The Chairman of India's Telecom Regulatory Authority of India (TRAI) goes into the details of the issue of net neutrality and free content or services.
Ram Sewak Sharma’s world view is a unique one in the Indian development milieu. A world view forged from 37 years with the Indian Administrative Service and of a career technologist who writes computer code as a hobby, and, in a previous avatar, helped architect and roll out the Aadhar personal ID project.
That makes Sharma perhaps the best-suited mandarin in India today to shape Internet policy as Chairman of the Telecom Regulatory Authority of India (TRAI). In an interview with FactorDaily’s Pranav Dixit and Josey Puliyenthuruthel, he lays out his vision of how 1.2 billion Indians will access the Internet, and also clarifies his position about net neutrality, and whether TRAI’s recent consultation paper that talks about making content available across operators for free, goes against its spirit.
Let’s start with a 101 question. From a regulatory perspective, shouldn’t the approach be, “Hey boss, let’s not put anything that comes in the way of fast-changing technology” with a few caveats on national security, social good, etc?
I think broadly I endorse that view. I personally feel that the overarching objective should be to allow technology to proceed, innovations to proceed, new ideas to come in, new business models to develop… There is no doubt about that. I have no issues with that.
Having said that, there are certain situations here [in India] one has to modify the regulation. I would not say regulation must be used to protect legacy business models. That’s not my approach. But many a time, new models come in which essentially render the existing models of service delivery of existing operators obsolete, redundant, or very costly. While we should not put any obstacles in the path of innovators, we should also not put any obstacles in the path of the operators that they suffer a disadvantage compared to the innovation and new things happening. We should continue to evolve regulation so that while we don’t protect the interest of the operators, we see that the regulatory imbalance, which sometimes gets created, is eliminated or minimised. That’s my broad approach.
It’s a tightrope walk.
Yes, it is a tightrope walk; I agree with you. But the free flow of things can also result in certain situations which may not be desirable. For example, the whole issue of network neutrality and differential pricing. Now what happens is that in the typical business model, the content providers tie up with pipe providers. It’s not a technology issue, it’s a business issue. You’ve created a situation which is actually counter productive. My other view is that in a developing tech world, we should have more and more unbundling of things. Integration of things creates problems. Then, you have the situation where you start leveraging the advantage in one to have a business advantage in another area.
Can you give us an example?
A simple example is the network. There are many network providers who have now got a banking license. So suppose you allow a network provider to charge differential pricing, which is not only zero pricing but also infinity pricing — both subsidy and premium.
Now Indian Post also has a banking license, so does PayTM. These guys, unlike Airtel or Vodafone, have no pipe. If the telcos decide among themselves that if you go to Airtel Bank, for instance, we will not charge anything to customers, but if you go to India Post, I will charge you 20 times and will also throttle you [by reducing Internet access speeds while accessing you]. So you can essentially kill India Post. Similarly, small innovators, if they really create an interesting application, product or business model, they will now have to run to the telcos to allow them access.
This becomes a very dangerous situation where you introduce a huge amount of inefficiency in the system. You also introduce another level where instead of focusing on improving your content and experience, you start having another complexity in your business where you have to run after the telecom operators and plead with them to not negatively differentiate your content.
So from a regulation perspective, we don’t want to over-regulate things, but we also we shouldn’t not regulate things that we should regulate.
TRAI’s new consultation paper released in May talks about content being made available for free across telecom operators. Could you explain how that co-exists with your February consultation paper that banned differential pricing?
This is actually something I have never been able to explain properly. Or somehow, people have got it wrong and said that this is actually going back on net neutrality. This is actually completely false.
With differential pricing, what we decided was that telcos will not be able to differentiate between where you came from, where you are going, or what your packet contains. So zero-rating is not possible.
The Facebook guys had come to us and I told them that I have no problems if you do real charity [with Free Basics]. Which means that if you adopt certain websites and say irrespective of which telco or ISP you come to these websites, you won’t be charged anything because Facebook will pick up the tab [for the data]. Because essentially, net neutrality means that networks should be neutral about what flows through them. They should be agnostic. They are just data wheelers, so they should get paid for the data wheeling part.
[With the latest paper] We are exploring a 1-800 equivalent in the data world. Currently, toll-free numbers work because whichever one you call, there is an architecture in place that ensures that the bill is picked up by whoever provides the toll-free number.
So theoretically, in such a system, if Facebook picks up the tab…
Correct, and picks it up for every operator. So this is the broad policy. This, in no way, violates the basic principle of the network being neutral.
What we are saying is: can there be a telecom provider-agnostic automated mechanism, which can allow some websites to offer free visitation? Suppose there is some health website. You say, as an incentive, the customer will not be charged for data access. The government of India may decide that for this e-governance website, education website, health website, can we have toll free access? This should be without the website having an agreement with the telcos. Can we have an automated, universally available system? We are merely exploring if the regulator has a role to play in facilitating this. Maybe it can also happen on its own. I don’t understand how this violate net neutrality.
But you still run into the problem of rich websites being able to afford this over the ones that can’t.
Yeah, there’s no problem in that.
So if a Netflix wants to do this, it can, but if I have a small startup that can’t afford to subsidise data for the people who access me.
That’s your problem. That’s not an interface of network and content. Today Flipkart sells products at a 30% discount, which a new website can’t afford. This is business stuff, not net neutrality stuff.
It still gives the rich guy an advantage.
Yes, it does, but it doesn’t give advantage to the network provider. Which law can prevent giving free books or shirts or anything else to people who visit your website? That’s your business strategy.
What we are saying is: can there be an architecture for this? The architecture may, in the end, not be useful at all. We are talking about a situation where the telcos don’t participate in an agreement or a disagreement [with individual websites] at all.
How will this platform or architecture work?
I don’t have an answer! If I had the answer, I wouldn’t have put out a consultation paper.
Let’s imagine the platform then.
(Smiles) The telcos will not probably be aware of this. Let’s put it this way. You visit a website. After that, the website asks you how much I spent (on data access) and recharges my account. What we are talking about is a situation where telcos don’t participate in agreement, disagreement, etc. This platform must be agnostic to all the pipes.
Let’s say there was an API that every telco is expected to expose. The API would have details like which data plan you are on, which a website would be able to tap into, and reimburse you for the data and time you spend on the website directly without the telco having any idea at all. Just like the current recharge API, which means if I know your number, I can recharge your account.
The only thing that that must be understood is that going back on net neutrality and all that is a bogus argument. One argument was that if people want free what is your problem. Now free in [the earlier Free Basics kind of] architecture is bad, free itself is not bad.
Could you talk about VoIP and the regulation around those services?
Internet telephony has a lot of issues, but why should we not have it in India? Currently, telcos cannot provide VoIP services in India because of licensing issues, which we want to solve. Telcos should not have a disadvantage. WhatsApp doesn’t have to share data, surveillance, etc. On the other hand, telcos have a lot of obligations. So their idea was same service same rule.
Look, we will not like to restrict technology. At the same time, just because you are a licensee doesn’t mean you should be disabled from using that technology. So we are exploring if there are other issues which would need to be addressed in internet telephony.
But are you going to take a position on whether services like Skype should or should not apply for a license?
That will depend on the result of the consultation paper. The problem is that these “activists” assume that you have taken a position already when you release a consultation paper. As responsible citizens, we should allow debate to take place, then we can take a call. Are we going to allow or disallow [certain things]…how can you presume those things? When we begin a consultation, we are completely open-mined.
Will there be a revenue share for Internet telephony then, like it is there for voice services provided by telcos?
I can’t answer that. That will depend on the results of the consultation paper.
The February consultation paper exempts content provided over CECN (Closed Electronics Communication Networks) from the regulations against differential pricing. How did this clause enter the paper considering it hadn’t been brought up in any consultation process or open house before?
Just because it didn’t come up doesn’t mean we can’t talk about it. Look, regulation is going to apply only on the internet. So the ban against differential pricing is for the internet, not the non-internet [CECN]. What we did in the February paper was make it explicit that regulation will not apply to something that is not on the internet.
People are saying this is a loophole. [Editor’s note: Airtel, for instance, being able to provide a video streaming service only to its own subscribers for free]. I am saying that even if this was not there, could you apply this regulation on the non-internet? No.
Still, the regulatory regime doesn’t have enough disincentives to deter rule-breakers. That’s been a problem from the very beginning of TRAI.
We have already given a recommendation to the government saying please give us power. You have given us the responsibility of consumer protection. Protection against what? Protection against who? And how can you protect if you don’t have any teeth?