If Airtel, BSNL, Idea and Aircel decide that they will only allow sending/receiving calls and SMSs among the four providers (as a single group), all other cell service providers will go out of business overnight because these four companies control more than 80% of the market share at this point ( http://www.ibnlive.com/news/india/733-million-gsm-subscribers-in-india-airtel-leads-with-28-41-market-share-696040.html ). People who are on other networks will switch to one of these four providers because almost every other person they know is on one of those four networks. No new operator can enter the market either. This undermines one of the principles of free market economy: competition. I am sure there is a rule that says every provider should route calls to/from all other provider. This regulation is a form of neutrality. Without the regulation, top three-four influential companies with a large enough market share can behave just like one huge company through collusion and wipe out rest of the market. Whether this will actually happen or not, our laws have to protect the consumers from such failures of the market. If at any point, some three-four companies hold a large market share, this form of failure is bound to occur without such regulations.

Yet another way this market can fail is by overpricing calls to/from other networks. For example, cost from Airtel to Airtel can be Rs. 1; Airtel to other three networks can be Rs. 2; from Airtel to other networks, they can be Rs 100. When this happens, existing players go bankrupt and no new player can enter the market. This is exactly where the government should step in and say that the max cost should be Rs X, and X should be determined based on what is in the interest of the nation, as a whole.

Net neutrality need not be an “all or nothing” deal. The government can always step in set the limits on what ISPs can do with the bandwidth. They can give full liberty, no liberty, or partial liberty. Unfortunately, both in the US and in India, the “all or nothing” argument is taking place.

I look at what has happened in the US with regard to Presidential debates. I see that the media only highlights the candidates from the two major parties. What about other candidates? They are not even invited to the debates. This undermines democracy because media has essentially become the king maker. Internet is one medium where other candidates can reach out to voters. If the same media is given the liberty to block certain websites, no other candidate can even reach out to people. Internet is more important than TV and phones, so neutrality is also equally important.

PS: ISPs are a form of natural monopolies (https://en.wikipedia.org/wiki/Natural_monopoly). That’s why you have local loop unbundling laws in some countries ( https://en.wikipedia.org/wiki/Local-loop_unbundling ).