The Telecom Regulatory Authority of India (TRAI) on Monday barred telecom service providers from charging differential rates for data services, effectively prohibiting Facebook’s Free Basics and Airtel Zero platform by Airtel in their current form.
1 .No service provider can offer or charge discriminatory tariffs for data services on the basis of content.
2. No service provider shall enter into any arrangement, agreement or contract, by whatever name called, with any person, natural or legal, that the effect of discriminatory tariffs for data services being offered or charged by the service provider for the purpose of evading the prohibition in this regulation.
3. Reduced tariff for accessing or providing emergency services, or at times of public emergency has been permitted.
4. Financial disincentives for contravention of the regulation have also been specified
5 .TRAI may review these regulations after a period of two years.
“No service provider shall offer or charge discriminatory tariffs for data services on the basis of content,” the regulator ruled in its Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016. It said the prohibition was necessary to keep the Internet open and non-discriminatory.
TRAI said a fine of Rs. 50,000 would be levied per day, subject to a maximum of Rs. 50 lakh, for any violation of these regulations by the service providers. An exemption, however, has been made for offering emergency services.
Ruling out case-by-case approval for plans that might be priced differently, the regulator said a clear policy should be formulated.
No differential rates for data services, rules TRAI
“We had issued a consultation paper just about 60 days ago on differential pricing …We deliberated on the issue for quite some time … Anything on Internet cannot be differently priced. This is the broad point that we have highlighted in the regulation,” TRAI Chairman R.S. Sharma told reporters at a conference.
The regulator and Facebook have been at loggerheads over the issue with the authority terming the social networking giant’s attempt to lobby for its Free Basics initiative a “crude” attempt at turning the consultation over differential pricing of data services into an “orchestrated opinion poll” on Free Basics. Facebook had partnered with Reliance Communications in India to offer Free Basics service. However, the services were put in abeyance, post a TRAI order to this effect.
In an emailed statement, a Facebook spokesperson said, “While disappointed with the outcome, we will continue our efforts to eliminate barriers and give the unconnected an easier path to the Internet and the opportunities it brings.”
The TRAI said tariff for data services could not vary on the basis of the website/application/ platform/ or type of content being accessed. For example, a consumer could not be charged differently based on whether she was browsing social media site A or B, or on whether she was watching streaming videos or shopping on the Internet, it added.
It, however, said that to bring more users on the Internet, this prohibition would not apply to other forms of tariff differentiation that were entirely independent of content. “For instance, providing limited free data that enables user to access the entire Internet is not prohibited,” the TRAI said.
While the move was cheered by Net Neutrality activists and industry bodies such as Nasscom and IAMAI, telecom operators, who had been pushing for allowing of differential tariff for data service, expressed disappointment saying the ruling would impact the Narendra Modi government’s ambitious Digital India initiative.
Rajan Mathews, Director-General of operators’ body COAI, told The Hindu: “We are very disappointed with the ruling. Differential pricing is an effective marketing tool and would have helped in bringing online the next one billion people. We are confused as the decision comes at a time when the government is pushing adoption of Internet.”
“It will negatively impact the growth of the industry and the consumers who may need such plans to afford data connections. We are looking at this closely to examine TRAI’s rationale as to how this purportedly hurts customers or negatively impacts markets or even hinders internet access,” he said.
Hemant Joshi, Partner, Deloitte Haskins & Sells LLP, said differential pricing for different levels of services was a well-accepted principle across all industries and the concept inherently recognised the economic principle of paying differently for different levels of service and experience.
“For example, the differential pricing for the 2nd class, 1st AC, sleeper class, etc. based on different experiences and service levels … In the telecom sector there are virtual highways that need to follow the same principle. EU is considering allowing ‘specialised services’ with few priority services having fast lane Internet connection. More awareness and education needed around the economics of differential pricing and its long-term implications on the industry and the consumer,” Mr. Joshi said.
Amresh Nandan, Research Director, Gartner, said while operators might not be happy with this notification, they still have the ability and freedom to create different kind of Internet access packages as long as content was not a parameter to provide or bar access to anyone. “Such practices have already started elsewhere with products such as bandwidth on demand, bandwidth calendaring etc. to create premium products. Obviously it will require changes in network and operations
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