The Internet is not a Library!
Once again, no analogies. I promise! The Internet is very unlike most things that the humankind has encountered in the past. Analogies will simply not work.
The one good rule to remember is that the Internet amplifies everything. Anyone who has spent time designing products that take advantage of this will vouch for this. Take for example cyber bullying:
@chrisharrisment 12/28/2015 AT 06:35 PM EST The Wisconsin attorney who handled the prosecutions of Steven Avery and…www.people.com
In the past, all that would have happened was a few demonstrations and the issue would have died a natural death. Not now! Anytime someone searches for this lawyer, his yelp ratings and this news item is going to appear!
Where was I? Yeah! The Internet is not a school, a library, a hospital, or anything else. Anyone who tries to peddle these analogies is only shooting themselves in the foot.
Now lets get back to what we are best at doing. Assuming that my readers are smart guys who can actually grasp information, my readers don’t need half-baked analogies!
Chapter 1 — Background
- TRAI Act, 1997 empowers the TRAI to notify tariff for various telecom services. Telecommunication Tariff Order, 1999 (TTO, 1999) was notified for the first time in March 1999 and has been amended from time to time to reflect changes in the tariff framework. As the market matured and competition increased, TRAI has moved to a ‘forbearance regime’.
- Note: Forbearance is just jargon to say that TRAI will not regulate price when the markets are functioning in a competitive manner. Even under forbearance, tariff continues to be monitored and TRAI will put measures in place to protect consumer interest.
- The light-touch policy where except for the national roaming, rural telephony, and leased lines, the tariffs can be designed by the TSPs according to prevailing market conditions.
- TRAI now provides regulatory oversight (i.e., keeps a close watch on) on tariff frameworks.
- TSPs file tariffs within seven working days of launch.
- This allows TRAI to scan the prevalent tariff landscape and effectively intervene wherever required to ensure that the tariff offers are reasonable, transparent, non-discriminatory, and not anti-competitive.
Note that it is TRAIs job to ensure that tariffs don’t stifle competition and that tariffs are non-discriminatory.
There is one concern though. I am not sure how TRAI views the term ‘anti-competitive’.
Here is the thing. If Facebook (FB) tries to do something anti-competitive, I am not so sure that it is TRAIs problem. TRAI probably will be worried if Airtel does something to mess with the rest of the TSPs.
I am beginning to wonder if we are really barking up the wrong tree here. Should we not be doing something akin to an anti-trust proceeding against FB rather than questioning free Internet access?
I know this is against everything I have pushed in the last few days. That is the job of new information, to question existing positions.
- TSPs have the flexibility to decide various tariff components for different service areas of operation.
- They have to fulfill reporting requirements and other regulatory guidelines in vogue.
- Several regulatory guidelines have been prescribed to ensure orderly growth of the telecom sector and protection of consumer interest.
- Some important principles are — prevention of discriminatory tariff offers and ensuring transparency in tariff offers.
At this point we have two new jargons
- Discriminator tariff offers
- Transparency in tariff offers
This is the sort of thing that makes this whole situation ripe for analogies. Advocates on either side could have spent the time to explain this to us without having to say things like “imagine the moon is like a large idly.”
- Defining ‘Non-discrimination’. Non-discrimination stands on two legs.
- Leg 1 — TSP cannot discriminate between subscribers of the same class in matter of application of tariffs.
- Leg 2 — TSP cannot just define classes arbitrarily. Criteria for classification must be valid.
- The criteria for a valid classification has been undergoing change depending on the sector’s growth, technological advancement, and other similar stuff.
This seems to be ok. What is surprising is that we have no laws or systems to enforce Net Neutrality. What is even more worrying is that we do not have a clearly understood global definition of Net Neutrality. Obama and Eric Schmidt have differing views.
After President Barack Obama announced support for strong net neutrality rules, Google’s chairman told a top White…www.wsj.com
- Defining transparency.
- Consumers must be able to make free and informed choices.
- Consumers must be protected from subscribing to or getting billed for any service due to lack of information or understanding (you know how many people supported Facebook’s Freebasics without knowing they were :))
I remember back in 2000 that the only difference that Sprint offered in the US was how difficult their package was to parse. I am sorta proud that TRAI is thinking about this!
- Principles for pricing data tariff
- Why do we need to take a re-look?
- Reason 1: 3G has changed the landscape, increase usage
- Reason 2: The older regulatory prescriptions started with voice. TSPs have started offering different tariff offerings. There is reference to two different forms which look very similar to Airtel Zero and Freebasics.
- We have to still hold on to our two principles — first the principle of non-discrimination and second the transparency.
- Regulation must balance the need for ensuring wider access to the Internet and ensure that the way in which that access is provided does not violate the above principles.
- The regulatory principles and guidelines that TRAI uses while scrutinizing tariff proposals include non-discriminatory, transparency, non– anti-competitive, non-predatory, non-Ambiguous, and non-misleading.
The first question I have is why has TRAI tried to push this through so fast? You have been given less than a month to debate something really important. That sounds shady.
The second question I have is once again the context of all these principles. They seem to apply only in the market that consists primarily of TSP players. I am not entirely sure if TRAI can regulate service providers like Facebook. Of course, TRAI can regulate Reliance and tell Reliance that being a party to Freebasics is not kosher under TRAIs own set of principles.
The more I read, the more I am convinced that it is not the TRAIs mandate to ensure free market and competition between FB and Google and incumbents. I know! That sucks!
Some statistics about mobile Internet usage:
- 300 million wireless Internet subscribers as of June 30, 2015
- 207 million use 2G with about 200MB per month on average.
- 92 million use 3G with 800MB per month on average
- 1 million use 4G LTE
What? Doesn’t all this breast beating look too premature given the usage pattern?
- A lot of ink spent on telling everyone that TRAI has noticed Airtel Zero and Freebasics without having to actually name names.
- The net result of these offers is that it empowers/enables TSPs to select certain content providers (either through the platforms or directly) and offer discounted access plans to these websites/applications/platforms.
What? Doesn’t all this breast beating look too premature given the usage pattern?
- These preferential tariff offers effectively result in easy access to these websites, etc.
- It may also result in making the entry of certain websites through the pipes of the TSPs more difficult.
- If you make it easier to access some websites, you are in effect making it harder to access some others by placing indirectly higher tariffs for accessing them.
- Accepting the principle that the TSPs should be able to provide differential and attractive offers for different websites/content providers, whom they ‘like’, one is accepting the principle that TSPs may also effectively prescribe non-attractive/prohibitive tariffs for some websites whom they may ‘not like’.
Wow! we are pecking on the borders of net neutrality here.
The positives and negatives of having reduced rates tied to specific content.
- Positive #1: It makes overall Internet access more affordable by reducing costs of certain types of content.
- Positive #2: It enables people who have so far not been able to use Internet services and content to access at least part of the Internet.
- Positive #3: It can expand and accelerate Internet access, as first-time users of the free Internet could experience its benefits and start paying for full access.
- Negative #1: Possibly goes against the principle of non-discriminatory tariff.
- Negative #2: Disadvantage to small content providers (apps) who may not be able to participate in such schemes. They cannot attract users if free alternatives exists. This creates entry barriers and a non-level playing field for app developers thereby stifling innovation. This could potentially harm competition.
Bingo! There you have your answer, TRAI is worried about anti-competitive moves on a broader scale. It is worried that smaller app developers may find it difficult.
I agree with all the positives here. Think of this as lead generation for TSPs. Let us understand one ground reality, unless the TSPs make money, the Internet capacity will stay where it is for 20 years as more people come online. Would you invest in a losing proposition? We all want a multiple on our investments right?
If the Internet capacity stays in the same place, speeds will come down. Like Mark Andreesen says, I don’t want to live in that future. Do you?
- Differential tariffs could be used as a tool by TSPs to incentivize or disincentivize access to different contents available on the Internet. This could be done by varying the price access upward or downward.
- Theoretically, this can be done by providing certain content for free while making other content prohibitively expensive.
- This allows TSPs to perform a gate keeping function
- This might potentially empower TSPs to select certain content providers and disadvantage others.
- This will affect public interest.
TRAI has this spot on! This is what I have been shouting about. You are putting too much power into the hands of Facebook and Reliance. That can never be good.
There are only two ways to get this right:
- TRAI does the gate keeping; that could be expensive for TRAI.
- The TSPs do the gate keeping using a super transparent process and TRAI has a very open complaints and arbitration process. Apps which feel disadvantaged should be able to appeal to TRAI and get justice.
- As smartphone prices go down, these would soon become affordable to the mass market.
- This would result in usage of more data where the TSPs offer a bouquet of data products at various price-points enabling consumers to access select websites and apps.
If you allow discrimination based on websites, you are opening the door to more and more schemes that are based on such discrimination and this classification will just gain momentum. This is a slippery slope.
TRAI just makes sense here.
- If we permit TSPs to offer a bouquet of data products at various price-points enabling consumers to access select websites and apps, TSPs may start promoting their own websites/apps/services platforms at lower rates.
- They may take advantage of owning the primary access of consumers by offering better for free when using their own service and offer limited connectivity at a higher price for other services.
- This may be perceived to be an anti-competitive move that stifles innovation and competition, thereby leaving absolute power in the hands of TSPs.
Wow! TRAI is literally batting for net neutrality. Did anyone read this paper at all?
Like I mentioned in my earlier post, TSPs have a history of abusing their position of power. So making them gate keepers is like… oh! I forgot no analogies. :)
- We should not forget the laudable goal of providing the benefits of Internet access to those without it. Given the concerns outlined above, we need to consider if there are any viable alternate models.
- One approach might be to delink free Internet access from specific content and instead limit it by volume or time. You could give free browsing or discounted tariffs for a specified time or give certain amount of data daily for free.
- App providers could reimburse the cost of browsing or download to the customers directly.