Mains 2016 Initiative

Mains 2016: Net Neutrality and Free Basics


Net Neutrality and Free Basics


· A TRAI consultation paper proposed models that would get Free Basics-like services back in a slightly altered form — by making a distinction between telecom and Internet services.


· Over the last one year, Indians have engaged in a passionate debate on the concept of Net neutrality, whereby all content should be treated equally on the Internet. The problem of content
discrimination on the Internet got most associated with Free Basics.

What is Net Neutrality?

· Net Neutrality means an Internet that enables and protects free speech. It means that Internet service providers should provide us with open networks — and should not block or discriminate
against any applications or content that ride over those networks.
· Like, phone companies shouldn’t decide who one can call and what one says on that call,
· ISP shouldn’t be concerned with the content one view or post online.

Importance of Net Neutrality

· Net Neutrality is crucial for small business owners, startups and entrepreneurs, who rely on the open Internet to launch their businesses, create a market, advertise their products
and services, and distribute products to customers.
· Net Neutrality lowers the barriers of entry for entrepreneurs, startups and small businesses by ensuring the Web is a fair and level playing field.
· It’s because of Net Neutrality that small businesses and entrepreneurs have could thrive on the Internet. They use the Internet to reach new customers and showcase their goods, applications and services.
· ISPs are the gatekeepers to the Internet, and without Net Neutrality, they would seize every possible opportunity to profit from that gatekeeper control.
· Without Net Neutrality, cable and phone companies could carve the Internet into fast and slow lanes. An ISP could slow down its competitors’ content or block political opinions it disagreed with.
· ISPs could charge extra fees to the few content companies that could afford to pay for preferential treatment – relegating everyone else to a slower tier of service. This would destroy the open Internet.
For instance, one might find YouTube loading swiftly while Wikipedia lags because YouTube
paid your ISP for preferential access.

What is free basics?

· It was an application by Facebook which provided its own content and that of its partners free to consumers, while all other content remained paid for.
· This violated the principle of net Neutrality.
· But the Indian public protested and giving in to popular demand, in February 2016 the regulator banned Free Basics like services based on discriminatory pricing of content.

Criticisms of free basics

· It was said that Internet was first a public good before being a market one.
· In agreeing to ban Free Basics everyone thought that the regulator agreed differential pricing to be an inappropriate practice, for consumers, including poor consumers, as also for the larger society.
· Indeed, the regulatory order eloquently argued that “price-based differentiation would make certain content more attractive to consumers resulting in altering a consumer’s online behavior
(and) the knowledge and outlook of those users would be shaped only by the information made available through those select offerings”.
· It further offered reasons of freedom of expression and plurality of views for banning differential pricing.

Re-emerging issue

· Now the regulator is having second thoughts.
· According to experts a new consultation paper proposes models that will get Free Basics back, though in a slightly altered, and perhaps disingenuous, way.

TRAI’s view (Telecom regulatory Authority of India)

The consultation paper of TRAI is a complete  turnaround from its previous view, suggesting
that these were never the problem.
· It was not at all the issue that Free Basics discriminated regarding the content as received by any consumer. The real problem was that Free Basics had an exclusive agreement with just one telco to do so.
· It would accordingly be fine if Free Basics entered a similar agreement with all telcos.

Alternative models suggested: –

· Reward based Model: Whenever users access a website/application from the ‘TSP agnostic’ platform they will be rewarded in form of data/voice usage.
There is no clarity in the paper on how users who have not yet been connected to mobile internet through smart phones can use such a platform that rewards ‘after’ using a service. Also, this model misses out on the fact that a user would need to pay to be online with sufficient
‘data balance’ to use such a model.
· Toll Free API Model: This is an alternative that would allow users access to all content from the platform but not charge them for ‘access to certain websites and applications’. This seems
like a watered-down version of Facebook’s Free Basics and the paper claims that such models are existing in many developed countries without going into further details.
· Direct Transfer Model: In this model the user will use data normally and the cost of data will be transferred to her bank account, much like the direct benefit transfer prevalent for LPG
cylinders. This model is very like the Reward based model and will also need that the user pays upfront to avail ‘free’usage later.

About the suggested model

· The suggested models will just make Free Basics kind of services more ubiquitous,
as well as a permanent feature, and not merely a promotional one, as earlier touted by its promoters.
· The only significant new feature of the proposed models is that telcos will not be able to benefit from content-based price discrimination. However, they will facilitate ways whereby content providers can pick up the tab for consumers accessing their content (and not other).
· Other suggested models would get the telco entirely out of the picture, with consumers reimbursed directly by content providers for the access of their content.
· At the consumer end, all these models have exactly the same effect as telcocontrolled models — of incentivising accessing some content and services over others, undercutting the key equalising feature of the Internet.

Criticism of the above models

· The regulator seems to be drawing an interesting line — services provided by telcos are under a public goods framework, but those rendered by the Internet companies subject only to freemarket principles.
· It seems not to matter that the actual impact on individuals and societies of non-Net-neutral practices by either is the same.

Internet exceptionalism

(Internet Exceptionalism refers to the internet specific laws that diverge from regulatory precedents in other media.)
· According to experts such an attitude comes from a problematic trend that has been called “Internet exceptionalism”, whereby the Internet is considered to be some kind of uniquely regulation-free zone.


· Having banned Free Basics-like content discrimination services when involving a telco, it is ludicrous to now propose to allow the same by Internet companies directly.
· This attempt to bring back the much detested Free Basics through the backdoor, by making an absurd distinction between telecom and ‘Internet services’, is the right opportunity for us to get out of this wrong binary regulatory mindset.
· We must consider our old and new communication systems as one important social sector requiring close regulatory watch in public interest.

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