On December 24, India’s biggest telecom operator Bharti Airtel Ltd announced that it would charge customers for calls made using VoIP (Voice over Internet Protocol) and then did a volte face five days later by withdrawing the proposal. The stated reason for the U-turn was that the telecom regulator was working on a consultation paper on the subject. The unstated part was that Airtel’s proposal had customers and advocates of net neutrality up in arms.
Proponents of the principle of net neutrality hold that all traffic on the Internet should be treated equally or in other words, service providers such as Airtel should allow access to all content without favouring any particular product or website. This debate has been an ongoing one across the world for over a decade with advent of new age services like Skype, and no clear winner has emerged so far.
The Telecom Regulatory Authority of India chief has said even though Airtel’s move is against net neutrality it is not illegal as there is no legal framework. The net neutrality debate becomes even more relevant in case of India where the penetration of smart phones is increasing and efforts are on to bring more people to the Internet, through the digital India campaign of Prime Minister Narendra Modi.
The nub of the problem is this — over-the-top services (OTT) like Skype, WhatsApp, Viber, etc, use data networks of telecom firms like Airtel for their service and offer voice calls either cheap or almost free of cost. Initially telecom firms thought this as a good means for them to drive traffic. However, the catch is that these services cannibalise the telcos’ legacy voice and SMS revenue while consuming bandwidth. So, Airtel’s intent is to make VOIP calls expensive and arrest the risk of loss of revenue and also to recover its cost of investment in networks.
A report by Kotak Institutional Equities says that a VoIP voice call, depending on which codec the VoIP service uses, takes anywhere between 0.5 and 1 MB of data per minute of call. So under Airtel’s plan, effective call rate on pay-as-you-go rates, on 3G, would work out to Rs.2-4 per minute versus prevailing local/STD outgoing tariff of Rs.0.50-1.50 per minute for legacy voice. Under the existing data packs, the same VoIP call would cost Rs.0.13-0.25 per minute.
So, the net neutrality debate boils down to telecom/Internet service providers, on the one end, and OTT providers such as Skype, YouTube and Internet advocates, on the other side. The telecom/ ISPs argue that they have made huge investments in broadband capacity, and, therefore, they should be allowed to charge for the services, which generate lot of traffic. For example, Airtel has invested over Rs.1,40,000 crore in the last 20 years. Preventing, Airtel from charging for OTT services would mean that they would reduce their investments in building networks.
Airtel’s roll-back is only temporary as its statement says that the firm decided not to go ahead with its plan of charging for VoIP on reports that TRAI is coming out with consultative paper on services offered by over-the-top players such as Skype, WhatsApp, Viber etc. Airtel said it is hoping for a balanced outcome, which is critical for the viability of the sector. So, now the ball is TRAI’s court.
Interestingly, in November last year, U.S. President Barack Obama came out strongly in favour of net neutrality and sought the regulator, Federal Communications Commission, to come out with guidelines. The call surprised many as FCC is an independent agency that operates outside of the President’s authority. FCC will put to vote its draft guidelines on net neutrality next month, which would determine how consumers pay for these services. The telecom/Internet service providers have rejected any regulation and want to recover costs of huge quantity of broadband used by the content providers.
As TRAI tries to solve this debate, some interesting questions arise: While Airtel’s argument about whopping investments it has made might be right, can it stop an innovative and disruptive firm, which has found a low-cost solution for voice calls? That is the beauty of the Internet, an open platform which allows innovation to thrive. Can control of such a platform be allowed to rest in a few telecom/Internet service providers?
Should Airtel and other telcos not look at other strategies? The Bharti Group already has an instant messaging app Hike, a rival to Whatsapp and Viber, in joint venture with Japan’s Softbank.
Can the choice be left to the customers with telcos demanding a premium from them for faster and reliable access? However, the advocates of net neutrality fear that this would mean that Airtel would only push selective services and not push competing services. So, this would mean faster Internet traffic for those who can afford to pay the premium and slow connections for the rest. Another threat would be that bigger firms can use their muscle to dominate at the cost of smaller firms.
Also, when Airtel and other telcos offered free access for Facebook and Google up to a particular quantum, there was not much noise even though it was against the principle of net neutrality. Opposition was raised only when it decided to charge extra for services such as Skype. Clearly, contentious battles lie ahead as this is a vital issue for both telecom/Internet service providers and the OTT firms. TRAI’s stand on this would be keenly watched as it could set a precedent for future of the Internet in the developing world.
(This article first appeared in The Hindu dated January 5)