India: Wind Blowing in Favor of Net Neutrality

February 8, 2016

In our earlier newsletter article titled “Debate on Net Neutrality in India” published in Vol. VII Issue no. 16 dated April 20, 2015, we had covered the controversy surrounding the net neutrality issue which had suddenly invoked widespread debates in India.

The irony of the entire controversy surrounding Network-Neutrality is the fact that so far there was no incumbent policy or regulatory framework in India which says that net neutrality should be maintained. Non-compliance on the part of a service provider with the ‘principle’ of Net-Neutrality is something that till now was not patently illegal. The issue received a lot of media attention in December 2014, when telecom giant Airtel revised its service terms for 2G and 3G data packs so that VoIP (Voice over Internet Protocol) data was excluded from the set amount of free data. This particular move by Airtel was heavily criticized on the Social Media and when asked by the press, the then chairman of Telecom Regulatory Authority of India (hereinafter, referred to as TRAI), Rahul Khullar, reiterated the same stating that what the company plans to do is certainly not in conformity with net neutrality. He further stated that one, however, cannot say that the move is illegal today as there is no policy either by the government that net neutrality is our principle or a regulatory framework put in place by the regulator. The only legal justification at that point of time for not opting for Net-Neutrality was that the TRAI guidelines for the United Access Service license, which promotes Net-Neutrality, but does not do enough to enforce it.

Over the course of the next twelve months, the issue of Net-Neutrality had polarized the Telecommunications world. On one side of the debate are the bigwig Internet Service providers like Reliance Communication, Airtel and on the other-side, a heterogeneous mix of vigilant consumers voiced by organizations like the Free Software Movement of India, Free software Foundation of Tamil Nadu, etc. Both the groups have been at loggerheads with each other, with frequent vocal skirmishes and media mud-slinging being all too common. As this debate gained currency, on December 9, 2015, TRAI released a consultation paper on over-the-top services (OTT) and net neutrality named ‘Consultation Paper on Differential Pricing for Data Services’ where comments and counter comments of concerned stakeholders were invited till January 7, 2016 and January 14, 2016 respectively. The prime objective of the consultation paper was to seek the views of the stakeholders on whether the service providers should be allowed to change differential tariffs based on the website/platform being accessed on the internet. An Open House Discussion was also held on January 21, 2016.

An overwhelming number of the detailed and well-reasoned responses, representing a diverse set of views were received in the consultation process, both in support and against ex ante steps for regulating differential tariff for the data service based on content. After careful examination of all the comments and feedback, TRAI issued the ‘Prohibition of the Discriminatory Tariffs for Data Services Regulations, 2016’ on February 8, 2016, thus ending the silence of the law on the issue of Net Neutrality. This was done in exercise of TRAI’s powers conferred upon it under Section 36(1) read with Sections 11(1)(b)(i) and 11(2) of the Telecom Regulatory Authority of India Act.

The said Regulations bar service providers from offering or charging discriminatory tariffs for data services on the basis of the content, effectively prohibiting Reliance Communication and Facebook’s Free Basics and Airtel Zero platform in their current form. Further, no service provider can enter into any agreement or contract with any person whether natural or legal, that can result into discriminatory tariffs for data services which is offered or charged by the service provider for the purpose of evading the prohibition in this regulations. Reduced tariffs for accessing or providing emergency services, or at times of public emergency have been permitted. Financial disincentives for contravention of the regulation have also been specified. However, it also provides for an exception and it does not apply to tariffs over closed electronic communication networks. Whether a service provider is in contravention of these regulations or not, the ultimate decision rests with the TRAI. Section 5 of the Act provides for punitive sanctions on the part of the violators. If a service provider acts in contravention of these Regulations, TRAI can order the withdrawal of such tariffs and direct them to pay an amount of INR 50,000 a day, but not exceeding the INR 50 Lakh (5 Million).

This move by TRAI has been met with widespread applause from internet users with some going as far as terming the order a victory for consumers in India. However, Mark Zuckerberg, the Founder of Facebook was not particularly happy with the order, primarily because it means an end to Facebooks’ aggressively marketed initiative, which was rechristened to Free Basics in September of last year.

To summarize:

  • The Regulations mandate that no service provider can offer or allow discriminatory pricing for data services based on content.
  • It has also ruled against any arrangement or agreement between any service provider and any person, whether natural or legal, that adheres to differential pricing for data services.
  • Any transgressor if found violating the regulation, will pay a penalty of INR 50,000 for each day of contravention, subject to a maximum penalty of INR 50 Lakhs (5 Million).


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