TRAI supports Net Neutrality; slams differential pricing: Here’s everything you need to know

TRAI order: Telecom industry body says regulator ignored benefits of price differentiation, Facebook says it will continue efforts

By: Tech Desk | Updated: February 9, 2016 10:20 am
Net Neutrality, TRAI, Facebook Free Basics,, internet services, differential pricing, tech news, technology TRAI rules against differential pricing of internet services which could be seen as a direct blow to Facebook’s Free Basics

The Telecom Regulatory Authority of India (TRAI) on Monday ruled against differential pricing for Internet services, in a major setback to Facebook Inc’s plan to roll out free Internet to the masses in Asia’s third-largest economy. It ruled that no service provider shall offer or charge discriminatory tariffs for data services offered based on content. The order can be access here.

The TRAI added that a service provider may reduce tariff for providing emergency services or at times of any grave emergency. It remarked the same has to be reported to authority within seven working days. The TRAI says it will order service providers to withdraw such tariff and will penalise the service provider with Rs 50,000 for each day of contravention.

Watch Video: TRAI Slams Differential Pricing For Internet Services: What It Means

The telecom industry expressed its disappointment at the order. Rajan Mathews, Director General, COAI said:”COAI had approached the regulator with the reasons to allow price differentiation as the move would have taken us closer to connecting the one billion unconnected citizens of India. By opting to turn away from this opportunity, TRAI has ignored all the benefits of price differentiation that we had submitted as a part of the industry’s response to its consulting paper, including improving economic efficiency, increase in broadband penetration, reduction in customer costs and provision of essential services among other things.”

MUST-READ: Key points from the TRAI order 

He said in the COAI’s opinion, TRAI’s regulation on prohibiting differential pricing constitutes a welfare-reducing measure of high concern by blocking a possible avenue for our less-advantaged citizens to move to increased economic growth and prosperity by harnessing the power of the Internet. “We believe that this measure will have an impact on the Government’s ambitious Digital India initiative.”

In a statement, a Facebook spokesperson said: “Our goal with Free Basics is to bring more people online with an open, non-exclusive and free platform. While disappointed with the outcome, we will continue our efforts to eliminate barriers and give the unconnected an easier path to the internet and the opportunities it brings.”

Facebook’s Free Basics plan, launched in around three dozen developing countries, offers pared-down web services on mobile phones, along with access to Facebook’s own social network and messaging services, without charge.

Must Read: Facebook Free Basics and Net Neutrality debate: All that has happened so far

Critics had argued that allowing access to a select few apps and web services for free violates the principle of net neutrality – the principle that all websites and data on the Internet should be treated as equal.

The telecom regulator also rejected the argument that differential pricing will enable TSPs to bring innovative packages to suit requirements of users.

“Given that a majority of the population are yet to be connected to the Internet, allowing service providers to define the nature of access would be equivalent of letting TSPs shape the users’ internet experience,” TRAI said in its release.

The TRAI also quoted ISP License Agreement which reads, “The subscriber shall have unrestricted access to all the content available on Internet except for such content which is restricted by the Licensor/designated authority under Law. Price-based differentiation would make certain content more attractive to consumers resulting in altering a consumer’s online behaviour.”

The telecom regulator has exempted intranet from its purview for now and it may review the regulations after the expiry of a period of two years.

Reacting to the order, MP Rajeev Chandrasekhar said: “This is a big win for Indian consumers & Net Neutrality. Congratulations to TRAI and R S Sharma for standing up for the consumers. This is a very powerful and positive first step taken by TRAI. The days of telcos controlling regulations and regulatory policy is over and it’s consumer to the fore.”

Arpita Pal Agrawal, Leader – Telecom, PwC India said with this notification TRAI has decided that all citizens of India will get the same view of the Internet which is in line with the principle of non-discriminatory access. “What remains to be done is to find innovative ways to actually get all citizens access to this Internet as India’s ranking in universal broadband access is abysmally poor and the digital divide continues to widen.”

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Amresh Nandan, Gartner’s Research Director, said the TRAI notification favoring net-neutrality is in line with what was seen in the US in 2010 when FCC favoured an ‘Open Internet’ and then came up with an ‘Open Internet order’ in early 2015. “The European Union also ruled in favor of treating all Internet traffic equally. Though some of their amendments allowed for differentiation and have been a subject of intense criticism,” he said.

“Telecom service providers may not be happy with this notification. However, they still have the ability and freedom to create different kind of Internet access packages; as long as content is not a parameter to provide or bar access to anyone. Such practices have already started elsewhere with products such as bandwidth on demand, bandwidth calendaring etc. to create premium products. Obviously, it will require changes in network and operations but that’s where the telecom roadmap goes,” Nandan added.