The year 2014 has been a promising one for the telecom industry, which exhibited strong signs of revival in operations and profitability, primarily owing to the sector’s improving policy and regulatory environment. However, as the year drew to a close, Bharti Airtel’s move to charge voice over IP (VoIP) services differently (at a higher rate) from web surfing as well as the telecom regulator’s silent stance on the move has initiated a new debate in the industry with respect to the concept of net neutrality.

Net neutrality, an uncommon term in Indian telecom parlance but practised nonetheless, is a concept wherein an operator/internet service provider (ISP) does not differentiate between the data-based services that its users access. ISPs provide unfiltered and unrestricted services with regard to content, destination and source. This means that web users can access any legal website without interference. For instance, the speeds at which a user can surf the web or make VoIP calls and download YouTube videos or photos from any other website remain the same. In addition, an operator cannot charge differently for different data services.

Over the years, the neutrality of the internet has become more of a norm than a law. It is a key norm for protecting consumer interests. In the absence of net neutrality, ISPs may charge higher rates for high bandwidth services like YouTube and NetFlix as compared to other services that consume lower bandwidth. Further, they may end up favouring certain websites by providing faster access to those while blocking the usage of others, leading to biased and partial content delivery to users.

However, as the new era of internet unfolds, many industry veterans have expressed their doubts about the permanence of net neutrality as a concept. In January 2014, a US federal court overruled the net neutrality rules put in place by the Federal Communication Commission in 2010. The rules, which prevented broadband service providers from charging content companies for access to “Internet fast lanes”, were struck down to allow ISPs to sell faster download speeds to the highest bidder even if access speed for other websites becomes relatively slow.

ISPs no longer want to stay neutral in providing web access to their users. They would rather charge users high for some data services, involving higher bandwidths. Further, under the existing arrangement, content providers do not pay ISPs for allowing users access to their content. However, this is a lucrative opportunity for ISPs who would be willing to only host the content of companies that pay them hefty fees.

In such a scenario, the intervention of telecom regulators to protect consumer interests becomes necessary. Currently, there are only a handful of countries, including Chile and Denmark, that have laws regarding net neutrality in place.

The case for India

India does not feature in the list of countries that have regulations pertaining to net neutrality and the Telecom Regulatory Authority of India’s (TRAI) stance on Bharti Airtel’s case does not improve the situation. Interestingly, the operator withdrew its decision of charging VoIP services such as Viber and Skype differently from other data services due to the huge furore and backlash by consumers and not due to a regulatory obligation.

Since over-the-top players are eating into operator profits, Bharti Airtel’s move is a shrewd one from the profitability point of view; however, it paints a grim picture of the freedom of the internet in the Indian telecom space. The operator clearly wants to weaken the business case for services such as Skype and Viber by  making them more expensive to use, thereby restricting user access. Further, as other operators in the market jump onto the bandwagon, the scenario is likely to become detrimental to consumer interest.

Without net neutrality, users cannot have free access to the internet. They would be subjected to different speeds for different types of content, depending on how much they pay. They would be charged differently for logging on to Indian websites as compared to international ones. On a broader level, the move will stifle innovation in the sector as small companies and start-ups will have a tough time establishing themselves, in the face of internet giants such as Google paying operators and ISPs to provide faster access to their websites.

TRAI has decided to maintain its distance from these developments for now. Licence guidelines for providing unified access services promote the principle of non-discrimination; however, they are not enforced. The Indian Information Technology Act does not provide regulatory provisions pertaining to internet access, or explicitly prohibit ISPs from controlling the internet to suit their business interests.

Conclusion

While ISPs have adhered to the principle of net neutrality for many years now, the scenario is slowly changing with the launch of 3G/4G and unprecedented growth in data uptake. Networks are increasingly becoming clogged and ISPs may be tempted to impose a certain premium on downloading and surfing.

The jury is still out on whether net neutrality should be regulated in India. An appropriate and timely decision in this regard will ensure the success of the internet revolution in the country.