Winning round one

Print edition : March 18, 2016

Activists during a demonstration in support of Net neutrality in Bengaluru on April 23, 2015. Photo: Aijaz Rahi/AP

A hoarding advertising Facebook's Free Basics initiative in Mumbai. A December 30, 2015 photograph. Photo: Danish Siddiqui/Reuters

The TRAI fires the first salvo in favour of protecting Net neutrality, but the battle to keep the Internet free from control by commercial interests rages on.

WHAT comes apparently free generally comes with strings attached. When Facebook, the most popular social networking service on the planet, launched —which later morphed into Free Basics—in India last year, promising a free service, it raised the hackles of Internet activists in the country.

Netizens who were not aware and the millions of people without Internet access in the country must have wondered what the fuss was all about. After all, Free Basics was launched as an answer to overcome the digital divide by offering Internet access for free. A closer look at Facebook’s apparently altruistic offer, in partnership with Reliance Communications (from the Anil Ambani stable), showed that users would be offered not the life-enhancing opportunity of roaming the World Wide Web but the opportunity of a Facebook-guided walk through a “walled garden”. In effect, the user would be offered the opportunity to take a guided tour through a curated list of more than 100 applications, services and sites that Facebook had assembled. This was a far cry from the original promise of the freedom that the Internet offered.

The February 8 ruling by the Telecom Regulatory Authority of India (TRAI), after a consultation process spanning exactly two months, that Facebook’s “free” service was in violation of Net neutrality principles has been a shot in the arm for those who have been tirelessly campaigning against a truncated Net. The TRAI ruled that the “free” packs such as those offered by Facebook in collaboration with Reliance, which were based on differential tariffs based on content or services accessed by users, are prohibited. The ruling prohibited “zero rated” plans of not just the Facebook-Reliance combine, it also banned services such as Airtel Zero, a plan offered by the biggest Indian mobile service provider, which offers some bundled applications for free to customers while not allowing others.

Those campaigning against differential pricing pointed out that the practice violated a cardinal principle of the Internet as a neutral end-to-end carrier of information. It would allow telecom companies to act as gatekeepers, which would not only curtail choice but have repercussions for freedom of speech and the need to ensure media pluralism. Although the TRAI ruling did not specifically address the issue of Net neutrality in its order, those ranged against Facebook and the telecom companies clearly saw this as the central issue in the consultation process.

The principle of Net neutrality was first propounded by Columbia University media law professor Tim Wu about a decade ago. In its simplest form it stipulates that no Internet Service Provider (ISP) shall provide access on a discriminatory basis to users, platforms, applications, websites or type of content travelling through its network.

Network theorists and media experts now concur that this neutrality is critical for the Internet to remain open so that all content, applications and services sail seamlessly across networks. Discrimination would be antithetical to the foundational principles of the Internet, they argue. Wu, in his book The Master Switch: The Rise and Fall of Information Empires (2010), warned that like all other information systems that preceded the Internet, the telephone, radio broadcasting, movies and television, this too would go through a period of consolidation, closure and the rise of monopolies, until it too was shaken by a wave of innovation appearing from some unlikely source.

Facebook took the fight to the consumer. It bombarded print media with full-page advertisements and it put up huge hoardings in major cities across the country. In effect, it urged ordinary people to fight its battle because it was fighting theirs. According to one estimate (by The Verge website), Facebook spent $45 million (Rs.295 crore) on the media campaign. Faceook CEO Mark Zuckerberg, who made a much-publicised visit to India last year, appearing on stage with Prime Minister Narendra Modi, was clearly betting on the large Indian market, home to the largest Facebook user base outside the United States.

Writing in a leading Indian daily, Zuckerberg compared Free Basics to the role played by public hospitals or libraries. He argued that Free Basics offered “essential” service to those on the margins just as libraries that did not contain every single book in the world or hospitals that did not offer cures for every ailment offered basic services.

As protests began pouring in, the TRAI issued a Consultation Paper in December on the issue of price discrimination, and the following month asked Facebook to stop offering Free Basics until the issue was settled. In the two-month period, the TRAI was flooded with thousands of “responses”. While Facebook and telecom companies activated automated responses by so-called users by opting for the “click here” button or by sending missed calls, other stakeholders representing a range of opinions, from start-ups, ordinary users, students, activists and even service providers such as Paytm, joined the other side, calling for an end to discriminatory pricing.

Clearly irritated by the flood of automated responses, the TRAI wrote to Facebook in January that its users had not been allowed the opportunity to make “informed decisions”. It rebuked Facebook for not having circulated to its users the text of its Consultation Paper before they pressed the “click here” button on their screens. It pointed out that the “template responses” sent through Facebook in support of the vague notion of “digital equality” and Free Basics were “wholly misplaced”.

Activists join the fight

Meanwhile, activists of various hues joined the fight. They campaigned on the Internet in many ways and on many platforms. Among them was the AIB, a comedy collective, which posted a series of witty videos that addressed the weighty issues at stake on YouTube. As the issue gained momentum, parties from across the political spectrum joined the fray.

More than 2,000 persons signed a petition from the coalition to the Prime Minister in January in support of Net neutrality. The majority of the signatories were software professionals. Among them were 242 information technology professionals, 276 “aspiring entrepreneurs” and more than 850 start-up founders. The petition warned that differential pricing would mean that Indians would not be able to access the “solutions” that Indian entrepreneurs would develop. “Moreover, it will have a domino effect on the performance of our nation’s start-up ecosystem and therefore on our potential for economic growth,” they said.

Kiran Jonnalagadda, founder of hasgeek, a discussion space for geeks, was quick to counter Free Basics. He pointed out several problems with the offering. Firstly, although spectrum is publicly owned and licensed to telecom operators, the use of a portion of the spectrum for only services associated with Free Basics amounts to a violation of the licence conditions. “Essentially, it is redirecting public spectrum for private gain,” Jonnalagadda observed in a discussion that was podcast.

“Free Basics is not the Internet, despite whatever Facebook may want us to believe,” said Jonnalagadda. Among Facebook’s “special” technical requirements are those that are not required for the Internet. Moreover, Facebook retained the right to change these requirements at will. This imposes costs on the associates who are part of its scheme.

Those participating on the Free Basics platform were required to comply with several restrictive conditions. For instance, associates were not allowed to offer messaging or VoIP (Voice Over Internet Protocol) services because those would be construed as being in competition with the telecom operator.

Jonnalagadda also raised the question of user privacy because all the user data go through Facebook, which retains the right to keep a copy of the user data. Of course, Facebook claims that this would be only for 90 days, but the fact is that data being in the hands of a third party for 90 days leaves many serious privacy issues unanswered. “Where else on the Internet would a user accept this if it were part of a privacy policy?” Jonnalagadda asked. Moreover, Free Basics does not support encryption, which aggravates the problem.

Nikhil Pahwa, founder of MediaNama, a mobile and digital news portal, pointed out that Free Basics attempted to create a “private bubble for free”, while making users pay for accessing the rest of the open Web.

Role of telecom companies

The Coalition, which focusses on the issue of Net neutrality, argued in its lengthy submissions to the TRAI that the arguments advanced by both Facebook and the telecom companies represented by multiple industry lobbies were fallacious and self-serving and violated the cardinal principles of Net neutrality.

In particular, it provided data to counter the claim by mobile companies that the proportion of revenue from data services was still very low in India (compared with revenue from voice), implying that differential pricing was a means of expanding the market for data services. The coalition countered this by pointing out that telecom companies’ revenues from data services account for a much higher proportion of overall revenues now compared with that of two years ago. For instance, Airtel’s revenues from data services now account for more than one-fifth of its overall earnings; in 2013-14, combined revenues from value-added services and data were just 17 per cent.

The coalition also pointed out that the three leading Indian service providers, Airtel, Vodafone and Idea Cellular, earned a combined net profit of about Rs.35,000 crore in the five-year period since 2010, which belies their claims that they were bleeding. It argued that if operators were not allowed to charge on a differential basis for voice calls, they could not selectively discriminate users’ access to particular applications or sites. It also countered the operators’ claims that discriminatory pricing was “welfare enhancing” and a means of drawing in marginal consumers and increasing Internet penetration levels in the country.

Clearly, the operators were conflating two different issues—the cost of accessing data services and the issue of a discriminatory model that barred some applications/content while favouring others. The coalition pointed out that cheap data packs would not violate Net neutrality principles, nor would packs with lower data speeds. Critics of the telecom companies said the companies were unwilling to invest more in data services, especially at a time when such services were bringing them higher returns.

“Access to one service is by definition not access to the Internet,” the coalition said. Differential pricing would allow operators to influence access to individual services and amount to providing consumers a “false choice”, it said in its counter. It also roundly rebutted the industry’s argument that differential pricing was the norm in the wider industrial world. “What they fail to say is that unlike other private enterprises, they are not producing goods and services using their own resources on their own private property,” it said.

The coalition pointed out that the government, acting as the custodian of national resources like spectrum and right of way, licensed operators the right to levy charges for telecommunication services. The operators’ demand that they be allowed not only the right to use publicly owned infrastructure but the right to discriminate between onsumers on the basis of what they use was tantamount to egregious rent–seeking, it said. According to the coalition, rent need not always take an obviously financial form such as higher prices; it could also take the form of restrictive access. The fact that the top four telecom companies control more than three-fourths of all active mobile connections gives them greater market power.

At the heart of the debate lies a simple but age-old question that has stayed alive since at least the late 19th century: how to price public infrastructure services while preserving and ensuring the public interest. Back then, particularly in the U.S., it was about how and on what terms Bell Telephone Company (later the American Bell Telephone Company, and still later, AT&T), the pioneer in telephony in that country, could operate a monopoly that was guaranteed and protected by the U.S. government (see Tim Wu’s fascinating account, cited earlier, of how a state-sanctioned monopoly, and not the market, played a critical role in the expansion of the telephone network in the U.S.).

Later, these issues were revisited in the case of every major infrastructure such as electricity, railways, access to waterways, and private and tolled roads. The ongoing debate on Net neutrality is just the latest instance of how and on what terms the interests of private conglomerates would be balanced by public interest requirements.

As Nishant Shah points out in the accompanying interview, Facebook, a mere service provider, tried to position itself in a role of supplanting the state, and therein lay its dangerous overreach. Shah told Frontline that while the TRAI ruling has been portrayed as a victory of regulation over private sector avarice, the debate has bypassed the government’s culpability in the failure to overcome the digital divide.

The TRAI’s ruling addresses only a single fragment, that of discriminatory pricing, in the mass of issues that constitute the Net neutrality debate. Powerful interests, particularly the telecom companies and service providers such as Facebook and Google, are likely to keep the pot boiling in the days ahead.

But, for now, its ruling marks a small but significant victory in the war to ensure that the Internet remains free.

Related Articles