To, 

RS Sharma, Chairman, TRAI

CC:Vinod Kotwal, Advisor (F and EA), TRAI

 

Sir/Madam,

I would request you to not publish my email address, if you upload my submission online.

 I am writing to you in my personal capacity, as a concerned citizen, and as a person with experience in working with media and telecommunications in decision making roles for over a decade.

Between 2000 and 2006, I worked with STAR India. Pvt. Ltd, the Indian media business owned by News Corporation, in digital media, dealing with distributors and was a part of the team that set up Kaun Banega Crorepati. Between 2006 and 2009, I was Senior Vice President and Head of Mobile Entertainment for STAR TV, and set up the digital business of STAR, working across functions, enabling mobile distribution and relationships for STAR TV.

My experience with mobile operators is instructive in helping understand how mobile operators function in an environment where they are allowed differential pricing, because as a representative of a content owner, I worked within the same environment, where content delivered to consumers as Mobile Value Added Services (MVAS) was priced differentially, and telecom operators were allowed to charge us a share for allowing us to serve our viewers.

 

Question 1: Should the TSPs be allowed to have differential pricing for data usage for accessing different websites, applications or platforms?

1.     The license we have given to telecom players is to run virtual toll roads where if anyone uses the toll road built by them, they charge a fee. The longer the distance a user goes, the more the fee they can and should charge. Therefore, anyone who uses the internet gets charged in a similar manner, the more one uses, the more one pays. However, allowing for differential pricing for data usage basis usage is similar to toll road owners being allowed to charge the destination for where the user is going, and the charge being based on the size of the destination, or the ability of the destination to pay. This gives tremendous discretionary capacity to a telecom operator, and given that they will remain the only and exclusive means by which the destination will get business, they will in turn determine the future of the destination. The ability to charge basis what the traffic is and where it is headed has been used in the past and it has destroyed the complete ecosystem of mobile content and services in India. Mobile operators used the same lack of clarity devastatingly to squeeze shares and stifle all innovation in mobile content in India.

This was also a space for collusion. In the case of MVAS, in order to be allowed to deliver mobile content to those users who wanted it and were willing to pay for it, a provider would have to go and negotiate with the telecom operator, who would play gatekeeper, and try and squeeze as much revenue share out of content providers as possible. For smaller content owners, there was pressure to offer content exclusively to one of the largest mobile operators, on their terms. Once a deal was negotiated with one telecom operator, content provides would find that others were made aware of the terms with one: it was clear that there was collusion between telecom operators, thus ensuring that the content provider gets the worst possible deal. Many content providers were forced to partner with specific aggregators, who had their own terms. Because of this, the consumer got the worst possible deal, and the content provider had no freedom.

This is why, despite being amongst the largest mobile subscriber base in the world, most innovation on the mobile content consumption via MVAS was not happening in India.

It is only now as mobile data (which the operator is not controlling) expands that one is seeing some activity in the space. Now, an attempt is being made to create a similar situation in case of mobile data. Differential pricing will give telecom operators disproportionate power over content providers, and deprive the online market of innovation, competition and freedom. This will adversely impact investment in startups. I fear what we will be losing in terms of innovation, bottom of the pyramid ideas and growth of a wide ecosystem of digital businesses is significant and immeasurable at this point. I would strongly urge you to not allow differential pricing control in the hands of any entity. The users in India deserve to access the same Internet as the rest of the world gets.

 

Question 2: If differential pricing for data usage is permitted, what measures should be adopted to ensure that the principles of non- discrimination, transparency, affordable internet access, competition and market entry and innovation are addressed?

Differential pricing should not be permitted. Reasons for this are explained in the answer to Q1.

 

Question 3: Are there alternative methods/technologies/business models, other than differentiated tariff plans, available to achieve the objective of providing free internet access to the consumers? If yes, please suggest/describe these methods/technologies/business models. Also, describe the potential benefits and disadvantages associated with such methods/technologies/business models?

As many people as possible must be encouraged to access the internet and get basic services such as ticketing, banking and access to government schemes. I sincerely believe that the real stumbling block for masses not getting onto the Internet is probably lack of local language websites and then literacy (which needs local innovative entrepreneurs) and not cost of Internet access.

However, it is believed that net access cost is really such a big deterrent then I would be happy if the government gave up 10,000Cr. of the over 1,00,000Cr. they have collected from telecoms as license fee and gave every subscriber 1GB of data at a fixed speed free. This would enable net neutrality AND bridge the digital access divide as well as win Kudos for the TRAI and the Government and Political Leadership. Consumers can then be charged for higher speeds and larger bandwidth if they so desired. This is not a new idea, today cost of electricity is scaled basis usage, so it water, fixed line telephony etc.

The other route to deal with this is how the US has done it with free wifi hotspots all over the place. I have travelled all over the US and used free wifi in malls, outside stores and even in some bus and train stations but this will need better devices which may not be forthcoming so the best option is really letting the government to social welfare and give all citizens some free net access.

Now the question is why am I against anyone except the government giving free internet.

Let’s agree upfront that no company will spend millions to promote a philanthropic idea but will instead spend their money directly to make real change happen on the ground. So if Facebook and others really want to help bridge the digital divide, they can easily do a deal with a telecom operator and launch a loss making "bottom of the pyramid" MVNO (like Virgin Mobile) and is already permitted as per Indian law.

Even then, assume they do create a system and it is hugely successful as it is "free": they are essentially creating a walled garden of content where users have limited choice of services. These choices are made by the owner of the walled garden, and not the people. how will this decision be made and by whom? If it is made commercially, it is profiteering and goes against what is being promoted and if it is selection then what’s wrong with what China is doing for its citizens? That too is just a walled garden.

Lets continue to assume it is hugely successful and a few companies who are in the walled garden are now paying for traffic. Who do you think is going to pay for that traffic? They will charge higher rates for services obviously. Today, we pay a premium to airlines to buy tickets online as a convenience fee whereas we save them money by helping ourself. The same is true for train and movie tickets and ATM usage. These fees will just go up to help "companies balance their books". I don't think we can do anything to change this but at least let’s ensure this doesn't increase and hurt us even more.

I sincerely believe this is FreeBasics a Trojan horse and we need to keep it out of our country and find better and more innovative ways to help bridge the digital divide.

 

Question 4: Is there any other issue that should be considered in the present consultation on differential pricing for data services?

Apart from price discrimination, also do not allow telecom operators to charge Internet companies and apps for preferential speeds. No charging of content owners should be allowed, because that lends itself to a corrupt system where there is collusion. The TRAI failed to address this, and continues to fail to address this in MVAS. There have been consultations in the past where the TRAI was asked to address opening up mobile VAS, including the common short code regime, so that businesses could own their own short code, and could provide access to their service, independent of gatekeeping from telecom operators. If allowed, telecom operators are likely to use speed manipulation as a means of rent-seeking from Internet companies. Don’t throw the Internet into the same cesspool as mobile VAS.

 

India’s IT revolution and expansion depends on it.