The internet is built around the idea of openness. It allows people to connect and exchange information freely, if the information or service is not illegal. Much of this is because of the idea of net neutrality.
The idea of Net neutrality is derived from how telephone lines have worked since the beginning of the 20th century. In case of a telephone line, you can dial any number and connect to it. It does not matter if you are calling from operator A to operator B. It doesn’t matter if you are calling a friend or a escort service. The operators neither block the access to a number nor deliberately delay connection to a particular number, unless required by the law. Most of the countries have rules that ask telecom operators to provide an unfiltered and unrestricted phone service.
When the internet started to take off in the 1990s, there were no specific rules that asked internet service providers (ISPs) to follow the same principle. But, mostly because telecom operators were also ISPs, they adhered to the same principle. This principle is known as net neutrality. An ISP does not control the traffic that passes its servers. When a web user connects to a website or web service, he or she gets the same speed. Data rate for Youtube videos and Facebook photos is theoretically the same. Users can access any legal website or web service without any interference from an ISP.
How Net Neutrality shaped the internet
Net neutrality has shaped the internet in two fundamental ways.
Web users are free to connect to whatever website or service they want. This has allowed the internet to grow into a truly global network and has allowed people to freely express themselves.
Net neutrality has enabled a level playing field on the internet. To start a website, you don’t need lot of money or connections. If your service is good, it will find favour with your audience. Unlike cable TV that requires alliances with cable connection providers to guarantee your channel reaches viewers, internet does not need interaction with ISPs to put your website online.
This has led to creation of Google, Facebook, Twitter and countless other services. All of these services had very humble beginnings. They started as a basic websites with modest resources. But they succeeded because net neutrality allowed web users to access these websites in an easy and unhindered way.
The internet’s success has led to attempts to change its basic architecture and design principles. In particular, the rapid growth of data flow, a result of the exponential increase in users and applications, has encouraged efforts to block or prioritize certain types of traffic.
These efforts, in turn, have led to an increasingly sharp debate over whether governments should step in to limit changes to network architecture.
This debate, often referred to as the “net neutrality” debate encompasses a variety of issues, interests and actors. Although it appears to be a narrowly technical debate, it has major implications for innovation, free speech and economic growth. The future of online media—and in particular whether media are dominated by a small set of conglomerates or a profusion of independent voices—may also be determined by the outcome of this debate.
The net neutrality debate grew out of concerns in the late 1990s that the vertical integration of cable firms with ISPs would threaten the end-to-end design of the internet.
Critics argued that if cable operators were allowed to bundle ISP services with cable services, cable operators would be in a position to destroy the neutrality of the network by favoring their own internet applications. In recent years, various routers have in fact been introduced that enable network operators to inspect data and subsequently prioritize or de-prioritize packets in a tiered fashion at the middle of the network. This process is known as “access-tiering”, or discrimination, and it takes different forms.
Whenever access-tiering occurs, users experience a difference in network performance. However, diminished (or improved) performance may also result from technical issues, and it is often difficult to distinguish the underlying cause.
This lack of transparency is often listed as a complementary concern among net neutrality advocates, and is likely to grow in importance as networks become more differentiated and adopt increasingly varied usage policies.
Troubled by “access-tiering” and its impact on the end-to-end design principle, various actors (mainly content and service providers, joined by hundreds of individuals, non-profit groups and businesses) have embraced network neutrality and have called for intervention to guarantee that carriers treat all packages equally, without prioritization or blocking.
Counter-arguments have been made by network providers, as well as by law enforcement agencies (which seek, for instance, expanded capabilities to inspect data packages for surveillance purposes). The arguments used for and against network neutrality are as diverse as the actors involved.
Access-tiering could also change the competitive landscape of the media industry in a variety of ways. Chief among these is the possibility that ISPs might seek to favor content produced by their own company and limit the content produced by competitors. In addition, ISPs could seek to leverage their gatekeeper position by selling favorable access on the network to certain players, thus also affecting existing market arrangements.
It is important to point out, however, that some proponents of access-tiering believe the practice would have only a limited effect on competition. They argue that anti-competitive behavior could only affect the flow of information in the rare cases where an ISP enjoys such a degree of market dominance that customers are effectively precluded from switching providers, or when an ISP is itself a content provider with an interest in privileging its own content. They suggest that the relative rarity of such situations (which can be regulated separately, under existing anti-monopoly laws) should not be used as a reason to prevent access-tiering.
There is a lot of debate in the US surrounding the issue of network neutrality since a Federal Appeals Court struck down the FCCs “Open Internet Rules” in January this year and the consequent deals struck for instance between Netflix and Comcast. Recently, even President Obama has weighed in with his support for Net Neutrality, though this remains the domain of the Federal Communications Commission (FCC). In India, however there has been very little discussion of the issue despite the numerous egregious violations of the principle.
There are no laws enforcing net neutrality in India. Although, the TRAI guidelines for the Unified Access Service license contains promotes net neutrality, it does not enforce it. The Information Technology Act 2000 also does not prohibit companies from throttling their service in accordance to their business interests.
In February 2012, at the World Mobile Congress held in Barcelona, the CEO of Bharti Airtel, Sunil Bharti Mittal suggested that services like Youtube should pay an interconnect charge to network operators, saying that if telecom operators are building highways for data then there should be a tax on the highway. In July 2012, Bharti Airtel’s Director of Network Services, Jagbir Singh suggested that large internet companies like Facebook and Google should share revenues with telecom companies. According to him, internet companies were making big profits from small investments, whereas the telecom companies were actually investing in building networks. He also suggested that the telecom regulator should establish interconnection charges for data services, similar to that applied for voice calls.
In November, 2014, Bharti Airtel announced plans to offer its mobile users free access to certain specific Internet services (such as Facebook, Youtube, Snapdeal, Makemytrip and Twitter) for a limited time followed by special rates to access these specific services.
Such deals are fairly common in the Indian online ecosystem, with both service providers and content providers eager to tap into an ever-increasing market. While appearing attractive to the consumer, such deals are against network neutrality and consequently harm the online economy in the medium and long term. Such practices restrict competition and affect consumer choice by reducing the Internet to just a few specific services of big players such as Google and Facebook.
Destroying Net Neutrality Is Bad For Small Business
With net neutrality gone, ISPs are likely to discriminate, favoring their business partners while delaying or blocking websites they don’t like.
You know how some sites you go to just load slower than others? Usually, that’s just because the slower site is image heavy, poorly coded, or dealing with intense server load. But with net neutrality gone, ISPs can now start charging hefty fees to websites that want quick content delivery — shifting the long load times to poorer sites that can’t pay up.
Put together items one and two and it becomes clear — negating net neutrality is bad for small businesses. If ISPs force website owners pay for faster load times, tiny retailers and personal websites will be the ones to suffer from slower content delivery.
Alternately, or additionally, ISPs will have no reason not to favor partner sites: Airtel, for instance, might favor the websites of Google (which it has partnered) over competing outlets. It’s the indies again that will lose out here. While big sites might either get special treatment from their owners or have the means to pay in order to get placed in a bundle, smaller, independent networks won’t get any notice from ISPs. Expand this out to music sites, web publishing, etc., and you begin to see the problem.
In extreme cases, ISPs may hinder or block content that isn’t produced by partners.
Over the last few months, there has been considerable pressure put by various telcos on the Telecom Regulatory Authority, who want the regulatory authority to ensure that service providers such as Skype, WhatsApp and Viber – who provide free SMS or VoIP services (generically known as Over the Top Players or OTTPs) share part of their revenue with the telcos.
Telcos point to the fact that they purchase spectrum, over which these OTTPs provide ‘free’ services to the public, thereby cutting into their earnings. The telco industry estimates that it has lost close to 42% of SMS revenue and 19% of voice revenue to OTTPs over the last four quarters (industry estimates claim a loss of about 5000 Crores annually, due to rise to about 16,000 crores in the next two years).
TRAI has so far rejected calls to either regulate these OTTPs or carry out consultations on the issue inter alia stating that the rise in data charges and fees on this account is sufficient to offset the losses faced due to dropping numbers of SMS’s and voice calls. (To be noted that OTTPs have also argued that any proposed plan to share revenues would increase costs to the consumer).
While commending this stance taken by TRAI, it is indeed curious that TRAI has avoided broaching the issue of net neutrality – which is principle that TRAI should apply to the matter at hand (rather than seeing things only from the perspective of protecting the revenues of the telcos which in any event will not really suffer that much, as they will continue to charge for data services, the coverage of which will only increase).
Any proposal to ensure content or service providers must pay telcos for users to access their services / content would ensure that only big players could continue in the market. Any such fee would cripple start-ups and other smaller businesses in the VoIP or web messenger market.
Further, charging for OTTP services is just a step away from differential charging for a variety of other services – thereby ensuring that the telcos can determine where to drive users. The Internet will no longer be the relatively free space it now is and such steps would also drive down innovation.
TRAI must be commended on the stand it has taken to date. However there are plenty of battles ahead. It is clear that in the not too distant future, telcos will also attempt to charge extra (either from the service provider or the user) for access to heavy bandwidth applications and services such as video streaming websites.
If net neutrality is interpreted in such a way as to provide disincentives to operators to invest in network infrastructure, the result could be a significant impact on the economy over time. Such an economic impact would be felt primarily as a decrease in the jobs that are supported by a robust Internet infrastructure. Assuming a best case scenario, with minimal regulatory impact, net neutrality could still impose a seven billion dollar a year overhead on the economy by 2011, with a commensurate loss in jobs of up to 70,000.
Ironically, the purpose of net neutrality regulation, to ensure a level playing field, would largely be trumped by the fact that both network operators and service providers would be harmed by such regulation. Network operators would be harmed directly and immediately as their opportunities to generate increased revenues from subscribers became attenuated. In fact, operators would be given the choice of recovering costs from consumers, either by increasing access charges, bundling services in such a way as to force contribution or by adopting tiered access rates, depending on consumption. In the absence of cost recovery operators could simply refuse to invest or slow their investment In improved or more extensive infrastructure. This would harm service providers who depend on the network to deliver their services. Most analysis that shows positive benefits to the service providers simply assume that operators will continue to invest; an outcome that Stratecast models throw into doubt.
Ultimately, though, it is the consumer that would be most harmed by net neutrality regulation. Decreased network capability, over time, would deny consumers new bandwidth intensive services, both from operators and those who provide services over the operators’ networks. Additionally, as operators increasingly turn to access charges to support network deployment and management, the charges for that access could increase anywhere from $10 to $55 a month for the average consumer. The price of access would increase to the point where consumers might be unwilling or unable to pay it. This could have the effect of discouraging consumers to connect – an ironic turn of events when the objective is universal broadband access.
Net neutrality regulation that is constructed in a way that ignores the fact that broadband investment is highly sensitive to uncertainty and risk, could easily curtail or greatly slow the deployment of improved infrastructure necessary to support ubiquitous broadband.