Users batter telecom firms over zero rating, net neutrality

Flipkart says it has ended talks with Airtel to participate in the Airtel Zero plan, which activists say violates the principles of net neutrality

Leslie D'Monte, Mihir Dalal
Updated16 Apr 2015
The decision to withdraw from Airtel Zero was taken after a &#8216;great amount of debate, both internally and externally, on the topic of zero rating,&#8217; a Flipkart spokesperson said. Photo: Ramesh Pathania/Mint<br />
The decision to withdraw from Airtel Zero was taken after a &#8216;great amount of debate, both internally and externally, on the topic of zero rating,&#8217; a Flipkart spokesperson said. Photo: Ramesh Pathania/Mint

Mumbai/Bengaluru: Internet users and activists on Tuesday got the first taste of success in their campaign to prevent what they perceive is an attempt by India’s telecom services providers to violate net neutrality principles in the garb of allowing preferential free access to specific sites.

Bowing to pressure from the uproar on Twitter and Facebook, India’s largest online retailer Flipkart Ltd on Tuesday said it has ended talks with Bharti Airtel Ltd to participate in the Airtel Zero plan, which activists say violates the principles of net neutrality.

Net neutrality principles rule that Internet service providers, or ISPs, should not discriminate online data by user, content, site, platform, application, type of attached equipment or mode of communication.

“We will be walking away from the ongoing discussions with Airtel for their platform Airtel Zero,” a Flipkart spokesperson said in a statement, adding, “We will be working towards ensuring that the spirit of Net Neutrality is upheld and applied equally to all companies in India irrespective of the size or the service being offered and there is absolutely no discrimination whatsoever.”

Hence, a so-called zero rating plan that is designed to favour an ISP’s own or its partner’s app or company, can place competing apps and companies at a disadvantage and be anti-competitive. India, however, has not enacted a law on net neutrality.

The Flipkart spokesperson said the decision to withdraw from Airtel Zero was taken after a “great amount of debate, both internally and externally, on the topic of zero rating”. Online news website reported Flipkart’s decision to pull out from Airtel Zero earlier on Tuesday.

It was only last week that users downgraded Flipkart’s app in response to its co-founder Sachin Bansal’s interview to, stating that he did not see why partnering with Airtel Zero was any different from Facebook Inc.’s initiative called that also offers free access to certain sites.

Later in the day, Bharti Airtel issued a statement, saying it “fully supports the concept of Net Neutrality”, and adding that “there have been some misconceptions about our toll free data platform—Airtel Zero...(which) allows any application or content provider to offer their service on a toll-free basis to their customers who are on our network... No site whether on the toll-free platform or not under any circumstances is blocked, throttled or provided any form of preferential access.”

Zero rating, however, is not necessarily a bad concept if there’s transparency, some experts say.

“I strongly believe in net neutrality,” said Pranesh Prakash, policy director of Bengaluru-based policy research organisation, the Centre for Internet and Society, adding, “but my version of net neutrality is slightly different in so far that I do not consider a transparent zero rating as anti-neutral”.

Zero rating, according to Prakash, is a very important part of net neutrality. Regulatory goals should ensure three things, he said. The first being universal and affordable access, the second, effective fairer competition and the third, protecting consumers.

“An anti-competitive zero rating solution affects universal and affordable access on the Internet, and has the potential to have a bearing on effective fairer competition too,” he said.

According to Prakash, a “good zero rating agreement should be transparent with its terms and pricing. At the subscriber level, a telco should publish standard rate sheets. The telco should also make it known whether the agreement is on a non-exclusive basis”.

“This is essentially a debate on policy and the social desirability of net neutrality legislation—its threshold and the way it should be implemented. The most contentious aspect of this is zero-rated services,” said Apar Gupta, a Delhi-based lawyer.

However, while Internet users and ISPs are unanimous that net neutrality principles must be adhered to, there is less clarity over other parts of the debate that have arisen from the Telecom Regulatory Authority of India’s (Trai) consultation paper on ‘Regulatory Framework for Over-the-top (OTT) services’ that it released on 27 March.

Trai has raised 20 questions, which include whether OTT services providers (like WhatsApp, WeChat, Line and Hike) should be brought under the licensing regime and pay for use of the telcos’ network over and above data charges paid by consumers, and should telcos be allowed to implement non-price based discrimination of services.

About 300,000 Internet users (India has a little over 300 million Internet users) are estimated to have emailed their responses to Trai till date, and many more are expected to do so by the end of the deadline.

About 167,500 users, till the time of going to press, have signed a petition on, petitioning Trai and the department of telecom, among others, not to allow “differential pricing of services on the Internet and let the consumers choose how they want to use Internet”.

The final date for user comments is 24 April and that for counter comments is 8 May.

Telcos continue to argue that the OTT business model, with low or zero tariffs, eats into their revenue while OTT services providers offering communication services contend that such services, including voice call, chat and messaging are offered to users through the Internet services provided by licensed telcos for which the latter levy applicable usage charges—and hence they are offering communication services over the Internet for which the telco is paid by an end-user.

The matter escalated when instant messenger WhatsApp, earlier this month, began allowing users who have installed the app on their phones to make voice calls to their friends or contacts who also have the app.

As of now, a voice call made from WhatsApp is similar to services like Skype, that is now a Microsoft Corp. product, Facebook Messenger or even Google Hangouts.

WhatsApp, which was acquired by Facebook for $19 billion in February 2014, had 700 million global users as of March, according to Statista Inc. Of these, an estimated 10% are from India. Facebook Messenger, on its part, has 600 million global users. itself has around 1.3 billion global users and about 110 million in the country.

Rajesh Chharia, president of the Internet Service Providers Association of India, asserted that his organization “supports net neutrality and disowns any kind of discrimination for any type of content”.

“At the same time, all services should be equal. No illegal services should be allowed in any form under the guise of net neutrality,” he added.

Internet telephony is the ability to make a voice call over the Internet but it is illegal in India. Companies are allowed to use it over a closed user group network but Trai does not permit the calls to terminate on a telephone network.

In their responses to Trai’s 20 questions, supporters of net neutrality, in a standard petition, have argued that “imposing a licensing and regulation regime (for OTTs, for instance) carries significant risks of destroying innovation. Launching new services and features will take more time and will make it difficult for new start-ups with low cash reserves to enter the market. It will basically ring the death knell for the country’s fast-growing digital media sector”.

They also point out that “ revenues also fall under the traditional revenue streams category as per the Unified Access License Agreement. So, it is factually incorrect to say that increase in data revenues will affect traditional revenue streams”.

The debate, however, is unlikely to die in a hurry.

There is a lot of confusion in the debate that is going on regarding this issue, said Rajan S. Mathews, director-general of the Cellular Operators Association of India , who believes the problem has arisen because “we haven’t clearly defined net neutrality in our country”.

Countries like the US and Germany, according to Mathews, have “clear definitions of the terms and rules and regulations on the issue in the context of those specific countries. This debate without having a clear definition is counter-intuitive”.

The second issue, according to Mathews, relates to zero rating being defined as being against net neutrality.

“There is always a clear legal structure under which it is defined. In the US, for example, zero rating is seen as outside net neutrality. There are clearly crafted terms with clear guidelines and regulations. With zero rating, there is no example to show that there is any discrimination or that it does not allow innovation. The process has been started in India and once the rules are clearly defined, after the issue has been debated to the full extent, in the Indian context, we will follow them. There is no restriction on access,” he said.

Hemant Joshi, telecom leader at Deloitte India, said: “We need to examine this issue in totality and also look at the fact that telcos do not get subsidized spectrum or equipment from the government or anyone else. They have paid a market-determined price and therefore, they should be allowed to charge market prices for services. However, Trai puts a cap on the pricing of voice services, and our country does not have enough spectrum.”

The net neutrality debate is as contested worldwide, as it is in India.

The Brussels office of Internet lobby body has termed the “...latest Net Neutrality proposal in the EU: a wolf in sheep’s clothing?” Along with other lobby bodies like Reporters without Borders, they are running a campaign called ‘Save the Internet’ in Europe. It was on 4 March that 28 member states of the European Union presented a joint proposal on the Telecoms Single Market, a legislation that will determine whether Net Neutrality will become a reality throughout Europe.

And on 13 April, the US Telecom Association petitioned a US court in Columbia for review of the order of the Federal Communications Commission that introduced new regulations in its order (on how to promote an open Internet) that were published in the Federal Register on that very day.

Shauvik Ghosh in New Delhi contributed to this story.

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess
HomeindustrytelecomUsers batter telecom firms over zero rating, net neutrality

Most Active Stocks

Bharat Electronics

07:19 AM | 18 MAY 2024
10.65 (4.29%)

Bandhan Bank

07:18 AM | 18 MAY 2024
1.7 (0.94%)

Zee Entertainment Enterprises

07:17 AM | 18 MAY 2024
5.75 (4.26%)

GAIL India

07:15 AM | 18 MAY 2024
4.9 (2.4%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Zydus Lifesciences

07:19 AM | 18 MAY 2024
52.55 (5%)

Balkrishna Industries

07:16 AM | 18 MAY 2024
133.25 (5%)

Bharat Dynamics

06:57 AM | 18 MAY 2024
116.05 (5%)

Hindustan Zinc

06:59 AM | 18 MAY 2024
29.45 (5%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K

    Fuel Price

    • Petrol
    • Diesel
    New Delhi
    HomeMarketsPremiumFor youGet App