Dear Sir/Madam,

This is with reference to the consultation paper that has been circulated by TRAI on the subject of OTT services and Net Neutrality. Below are my views, which in summary are in favor of Net Neutrality. I have addressed the questions I feel most strongly about, hopefully this will help in decision making

Question 3

ISPs argue that OTT services affect their revenue stream as people tend to use OTT services instead of the voice or SMS services of the ISP companies.

However, ISPs have a right to revenue from their consumers only for the services the consumers actually use. More concretely, the ISP has a right to revenue if the user uses their SMS service. They do not have any right to revenue on every form of messaging that the customer uses - this part is fairly obvious. So the “revenue stream” that was affected because people used an OTT service, was something the ISP never had any right to in the first place!

If we take the ISP logic, then a person who sends an email or a letter or even has a face-to-face conversation with somebody is also affecting the revenue stream of the ISP as the person could have generated revenues for the ISP by talking on the phone! Will the ISPs ask people to compensate them for emails?

It is also important to note that the so-called revenue loss is not an accounting cost, it is only an opportunity cost as it represents the revenue that the ISP could have earned if the customer had used their services. So the larger question is whether the government is now in the business of compensating companies for opportunity costs and competition. Will the government ask the ISPs to compensate the postal department because fewer people are sending letters and thus impacting postal revenues? It can also be argued that smaller ISPs lose revenue to the bigger ISPs, will the big ISPs be asked to compensate the smaller players? Will Apple and Samsung be asked to compensate Orpat because their mobile phones have reduced the demand for Orpat’s alarm clocks?

Another ISP argument is that they have invested in the infrastructure that enables users to access the OTT services. This is again a spurious argument because when customers buy the internet plan, they have already paid for the usage of that infrastructure. The use of that infrastructure might cannibalize the other businesses of the TSP, but the distribution of revenues within different business units of the TSP does not need to be a concern of either TRAI or the customer.

And while it is true that OTT players need the ISPs, the vice versa is also true. The existence of OTT services is what makes the data plans of TSPs worthwhile to many people. The internet is a vast market of services; access to the market itself is no inherent value by itself unless there is somebody selling attractive stuff there! This is especially true of heavy data users; if somebody is a heavy user, it is highly likely that s/he uses the popular OTTs and therefore needs the higher priced TSP plans with higher data caps. This is a win for the TSP itself too.

To summarize:

• The ISP has no divine right on revenues from every messaging service its customers use, but only on the services it directly provides
• The so-called “lost revenues” are an opportunity cost and it is not prudent for governments to compensate businesses for such costs
• The infrastructure and other fixed and variable costs of the ISP have already been paid for by the customer when buying data plans
• The existence of OTT services also attracts customers towards data services

Question 4

OTT players should not be paying anything over and above the bandwidth charges paid by the customers. From the ISP standpoint, a data packet of an OTT service does not cost any more to transfer than a data packet of a non-OTT service. There is no added cost to the ISP.

When a customer subscribes to a broadband service, s/he has paid for a certain quantity of data to be transferred by the ISP. If the customer is over-using a service and goes above the limit, ISP levies extra charges or reduces the speed. This being the case, the ISP has no reason to double-dip and demand fees from the OTT player as well.

If the OTT players are made to pay an additional charge, this automatically skews the playing field massively in favor of the TSPs. The TSPs can then create any number of services to compete with existing services. They could, for instance, create an online food ordering service and travel ticket booking service, and then demand extra charges from JustEat.in and Cleartrip/MakeMyTrip as those services compete with TSP services. This is essentially a rent-seeking model, and this will incentivise every TSP to create their own versions of such services. The TSPs would not need to invest in the quality of such services, as they can easily kill the competition off by charging them heavily. This would ultimately lead to nothing less than the Balkanization of the internet, with each TSP being a walled garden, a prospect that is certainly not in customer interest.

Additional charging also skews the playing field towards the big online players. Who would be better placed to pay hefty fees to the TSP: a giant like Google or a fledgling startup that is struggling to begin business? Obviously, this will stifle innovation and small businesses

Question 9

Net Neutrality is not a new concept. It is how the internet has worked until now. Coming to the specific principles laid out in para 5.47:

• Effective competition: This is only possible through net neutrality. By not allowing TSPs to discriminate between traffic from site X and site Y, they are automatically forced to compete on the quality and widespread reach of service, not the content of the websites that are served. The QoS is something that these companies, as utility providers, should be focusing on primarily in any case. Without NN, TSPs would seek to prioritise their own services over those in the open market (see above response for Q4 for the reason) thereby leading to poorer quality services for customers. Switching would also become tougher without NN as each TSP would prioritize their own favorite services, making it harder for customers to move - as they would have to move their data and content from service to service as well.
• Transparency: TSPs would probably be reluctant to provide this information. TRAI as a regulator could setup a publicly accessible website where every licensed TSP would mandatorily have to make regular updates on the Accessibility, Appropriateness, Understandability etc of their services. In this public website, people must be given the option to comment on the progress made by the TSP on each dimension of transparency.
• Switching: NN and the above transparency website would enable customers to witch their TSPs in an informed manner