Regulator to decide on zero rating to ensure Net Neutrality

The Telecom Regulatory Authority of India (TRAI) would have to determine tariff plans of telecom and internet service providers to uphold Net Neutrality, as stakeholders differ on zero rating plans, a government-appointed telecom panel said on Thursday.

"Before a licensee launches any tariff plan, including zero rating, the same would need to be filed before TRAI within a reasonable period prior to the launch of the plan," the Department of Telecom (DoT) committee on Net Neutrality said in its recommendations to the government.

The committee was set up on January 19, to examine Net Neutrality on providing Over-the-Top (OTT) services by telecom service providers and internet providers (TSPs/ISPs) in the absence of consensus among stakeholders.

"TRAI would examine each such tariff filing to see if conforms to the principles of Net Neutrality and that it is not anti-competitive by distorting consumer markets," the report said.

After considering opinions of Net Neutrality proponents and network operators, the panel said the tariff plans would have a deemed approval clause if the regulator (TRAI) does not decide within a reasonable period.

"This would ensure balance of interests protecting the liberty of TSPs/ISPs to design specific tariff plans attuned to specific customer demands and ensure that the principles of Net Neutrality are not breached," the report said.

With increasing costs of service and greater pressure on bottomlines, TSPs and ISPs have resorted to creating tariff plans that charges for usage based on the content or applications sourced by a user.

Differential data tariff plans linked to type of usage and zero rating plans are a few examples. These actions in tweaking tariff plans disturb user choice and market provision, which has serious implications on Net Neutrality.

Under section 11(1)(c) of the TRAI Act, 1997, determining tariff is a function of the regulatory and lies within its jurisdictional domain.

Currently, the watchdog follows a policy of forbearance for telecom services where competition is subject to the condition that all tariff plans need to be reported to it.

TRAI examines tariff plans and intervenes if they breach any of its regulations. It, however, does not examine the tariff plans from the viewpoint of Net Neutrality principles.

Large OTT players say zero rating helps to increase internet penetration because internet access is offered free.

For instance, Internet.org, a partnership between social networking services firm Facebook and six global telecos (Samsung, Ericsson, MediaTex, Opera Software, Nokia and Qualcomm) is free to users, free to operators and open to any operator, with a view to provide affordable access.

On the other hand, smaller OTT players consider zero rating as discriminatory and against the principles of Net Neutrality because they feel that they don't have the resources to enter into such arrangements with TSPs/ISPs, which also influence consumer choice to prefer free content over others.

Telecom service providers have started facing competition from unlicensed application platforms (OTT players), in their traditional voice communication field.

With an objective of enhancing revenue streams and to face competition from OTT players, TSPs have been exploring opportunities for generating revenues from users and content providers.

The Multi-stakeholder Advisory Group (MAG) members are of the view that zero rating should be market specific and not TSP/ISP specific and allowed with some regulation and not only on the content but also on the pipe/download.

According to industry associations, zero rating is a commercial arrangement and not related to Net Neutrality.

"Zero rating favours sites, services and applications having the ability to strike deals with TSPs/ISPs, which may not have any incentive in entering into commercial tie-ups with firms that have a small market share," the report said citing the industry view.

Such practices constitute an entry barrier to small start-ups in a competitive market for applications and services.