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BW Businessworld

Net Neutrality: A Catch 22?

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Access to the internet is growing to be one of the essential needs of society, particularly in India which has approximately 259.14 million internet subscribers. Today, internet is not merely an instrument of technology, but is increasingly becoming an economic and social necessity. It is critical to the strengthening of democracy and free expression and in this context the debate on open internet access and net neutrality is an inevitable one.
What is Net Neutrality?
‘Net neutrality’ or ‘Network neutrality’ refers to the impartial, unrestricted movement of data on the internet without regard to content, website, application platform, kinds of devices that may be attached, designation or  source. It contemplates a network design paradigm, where internet service providers are detached from the data/ information transmitted through their networks.
The Net Neutrality Debate
With the increasing popularity of a variety of services and applications such as the ‘Over the Top’ (OTT) services, the concept of net neutrality has stirred up a heated debate.

OTT services refer to the delivery of content and information (such as video or voice) by entities directly to the end customer, without the service provider having any role to play in the content or information being distributed.

OTT services such as Skype, Whatsapp, Facebook Messenger, WeChat, etc. are  perceived to be fast replacing native modes of communication like traditional voice, SMS, MMS, etc., causing inter alia a burden upon the network over which individuals access the internet.

The internet service providers (ISPs) i.e. the entities who are licensed to provide internet services, argue that OTT entities: (i) tend to utilize large amounts of the available network resources and bandwidth in the network often creating congestion and consequently poor quality of service; (ii) do not pay connectivity charges either to the ISPs or to the government for using the network, whereas ISPs are highly regulated and have to pay license fees, spectrum usage charges, etc; (iii) make no investments towards the underlying network infrastructure whereas the ISPs incur massive costs towards developing and maintaining the network infrastructure; (iv) impinge upon the revenues of the ISPs by shifting the customer base from the native services provided by the ISPs; and lastly (v) ISPs believe that there should be a level playing field for services that are similar in nature.

At the core of this, the ISPs hold that building a network infrastructure is highly capex intensive, with returns coming over a long duration of time. In their view, there is no financial incentive for them to maintain and expand their networks unless they can tap additional revenues by way of either levying fees or entering into priority arrangements with OTT entities for use of the network infrastructure.
On the other hand, ‘net neutrality’ proponents believe that if ISPs are allowed to charge OTT entities for use of the network infrastructure: (i) ISPs would have the power to prioritize their own services over the services provided by third parties; (ii) traffic could be categorised into ‘fast lanes’ and ‘slow lanes’ based on commercial incentives; (iii) data over the network could be blocked, controlled or throttled; (iv) such arrangements could result in a non level playing field for start-ups and hinder competition; and (v) permitting such arrangements will challenge the entire edifice of the internet structure which is built on the premise that the “internet is a neutral network”.
Consumers on the other hand, essentially need unhindered access and an open internet that is transparent, powerful and easily accessible platform for innovation, equality of data, freedom of speech and economic growth, at highly affordable prices.
Global Developments
The regulatory framework on net neutrality in various nations is still at a nascent stage, with very diverse views. For instance in the US, President Obama has advocated the following four principles: (i) no blocking of content by ISPs except if the content is illegal under applicable law; (ii) no throttling i.e. ISPs should not be able to intentionally slow down some content or speed up others based on the type of service or your ISP’s preferences; (iii) increased transparency; (iv) no paid prioritization i.e. no service should be stuck in a ‘slow lane’ because it does not pay a fee and (v) make net neutrality rules be applicable to broadband as well as mobile internet service providers. In his opinion, the net neutrality regulations could have clear, monitored exceptions for reasonable network management and for specialized services such as dedicated, mission-critical networks like serving a hospital. Pursuant to the same, the Federal Communications Commission is slated to come up with draft rules early this year.
Whereas, Vietnam has recently revoked its decision of banning foreign OTT entities which was initially introduced when the ISPs complained of network congestion and loss of revenue. The Vietnamese government is now devising a legal framework wherein OTT entities will fall under regulatory purview of the government and could require the OTT entities to set up domestic servers or enter into arrangements with the local ISPs for use of their networks for a consideration. The government is of the opinion that such a structure would benefit the end consumers, service providers as well as the OTT entities. Meanwhile in the Philippines, two major telcos (PLDT and Globe Telecom) have announced their plans for providing its subscribers free internet services by allocating larger bandwidth and free access to Facebook. The EU is also renegotiating its draft regulations on net neutrality.
On the home front, currently there is no regulatory framework in place governing the concerns around net neutrality. However, for the first time the Centre has adopted a public stand on this subject with the telecom minister Mr. Ravi Shankar Prasad stating that the internet is for the masses and showing his support for net neutrality. The Telecom Regulatory Authority of India (TRAI) has recently indicated that it will soon be releasing a consultation paper on open internet and net neutrality. It is hopeful that the framework adopted by the TRAI will strike a balance between (i) addressing the consumer’s need for open internet access; (ii) making available a neutral and level playing field for entities providing services over the internet; and (iii) granting the ISPs fair compensation for the cost of investing in and maintaining the network that enables delivery of services over the Internet.

The author, Jyoti Pawar, is a Partner at Economic Laws Practice (ELP), Advocates & Solicitors. She can be reached at [email protected] for any comment or query. The information provided in the article is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein.