A More Equal Internet: India’s Net Neutrality Hangs in the Balance

A recent paper released by the Telecom Regulatory Authority of India (TRAI) threatens to seriously compromise net neutrality – the notion that all Internet traffic should be treated equally without discrimination. Though still in a consultation stage, the paper suggests the Indian government may allow telecom operators to discriminate by allowing them speed up and slow down Internet traffic based on its source, ownership or destination. Such a policy would prevent the Internet from serving as the powerful empowerment and innovation tool it holds hope of becoming in a poor but economically rising democracy.

A non-neutral Internet would allow telecom companies to load certain websites and applications faster or slower than others or restrict access to them altogether. For example, subscriber to network X might be forced to use Bing as their search engine because Google partners with network Y and network X would either take longer to load Google (compared with Bing) or might refuse access to Google altogether. Similarly, telecom companies could also discriminate between consumers, allowing richer consumers access to a greater range of websites and applications for higher fees and forcing poorer consumers to opt for schemes that include only certain websites or applications. Thus a farmer in rural India for instance, might be able to access his Facebook profile cheaply but may have to pay much more to get reliable weather updates or track vegetable trading prices.

Critics of net neutrality claim that Internet data usage is not uniform. Basic Internet services such as sending e-mails or reading news are insensitive to delays or signal distortion. Services such as Skype however require a minimum quality of service in order to be effective and thus justify higher fees. The TRAI paper argues that Internet-based communications applications such as Skype and WhatsApp are cannibalizing services from which telecom operators traditionally profited as traditional caller plans and SMS services become increasingly redundant. If operators are to continue investing in better Internet technology, they must have the incentive to do so by earning greater returns on that investment. Critics also argue that zero-rating and tiered services enable greater Internet penetration by making cheaper plans available for poorer citizens. As a trade-off, cheaper plans entail slower Internet speeds or restrict access to only certain applications and websites. But as Facebook CEO Mark Zuckerberg said, “For people who are not on the Internet, having some connectivity and some ability to share is always much better than having no ability to connect and share at all.”

Though articulate, these arguments fail to recognize four realities that are crucial in India’s context.

First, operators have earned significant returns on investment. India’s cell phone market includes 970 million of India’s 1.2 billion citizens, covering more than 77 percent of the Indian population. Telecom companies have already benefitted immensely from this market reach. The argument that telecom operators have invested in technology that deserves returns is really another way of saying operators deserve continuing and consistent returns. This amounts to little more than rent-seeking.

Second, the argument for guaranteeing returns – on the basis of ensuring that operators can continue investing in better technology to deliver faster speeds – is disturbingly protectionist. The Indian cell phone market and Internet demands are growing exponentially in India’s fast-urbanizing, upwardly mobile society. Since 2011, India has added more than 150 million Internet users and yet that number represents less than 20 percent of India’s population. The key to tapping such a lucrative market lies not in seeking legal carve-outs to guarantee profits; rather business models must adapt to changing dynamics. For companies that have benefitted from technological innovation and deregulation themselves, a demand to stratify the next great leap in innovation is jarring. Creating opportunity for new market players and new technologies and destabilizing the status quo is what makes the Internet unique. Instead of leashing its power, India’s telecom operators simply need to adapt.

Third, any move to stratify the Internet goes against the renewed push on manufacturing transformation and technological innovation exemplified by the government’s ‘Make in India’ campaign. Much like Facebook and Google, Indian startups such as Snapdeal and Flipkart have flourished precisely because the Internet is deeply meritocratic, open, and equal. Stratifying the Internet, either by providing better quality or faster speeds to higher-paying applications or by restricting poorer citizens to only certain applications and websites would severely hurt startups. It would stultify their market reach and growth in one stroke. India’s IT industry has been a cornerstone of India’s economic growth story. But most of India’s IT sector remains focused on services, providing IT solutions and back-office support to technology giants in the United States. If the government’s professed aim of reversing this cycle is to materialize, Indian innovators and startups will need the conditions Facebook and Google enjoyed when they were first conceived. A neutral, equally accessible Internet is critical.

Finally, for a country that aims to use the Internet as a developmental tool, a stratified Internet is deeply counterproductive. If a farmer in rural India for example, cannot track vegetable prices or must wait longer to obtain weather updates than he does to access his Facebook profile, the Internet will have little value in pushing India’s development agenda although it might guarantee corporate giants a few millions more.

The business argument against net neutrality in India follows a similar pattern: it considers the services by telecom operators a technological investment that merits consistent returns; it labels Internet applications such as Skype as free-riders, who employ this technology to cannibalize their revenues; and lastly it suggests that the even greater profits companies stand to make by dividing the Internet is somehow necessary for continued innovation and for making the Internet more accessible to poorer citizens. In India’s case, these arguments are strikingly disingenuous. If the Internet is to assist the country’s development efforts and spur technological innovation as it has been able to do elsewhere, its neutrality must be scrupulously preserved. Before the Indian government then is a straightforward choice.

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