Does TRAI have the jurisdiction to address Net Neutrality in India?

The Network Neutrality issue is currently being heatedly debated and gained considerable momentum in India, with the Telecom Regulatory Authority of India (TRAI) inviting comments on the same from stakeholders in its consultation paper released in March 2015. TRAI has couched the issue of Net Neutrality within the context of “Over the Top” applications. “Over The Top” applications are the “apps” that one uses on communication devices such as WhatsApp, Skype, Viber etc. TRAI’s consultation paper is not a consultation on Net Neutrality per se, but its implications on telecom operators such as Airtel, Vodafone etc. The TRAI paper argues that in order to have a robust, competitive and innovative market, telecom operators should be allowed to charge not only the end consumer who uses internet, but also the application providers for the data used.

In the US, the FCC has decided to uphold the principle of Network Neutrality and introduced rules that will ensure the no content is throttled and the internet is not divided into a faster lane for some. On 12 March, 2015, the Federal Communications Commission of the United States of America released the “Report And Order On Remand, Declaratory Ruling, And Order” that essentially seeks to uphold the principle of Net Neutrality. The Rules look to promote an open internet without allowing internet service providers to prioritise data including blocking and “throttling” data on a paid basis. The theme of the Rules is that the FCC is committed to protecting and promoting an open internet. 

While TRAI has finally rolled the ball on Network Neutrality, simply taking a cue from the US might not be ideal for the situation in India. The Indian context is different from that in the US and the application of the principles adopted by the US pari passu will definitely lead to unnecessary complications and result in the regulation of a market which is beaming with competition. 

The Network Neutrality Debate is mature in the US

The debate about Net Neutrality is an old one in the USA. The FCC came up with an Open Internet Order on the need for Net Neutrality back in 2010, whereas the debate started in 2003 when Tim Wu coined the term Net Neutrality. Further in 2010, Verizon had successfully sued FCC in respect of the Open Internet Order 2010 and the US Court of Appeals for the DC Circuit held that the FCC does not have the jurisdiction to issue orders regarding “blocking” and “throttling” of internet traffic by service providers. The Court only upheld the FCC’s order in relation to the rule of transparency which required Internet Service Providers to disclose the network management practises and condition of the broadband connections.

TRAI’s favouritism for ISPs

However, TRAI, the Indian equivalent of the FCC, is not advocating for an open internet like its US counterpart. Rather, TRAI has narrowly focused the issue of Net Neutrality within the context of OTT applications. The slant of the consultation paper is towards the competition that the telecom companies are facing with the advent of substitutable services such as WhatsApp, Viber, Skype, Facebook messenger etc. to SMS and voice messages, which have traditionally been the services provided by the Telecommunication Service Providers. 

The essence of favouritism showed by TRAI is evident from one of the questions posed in the papers, as to whether the growth of data revenue is sufficient to compensate for the impact of revenue loss for the telecom providers. While the paper specifically states that the growth of OTTs have created an environment for innovation, the favouritism by TRAI for ISPs is blatant. It seems that TRAI, though recognising the importance of innovation, would rather stifle it by seeking to compensate the telecom providers at the cost of the innovators. 

Further, the TRAI paper is peppered with terms such as “entry barriers” and “abuse of market power”. In fact, TRAI has even gone so far as to express concern about the “competition loss” of internet/telecom service providers. Setting aside for now, the fact that TRAI’s primary concern appears to be the welfare of telecom operators over anyone else, the very concerns themselves are completely outside its regulatory ambit. The issues of competition loss, entry barriers etc. are primarily within the purview of the Competition Act, 2002 and the Competition Commission of India.

The Competition Act, 2002 is a specific governing law with the sole objective of preventing vertical holdings, cross holdings and other mechanisms amongst companies in India that would lead to abuse of dominant position of entities whereby such enterprises are prevented from imposing unfair or discriminatory conditions/pricing in purchase or sale of goods or services. The Competition Act also prohibits anti-competitive agreements having an “appreciable adverse effect” on competition including agreements which aim to determine price, limit or control the production supply, combinations in cases of mergers and acquisitions/amalgamation.

The Competition Commission of India (CCI), a quasi-judicial body, is one specifically constituted to oversee regulation of the various issues referenced in the consultation paper of TRAI. The Competition Act vests in the CCI all necessary authority and responsibility to eliminate practices having adverse effect on competition, to promote and sustain competition, and protect consumer interests. It is unclear what additional benefits might accrue from now extending related authority for TRAI to assert in the internet sector, particularly since the CCI already functions adequately in this respect and that the TRAI Act, 1997 specifically ousts its own jurisdiction from matter so competition under Section 14 (a) (iii) (A).  

The ambit of the Competition Act includes that of the internet and any instances of concentration of control, dominance, abuse of dominance, anti-competitive behaviour, restricting entry barriers can be adequately addressed by the Competition Act and the Competition Commission of India. In fact Google is currently undergoing scrutiny at the CCI for having abused its dominant position in the online advertising space. The introduction of duplicative regulations of TRAI, overlapping the already existing mandate and basis of the Competition Act, is very close to creating confusion and friction between regulators. 

The ISPs are turning the tables for the consumers, at the cost of the content providers and potentially creating entry barriers for those who would not be able to compete with established content providers. However, whether such agreements that ensure delivery in a particular manner, create an entry barrier for newer players is for the CCI to determine. The Competition Act, 2002 is the relevant law that will ensure that agreements between entities do not create artificial barriers to entry for new players and are rendered illegal; it is not for TRAI to regulate competition. 

While the content provider is entering into agreements with the ISP so that their content is delivered faster and such agreements correspondingly/proportionately reduce the speed of other content providers on the same IPS platform, is purely competition law proposition. It is a matter of trial that will determine that such agreements are causing entry barriers for other content providers. In fact, Ofcom, the equivalent regulator in the EU, has clearly laid down that it shall exercise its jurisdiction under the UK Competition Act to address any discrimination of data dissemination carried out by the ISPs. The following is the extract from the document released by Ofcom of its stand on Net Neutrality:

“Finally, we note that the provision of managed services inevitably involves a degree of discrimination. Such discrimination is likely to be acceptable as long as its purpose and effect is to enhance efficiency, rather than to restrict competition. We do not discuss discrimination in the provision of managed services in this document, as we would expect to address any competition concerns such discrimination might entail using either our ex post powers under the Competition Act or our ex ante powers under the Revised Framework in relation to access and interconnection” 

While Ofcom may have the statutory authority under the UK Competition Act, in contrast, TRAI having ousted its own jurisdiction under Section 14 (a)(iii)(A) of the TRAI Act, 1997 does not even have the required jurisdiction to adjudicate upon the “competition concerns” including the concerns over Network Neutrality.

As of now, TRAI through its consultation paper only seeks to regulate OTTs. The chapter on Net Neutrality of the consultation paper is generously borrowed from the FCC Rules, and even uses the same terminology of “paid prioritization”, “throttling” and “blocking”. While TRAI could borrow from the US, it should not be inspired without context. To address competition, and uphold Network Neutrality, a “one size fits all” approach might not be ideal, considering that services such as medical emergencies, remote operations, security threats, public protection, disaster management and calamity averment exercises do require a faster lane for data dissemination. For instance, the app launched by Delhi Police, Himmat, for the safety of women in Delhi should definitely be on a faster lane than other apps. A reasonable, balanced approach to the issue of Net Neutrality should be the priority of the Government agencies in India, including, perhaps, a combined role played by the TRAI and the CCI together to ensure the internet continues to be the playground for innovation and is vibrant with healthy competition. 

Views expressed are the author's own.