Is TRAI masking an anti-competition stance behind net neutrality?

The Telecom Regulatory Authority of India (TRAI) has put out a consultation paper that has brought nearly every internet user in India up in arms against its effort to put restrictions on the internet. 

The Save The Internet campaign has been launched and only less than a week is left for citizens to register their protest or recommendations with TRAI over the clamp down of their internet rights. 

A minute study of the consultation paper, however, makes one beget a simple question: Does TRAI have an anti-competition stance? 

If you read the 120-page document, the answer, sadly, is yes. 

Let us look at some of the statements that TRAI has made in the document. 

1. TRAI says that the provision of services by Over The Top players (OTT), or mobile application (app) makers, will impact revenues of network operators insofar as their current business models are concerned. 

Our view: At least one of the telecom companies is also present in retail business and batted very heavily for the introduction of foreign direct investment (FDI) in retail. They argued that small kirana stores will have to change with the competition else Darwinism will prevail. Shouldn't the same logic apply to these telecom companies when app-makers are canabilising on their business models? 

2. "Earlier, if a consumer bought an app/ content, the telecom company (TSP) did the billing and the content provider had to depend on the TSP for its revenue share from the amount collected by the TSP. However, with the availability of internet banking, the content/ app provider can independently bill the consumer and get the money directly." 

Our view: What the telecom lobby is effectively saying is that eliminating middlemen to bring down costs for the consumer is acceptable only when we are not middlemen. In that case, we are going to cry over revenue lost from adding inefficiencies in the marketplace. 

3. "The traditional income model of the operators, based on subscriptions and metered services, mainly voice and messaging, is showing signs of running its course. At the same time, growing OTT communication services use the TSPs’ networks and compete with the very same TSPs’ own proprietary services." 

Our view: TRAI answers this itself when it says that, "Without a doubt, the increased use of OTT applications increases the growth of data usage and, thereby, increases the flow of revenue to TSPs." 

4. "While the rise of OTT services has created serious concerns for the traditional telecoms operators, it has also created an environment for innovation and alternative services to grow."

Our view: Has TRAI actually come out and said that they are anti-innovation? You decide. 

5. TRAI says ,"The growth of OTT apps, providing voice services has started to impact revenues of TSPs from voice services, which constitutes a major portion of their revenues. Therefore, the question that arises is whether there is a need for regulation to be put in place. Is a regulatory response warranted to this outcome of the technological evolution of the telecom sector?" 

Our view:  The answer to this lies in the consultation paper itself. TRAI says that the impact on voice services is not considerable because of three reasons. Firstly, India has one of the lowest voice calling rates. Secondly, mobile internet penetration is only around 20%, that too predominantly on 2G when the world is moving on to 4G and beyond. Lastly, because of low call tariffs, 80% of customers still prefer using mobile voice services and not apps like Skype, etc. 

TRAI says that telecom companies used to make money earlier on "value-added services" and now they don't as mobile networks have blurred the contours and consumers can buy the apps directly without the telecom company being the middleman. 

This has led to telecom companies earning revenues only from wholesale data usage. 

Which brings us to the most important point. It is time that telecom companies realise that they are fast turning into "bit pipes" --- providing fast speed internet and let consumers choose what they want to do over their networks.