On Apr 6, 2015 4:15 PM, "Kashish Anand" <anandkashish@gmail.com> wrote:

Question 1: Is it too early to establish a regulatory framework for OTT services, since internet penetration is still evolving, access speeds are generally low and there is limited coverage of high-speed broadband in the country? Or, should some beginning be made now with a regulatory framework that could be adapted to changes in the future? Please comment with justifications.

It is not too early in the sense of the underlying technologies. Tablet and smartphone markets all around the world are fast approaching saturation, and upcoming devices are unlikely to have radically different network access patterns (since they are largely based on mobile/cellular hardware).

However, it is too early in the sense that the technologies built atop the relatively stable base protocols of IP/BGP/LTE/HSPA etc. are evolving too quickly to regulate effectively or at all. By having a regulated foundation, we can allow innovators to fearlessly create completely new forms of communication and commerce on top of it. In fact, this is a critical time to have regulation that favors innovation to assist the Indian technology startup ecosystem that is just emerging from infancy. Combine the rise of cheap smartphones with the choice to use any application a user chooses, and we have a perfect environment for innovation. This environment is put at risk if network neutrality is compromised.

Assuming that TSPs will cease investment unless OTTs are charged separately is unjustified as there are other ways to manage network congestion that do not have downsides in terms of innovation capability (for example, Schewik’s application-agnostic discrimination).

Question 2: Should the OTT players offering communication services (voice, messaging and video call services) through applications (resident either in the country or outside) be brought under the licensing regime? Please comment with justifications.

There are several kinds of licensing schemes that can be implemented. However, one must consider the challenges of regulating communication media that are less than a decade old. For example, it would be illogical to regulate Skype but not Snapchat (as at a high-level both are communication media). Even if it was technologically possible to regulate these types of services (which is unclear, unless we want to have an internet that is locked-down to only use Indian services), it is impossible to effectively regulate such applications (or their inevitable future competitors) given how fast this market and technology evolves.

Question 3: Is the growth of OTT impacting the traditional revenue stream of TSPs? If so, is the increase in data revenues of the TSPs sufficient to compensate for this impact? Please comment with reasons.

Of course OTTs are impacting traditional revenue streams. However it is worth noting that no TSPs have been driven out of business because of OTTs yet, and most are profitable enterprises. However, there is no reason to believe traditional revenue streams should continue in perpetuity. If increase in data revenue is not sufficient to keep operators viable, then TSPs will either fail or increase prices to sustainable levels. Both of these options are acceptable outcomes in a free market. Again, if network congestion on the last mile is a problem, there are ways and means to manage the network without regulating OTTs specifically. Slightly higher base prices for data will not kill the market for mobile broadband, as being connected is too critical for commerce today.

Question 4: Should the OTT players pay for use of the TSPs network over and above data charges paid by consumers? If yes, what pricing options can be adopted? Could such options include prices based on bandwidth consumption? Can prices be used as a means of product/service differentiation? Please comment with justifications.

Such a scheme has many harmful effects on the market.

Startups that cannot pay TSPs will not be able to enter the market, stifling innovation and preventing the development of newer, more efficient, or more effective internet-enabled businesses.

Startup investment will dry up, and investors will be faced with the risk that companies they invest in will be suddenly asked to pay up on the whim of the TSPs if they become successful.

TSPs will control innovation, as they can choose to partner with OTTs as they please and give some advantages over the others. This will not be a level playing field at all, as TSPs hold all the power.

TSPs will be incentivized to provide poorer quality service to OTTs that do not pay them, making OTTs likely to request to be priced separately to keep their customers satisfied.

TSPs are currently at best an oligopoly, and entrusting innovation to oligopolies is an inherently bad idea.

The IT sector in India has thrived in large part because of a lack of regulation, and price discrimination would be akin to regulation, except that it would be performed by TSPs rather than the government.

Question 5: Do you agree that imbalances exist in the regulatory environment in the operation of OTT players? If so, what should be the framework to address these issues? How can the prevailing laws and regulations be applied to OTT players (who operate in the virtual world) and compliance enforced? What could be the impact on the economy? Please comment with justifications.

It is not clear why OTT is used a classification category. All internet services operating in India should abide by Indian law, (the same as businesses operating offline) and OTT is simply a medium for businesses to communicate with customers or to allow customers to communicate amongst themselves.

For example, if Flipkart sells something to a consumer over mobile broadband or a local store sells something to a consumer, most people would agree that the same consumer protection rights should apply. It is not clear how Flipkart’s status as an ‘OTT’ changes anything about this dynamic.

On enforcement it is important to be practical. For example, requiring law-enforcement access to messages sent using Apple’s iMessage platform is technically impossible on the server-side due to end-to-end encryption.

An example of a practical approach is how Skype in the US deals with emergency contact numbers (911) differently than PSTN networks, and is required to notify users of the same.

A framework to think about these issues is quite simple:

The current regulatory imbalances (if any) should be reduced as far as possible while taking into account the feasibility of enforcement, the negative externalities of prematurely regulating fast-evolving businesses, and the fast-evolving technology that characterizes these businesses.

Question 6: How should the security concerns be addressed with regard to OTT players providing communication services? What security conditions such as maintaining data records, logs etc. need to be mandated for such OTT players? And, how can compliance with these conditions be ensured if the applications of such OTT players reside outside the country? Please comment with justifications.

Practically speaking, it is impossible to intercept all forms of communication without sealing ourselves off from the rest of the internet. This is because public-key encryption enables truly private communication if implemented correctly. It’s worth considering that most major internet players that have the technical capability to intercept and turn over communication currently do so (Google, Facebook, Twitter etc.).

Question 7: How should the OTT players offering app services ensure security, safety and privacy of the consumer? How should they ensure protection of consumer interest? Please comment with justifications.

This is impossible to answer, security has to evolve as fast as attack complexity grows. Laws like the EU safe harbor treaty provide a framework for thinking about how to make companies liable for loss of customer data. This may be the most effective way of ensuring safety of customers.

Any enforcement techniques that delve into technical specifications will be quickly out of date, and hard to enforce.

Question 8: In what manner can the proposals for a regulatory framework for OTTs in India draw from those of ETNO, referred to in para 4.23 or the best practices summarised in para 4.29? And, what practices should be proscribed by regulatory fiat? Please comment with justifications.

Again, there is a distinction between last-mile net neutrality and regulation of peering arrangements. This is not at all clear in the paper. As long as interconnection agreements are ‘reasonable’ (hard as that is to define), TSPs should be allowed to charge OTTs depending on the difference between amount of data being sent and received from the interconnection point. ETNO is a trade group representing operators, so it’s not clear why their opinions are important.

Regarding best practices:

Separating regulatory practices for communication services vs non-communication services is quite hard (as classification is becoming increasingly harder), especially as communication technologies are evolving too fast for regulators to keep up.

Price discrimination for end-users on the last-mile is certainly a problem that needs regulation. Peering arrangements should be lightly regulated if at all.

FRAND is an acceptable framework, however, each the terms ‘fair’ and ‘reasonable’ are not precisely defined, and will require case-by-case analysis.

Question 9: What are your views on net-neutrality in the Indian context? How should the various principles discussed in para 5.47 be dealt with? Please comment with justifications.

The Ofcom Network Neutrality principles are an excellent place to start.

Competition can be encouraged by opening up the market (local loop unbundling, allowing MVNOs, easier licenses/permits for ISPs, lowering the cost of spectrum etc.)

Sufficient transparency can be ensured by defining a format to describe the sorts of network management ISPs and TSPs will perform, which should be made easily available on their websites.

Switching costs can be lowered by ensuring that termination of service is free and convenient, as other providers who want the business will compete to provide new service. Mobile Number Portability has made TSP switching costs far lower than they were previously.

User-controlled Quality of Service assurances can be maintained while preserving application-blindness, user choice and innovation without permission as described by Schewik. The dirt-track argument does not hold water, since if the heaviest users are charged proportionally more, the network will not be so congested as to become unusable.

Question 10: What forms of discrimination or traffic management practices are reasonable and consistent with a pragmatic approach? What should or can be permitted? Please comment with justifications.

Application-agnostic discrimination should be allowed. TSPs would not be allowed to treat specific application differently, or classes of applications differently from each other. Application-class discrimination is more reasonable than application-specific discrimination, but the classification process is complex and prone to manipulation.

Apart from this, TSPs are allowed to treat data packets differently. TSPs could offer different min/max bandwidth guarantees to users for different pricing plans, could have data caps (metered billing), or could throttle their top customers. This is because any of the other forms of discrimination by definition "interfere with users’ decisions about how to use the network, creating significant social costs" (Schewik). There is no reason why application-agnostic discrimination would prevent TSPs from performing reasonable network management.

Question 11: Should the TSPs be mandated to publish various traffic management techniques used for different OTT applications? Is this a sufficient condition to ensure transparency and a fair regulatory regime?

Absolutely. Transparency is the first step to any reasonable network neutrality plan. However, it is not sufficient, as there is not enough competition to ensure that users can find a provider that works according to their needs. Additionally, providers in India have usually increased and decreased prices in lockstep and introduced plans that are very similar, so it is unreasonable to assume that an oligopoly of TSPs will create services that span the range of consumer needs.

Question 12: How should the conducive and balanced environment be created such that TSPs are able to invest in network infrastructure and CAPs are able to innovate and grow? Who should bear the network upgradation costs? Please comment with justifications.

TSPs must bear network upgradation costs. Reasonable paid peering arrangements (i.e. those for interconnection points where there is significant skew between data being sent and received) will help with these costs. An understanding from TSPs that network upgrades are requirements to remain competitive will help ensure lower bids for future spectrum licensing. In time, this will move capital towards infrastructure and away from licensing spectrum.

Question 13: Should TSPs be allowed to implement non-price based discrimination of services? If so, under what circumstances are such practices acceptable? What restrictions, if any, need to be placed so that such measures are not abused? What measures should be adopted to ensure transparency to consumers? Please comment with justifications.

Any kind of discrimination that is not application-agnostic by definition must have economic impact, and an impact on user-choice. Therefore even non-price discrimination should only be allowed when it is application-agnostic.

Question 14: Is there a justification for allowing differential pricing for data access and OTT communication services? If so, what changes need to be brought about in the present tariff and regulatory framework for telecommunication services in the country? Please comment with justifications.

No. TSPs should not be allowed to control communication any more than they should be allowed to control data access services. TSPs cannot innovate in terms of communication technologies at the rate at which the free market does, and any restriction on communication OTTs will necessarily retard innovation in communication technologies.

Question 15: Should OTT communication service players be treated as Bulk User of Telecom Services (BuTS)? How should the framework be structured to prevent any discrimination and protect stakeholder interest? Please comment with justification.

No, see above.

Question 16: What framework should be adopted to encourage India- specific OTT apps? Please comment with justifications.

India-specific OTT apps do not need any specific encouragement, except that TRAI believes in net neutrality and allows them to innovate in any area they choose (communication or otherwise).

Question 17: If the OTT communication service players are to be licensed, should they be categorised as ASP or CSP? If so, what should be the framework? Please comment with justifications.

This is incredibly hard to do. For example, is Instagram a communication service or an application service? There is no clear way to tell. Additionally several businesses are now inherently social - i.e. involve communication directly or indirectly, and therefore cloud the issue further. TRAI should not attempt to differentiate between these classes of applications.

Question 18: Is there a need to regulate subscription charges for OTT communication services? Please comment with justifications.

No. Communication services are evolving too fast for any intelligent regulation. As the paper points out, several of them use innovative business models that would make them even harder to regulate. Any regulation in this regard would be necessarily infringing upon user choice.

Question 19: What steps should be taken by the Government for regulation of non-communication OTT players? Please comment with justifications.

Pass a strong data privacy law, and ensure that existing laws applying to different verticals are updated to reflect the reality of the Internet.

Question 20: Are there any other issues that have a bearing on the subject discussed?

Net neutrality is being conflated with regulation of internet-enabled businesses. I would recommend dealing with the two issues separately. Paid peering in the core of the internet (rather than the edge) is also a related but distinct issue, with no clear right or wrong answers yet.

K.Anand