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Nasscom comes out strongly in favor of Net Neutrality on TRAI paper

NASSCOM proposes a synergistic model for Internet platforms, applications and TSPs while strongly advocating net-neutrality

National Association of Software and Services Companies (NASSCOM) made a strong pitch for India to continue with net neutrality, responding to the TRAI consultative paper on Regulatory framework for OTT services.

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“NASSCOM believes that the Users Right to Choose is one such right that is seriously compromised when regulations fail to prohibit price and non-price based discrimination by TSPs. The downstream impact is needless data demand curtailment,” the firm – representative of India’s IT industry, said.

According to NASSCOM, the advent of the Internet, proliferation of mobile telephony, adoption of social media, big data/analytics, cloud, IoT etc. combined with the burgeoning growth of the start-up and innovation ecosystem and the Digital India vision have created the perfect confluence for breakthrough economic development and transformation of our country. This transformation would cover all vital social and economic spheres including education, healthcare, financial inclusion etc

“Net neutrality creates an open and level playing field that facilitates innovation, adoption and inclusion. The other key priority is the proliferation of an affordable telecom infrastructure. These essential building blocks of the digital revolution are not contradictory and can and need to be synergised. NASSCOM has advocated a constructive and forward looking definition of net neutrality to achieve these objectives”, said R. Chandrashekhar, President, NASSCOM.

Mr Sanjeev Bhikchandani, Chair of NASSCOM Internet Council said, “Any stifling regulations restricting access to Internet or Internet platforms and services would not only seriously hamper this prospect of development but also suppress growth and success of innovation driven tech start-ups and SME companies”.

The emergence of the Internet, the resultant data revolution and the advent of a host of application service providers has disrupted existing equilibria and business models in several sectors including telecom and IT itself, Nasscom said.

“It is important to synergise adoption of Internet platforms and innovation driven models with growth of telecom infrastructure. This would lead to a virtuous cycle of growth, where sustained rise in revenues from data consumption is spurred and driven by the Internet platforms and services.”

“As mobile penetration approaches saturation level, voice traffic would plateau and rising data traffic will be the driver of demand for more telecom infrastructure. The issues brought out in the TRAI paper arise from the fact that the current revenue streams of TSPs are heavily voice dependent while demand for infrastructure is being increasingly driven by rising data usage. In the long run therefore, a revenue stream calibrated to the demand/consumption of data is the way forward to ensure that the demand driver and revenue generator are aligned,” it added.

EXCERPTS FROM NASSCOM’S RESPONSES

Preamble

The advent of the Internet, the proliferation of mobile telephony in the country, the emergence of newer technologies and platforms like social media, big data/analytics, cloud, IoT, etc., the maturing of the IT industry in the country into a global force driving adoption of digital technologies, the burgeoning growth of the ICT start up / innovation eco-system in India and the adoption of a Digital India vision by the Government constitute a confluence of circumstances that hold the promise of breakthrough economic development and transformation for the country.

Yet, for that promise to be realized, it is vitally important that certain strategic objectives are clearly spelt out at the national level and underpin various policy and regulatory interventions in this space. NASSCOM believes that the following are critical elements of this framework:

i. India is fortunate to have arguably the most powerful IT service delivery industry in the world today. This capability needs to be leveraged maximally to achieve the lofty vision of Digital India. Yet, mere adoption of these technologies is not adequate to meet India’s needs, much less achieve its full potential; significant innovation is needed, both in technology and business models. In this context, the rapidly maturing entrepreneur – startup – innovation – product ecosystem (which is the 4th largest in the world today and will be the 2nd largest within 2 years) is a powerful new complement to the established IT-BPM industry and acts as a force multiplier. Hence the eco- system that is being built in the country should assign the highest priority to enabling such innovation and eliminating any impediments and roadblocks to such innovation. Given the Indian context, much of this innovation will come from small/new companies driven by young entrepreneurs with ideas, knowledge, energy and vision but limited means. This category requires a supportive environment. There should be no roadblocks to the rapid adoption of ICT-enabled and/or innovative models that emerge from this high-energy eco-system, on which the hopes of a digital revolution in the country rest in this milieu.

ii. Rapid country-wide proliferation of such solutions requires ubiquitous telecommunications infrastructure. Given that over 90% of such infrastructure is driven by the private sector in India, a viable and healthy business environment for TSP service providers is also an essential ingredient for the digital revolution in India. NASSCOM believes that it is a misperception that these two objectives are in any way mutually exclusive or constitute a zero-sum game. On the contrary, success lies in creating and enabling a virtuous synergy between these two objectives.

A major challenge to pursuing these twin objectives is brought out in the TRAI consultation paper. The emergence of the Internet, the data revolution ensuing in its wake and the emergence of a whole new breed of Application Service providers has disrupted existing equilibria and business models in several (if not most) sectors. Telecom is no exception. In fact, the IT industry has been, in many ways disruptive even of its own traditional business models.

As far as telecom is concerned, the main issue has been brought out in the TRAI paper, namely that TSPs are moving from a voice-dominated to a data dominated era and the pressures arising there from. The complexity arises because the current business model and revenue model of TSPs is largely dominated by voice, which is relatively low in terms of data intensity. Para 2.37 and 2.38 of the TRAI consultation paper have brought out this dichotomy clearly. However, once mobile penetration reaches saturation levels (which it is fast approaching), then voice traffic will plateau and data traffic will constitute the bulk of growth in demand for increased telecom infrastructure. Data traffic then becomes the driver of demand for more telecom infrastructure. It would therefore be evident that the existing misalignment between sources of revenue and drivers of demand for telecommunication services is unsustainable. The sooner it is removed and the demand driver and revenue streams are synergized, the faster will be the migration to a more sustainable and future- proof telecommunications eco-system in the country.

In fact, it is our belief that it is precisely this effort to identify problems and carve out solutions without addressing this basic conundrum of misalignment between sources of revenue and drivers of demand for telecommunication services, that has led to suggestions that appear to resolve apparent difficulties to achieving rapid proliferation of telecom infrastructure (objective ii), but create enormous barriers for rapid adoption of ICT-enabled and/or innovative models (objective i) and have the net effect of nullifying possible gains from migration to a digital, connected India.

There is absolutely no need from a logical point of view, no competence from a legal point of view and no practicability from a technology point of view of bringing in the type of regulations/ controls on Internet platforms and Applications (referred to as OTT services in the TRAI paper) envisaged in the consultation paper that limit the scope and potential of the eco-system that needs to deliver on objective (i) above.

In the long run, migration to a revenue stream calibrated to the demand/consumption of data is a possible solution. In such a scenario, Internet Platforms and Applications spur demand for data that in turn generates additional revenues for TSPs. A synergistic eco-system would thus ensue. In fact, many of the issues highlighted would disappear once this state is reached. Thereafter, only normal regulatory principles of preventing anti-competitive practices would be necessary. As brought out in our detailed replies to specific questions, this migration is neither needed instantly, nor is an imperative at present based on available financial data as elaborated in our detailed replies to the questions. The migration can happen over a period of time and it is for the TSPs and the regulator to evolve the most appropriate path and timelines for such migration. NASSCOM is of the firm view that the Internet Platforms and Applications need not be dragged into this equation.

Today there are already adequate laws controlling their operations under the IT Act, not to mention the conventional IPC, CrPC, etc. In fact, as the consultation paper itself points out, TRAI has no jurisdiction over non-communication service providing Internet Platforms and Applications. NASSCOM believes that the comments contained in this response apply to all Internet platform and service providers (referred to as OTT in the consultation paper) and that the issue does not warrant any such distinction into communication and non-communication Internet Platforms and Applications and indeed, such distinction is impractical, arbitrary and highly contentious since nearly all such services incorporate some element of communication. The only issues that need to be addressed therefore, are the regulations needed to ensure that TSPs do not resort to market distorting practices which go against the principles of Net Neutrality. Given the varying definitions of Net Neutrality worldwide, we would therefore like to first present our concept of Net Neutrality specifically tailored to the Indian context and then come to the measures needed to ensure that this framework is created and preserved.

Net Neutrality in our view should be characterized by the following attributes

1 User to have the unfettered right of making an informed choice in deciding content / services to access

2 No discretion to TSPs to censor or block access to any legal content, applications, services, or non-harmful devices or determine how users use internet

3 No right of TSPs to throttle lawful internet traffic on the basis of content, applications, services or non-harmful devices. In fact, opening of the content of transmissions other than when required under laid down legal processes, is illegal.

4 No right of TSPs to speed-up / favour lawful internet traffic over other lawful traffic in exchange for consideration of any kind.

5 Critical that there be a level playing field for all Internet platforms and services including particularly entrepreneurial start-ups so that they are not squeezed out by either TSPs or large/global Internet Platforms and Service providers through anti-competitive tie-ups or practices

6 Prioritization of Emergency or any other services as prescribed by the regulator accompanied by public declaration and without price discrimination

7 Clear and declared definition of acceptable technical practices by TSPs for management of network traffic in conformity with above principles

8 No double dipping by Telecom Service Providers. Charges would be levied only from end customers based on data consumption and not from Internet Platforms and Applications

9 Security restrictions as required for ensuring reliable services and lawful demand of security agencies.

The regulatory framework should incorporate suitable provisions to ensure the above and appropriate enforcement mechanisms to deal with any complaints or reported breach of the principles. As consumers increasingly rely on the Internet and Mobile networks for not only their communication needs but other needs like Banking, transportation, Health etc. we believe that the above principles of open and fair access should be upheld and any violation of these principles should be critically examined and actioned against.

With Digital India poised to transform the country, this is all the more imperative. Our detailed responses to each of the Questions posed by TRAI are aligned to the above principles. We believe that consumer and national interests should be paramount.

We welcome the consultative approach being adopted to allow stakeholders to share their views on this extremely significant issue that is likely to have long term impact on the usage and proliferation of ICT technologies in the country.

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