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TRAI’s net neutrality rules could see zero-rated networks replace zero-rated websites in India

hungamaThe TRAI’s new net neutrality rules are likely to see the launch of a number of zero-rated networks by players whose dreams of zero-rated websites have been dashed by the regulator.

Under the new regulations, telecom companies have been banned from offering any website for free, but have been allowed to offer entire networks for free.

What that means is that players who were interested in sponsoring their customers’ data charges by offering ‘toll-free’ websites will now have to offer toll-free networks instead.

Technically, the idea is not that challenging but it requires the content company to set up a new server for its toll-free website or app, while it could have used the same website for both its toll-free and regular customers before the TRAI regulations came into force.

With the new rules, the company that wishes to offer toll-free access to its website will have to set up a new copy of its website that is not connected to the Internet. It will then have to connect this website or network to each of the telecom companies’ networks individually and directly, instead of going through the Internet.

If the website or app uses any information sourced from the Internet, TRAI will crack down under its clause that intranets should not serve as a backdoor to the Internet.

The subscribers of the telecom company will then access the zero-rated website (or websites, as more than one website can be hosted inside one network) through the telco’s own network without ever going on to the Internet.

Flipkart was one of the companies that had shown an interest in having a zero-rated website. Under the new rules, Flipkart can set up its own intranet unconnected to the Internet, connect this to the telecom company’s intranet and reach the telco’s customers directly without going through the Internet.

This option also allows any company to provide their websites and apps for free to the subscribers of all the telcos on which its zero-rated intranet is available.

Moreover, these websites and apps will be available to all subscribers of the telecom operator whether or not they have subscribed to an Internet plan or not.

Other companies who can take advantage of the free Intranet route are players like Hungama and Eros, who can offer free songs and videos to all the customers of a telecom operator, and make money from selling premium songs and videos. They can also opt for the subscription model, where each consumer subscribes to the service at a particular rate and gets unlimited access to all content.

Similar intranets can be offered by virtually any player, including newspaper groups and even Youtube.

However, for video players, the money that they have to pay to the telecom operator as access charge will inevitably be much higher than any revenue that they can hope to make from the subscribers via advertising or monthly subscription fees.

This won’t be as much of a challenge for those who provide zero-rated intranets comprising primarily of text content — such as newspapers and classifieds companies.

For example, a company like Info Edge can now set up an intranet comprising specially-created versions of its various matrimonial, recruitment and review websites and serve them over telecom companies’ networks for free.

Even a player like WhatsApp can take advantage of the new rules to offer free or cheap access by bring out a new customized chat client that can work via various telecom companies’ intranets and skips the Internet totally. The client can have a configuration that asks the user whether to use a particular intranet or the Internet to route its traffic to save money.

COMPETITION CHALLENGES

A thorny issue that will come up will be competition between third-party intranets and the telecom company’s own intranet.

For example, Bharti Airtel already has a huge collection of songs and videos which it will more or less certainly provide over its intranet — likely via a monthly subscription model.

At the same time, a player like Hungama, which also owns a huge repertoire of songs and videos, has to depend on these same operators to take its free intranet to the masses.

Given that there are no laws that define how much telcos can charge for data, such independent players may find the rates quoted by telcos unaffordable. This is likely to lead to cases in the Competition Commission of India.

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