. Prioritised delivery was always envisioned as part of the Internet Protocol although the details were not specified at the outset. Even the DoT Committee noted the need for allowing reasonable and legitimate traffic management practices that are consistent with the core principles of Net Neutrality.

If this principle is not followed, why would the network operator invest extraordinary amounts to meet a version of Net Neutrality that would be completely unviable for him?

We need to understand that service providers have already invested big capital (Rs.8.5 lakh crore) towards the development and maintenance of network infrastructure, and that spectrum is costly. There is a debt burden of about Rs.3,80,000 crore weighing heavily on the TSPs. As profit margins for Indian telecom operators are already wafer-thin, the key challenge faced by them is that while revenue growth remains challenged, data consumption is expected to grow at a high rate due to the OTT communication services, accelerating demand for network investments. While new technologies such as cloud and digital offer some cost savings, they are insufficient to cope with the pace and magnitude of escalating costs. Thus, the revenue earned by the operators needs to grow in order to meet the enhanced network requirements. The absence of a parallel revenue stream to support these investments makes the business model unsustainable for the operators in the long run.

Net Adoption
In comparison to other BRIC countries, India ranks the lowest with the Internet adoption rate in other three member-nations of BRIC on an average being more than three times the adoption rate in India. The immediate priority in India is for rolling out broadband networks and it is high time we prioritise the connectivity for all the villages of India as envisaged in the Digital India programme. The rollout of broadband and Internet services will require investments to the tune of Rs.5,00,000 crore over the next three-five years. Moreover, as per the government´s commitments, the Digital India programme itself will require investments to the tune of Rs.1,13,000 crore. The government is targeting to connect all village local bodies (Panchayats) by broadband Internet and phones, promote e-governance, Wi-Fi connectivity in 250K schools, universities and public hotspots for citizens. The investments in network will be governed by the regulatory framework defined for Net Neutrality. The financial health of the telecom industry has to be safeguarded and revenues earned by the operators need to grow in order to meet the investment expectations.

As mentioned earlier, Net Neutrality requires that all data available on the Internet is to be treated impartially by service providers/carriers. The term essentially refers to regulatory limits on how network operators can manage traffic, generally limiting such management efforts to providing security and reducing congestion. The idea is derived from how fixed telephone lines have worked since the beginning of the 20th century. In case of a telephone line, you can dial any number and connect to it. It does not matter if you are calling from operator A to operator B. The operators neither blocks the access to a number nor deliberately delays connection to a particular number, unless forced by the law. Most of the countries have rules that ask telecom operators to provide an unfiltered and unrestricted phone service. The beginning of Internet services was much the same as the Internet Service Providers (ISPs) were mostly the voice service operators and continued with the same norm. However, the Internet is no longer a single-service platform with a consumer/service provider model. Internet services today imbibe various types of data such as video streaming, gaming, interactive services, etc. This diversity of services online has necessitated that the services offered online could be prioritised or segmented and priced accordingly, based on the usage patterns and utilisation of network bandwidth. For example, video streaming takes up more bandwidth compared to other services; for which the service providers have to bear the cost. Sometimes, certain services/apps/sites may also end up congesting the networks due to heavy consumption of bandwidth. In fact, in the US, Comcast won a legal battle against the FCC (the US telecom regulator) over Net Neutrality. Comcast´s position was that it should be allowed to ´throttle´ Internet traffic from Bit Torrent, a file-sharing service whose users were clogging up its network. The adoption of Net Neutrality law usually includes allowance for discrimination in limited conditions, such as preventing spam, malware, or illegal content. The law in Chile allows exceptions for ensuring privacy and security. The law in the Netherlands allows exceptions for congestion, security, spam, or legal reasons.

Net Neutrality in the Indian context, should consider these factors – being able to connect the next 1 billion unconnected citizens to the Internet; providing non-discriminatory Internet access to every citizen; implement same service same rules for the service providers; assess and mitigate the potential revenue loss to the government owing to non-regulation of the applications offering the same services as licensed telecom operators; evaluate the critical security requirements of the country, as well as the vital aspect of data privacy; the development aspects of the network infrastructure which is critical to achieve the ´Broadband for All´ objective; and lastly, it needs to be acknowledged that a policy on Net Neutrality cannot be developed outside of a holistic framework of Internet governance.

Thus, India urgently needs Net Neutrality but one that is optimised for the maximum welfare of its citizens depending upon our own constraints and state of digital development. Our paramount requirement is for this investment for enhanced infrastructure. It would be retrograde for India´s economic development and harmful to our citizens to impose a Westernised version of Net Neutrality and thereby damage our vision of Digital India. The urgent need of the hour is an Indian version of Net Neutrality keeping in view the fact the foremost priority before the nation is to expeditiously expand Internet access to include the vast mass of unconnected and low net usage citizens. This is critical for the success of Digital India and for speedier economic development on an inclusive basis.

(The views expressed in this article are personal).