 "Airtel")
The debate on net neutrality reached a high when the country's largest cellular operator, Bharti Airtel, announced plans to introduce a different pricing for voice over internet protocol (VoIP) services last month. Net neutrality advices internet service providers and governments against charging for net services based on user profile, content, platform or application.
Bharti Airtel's announcement of special packs for VoIP, used in India on platforms like Skype, Viber and Line, invited the derision of consumers on the social media and drew the Telecom Regulatory Authority of India into the debate. A detailed consultation is needed, the watchdog said, even as it started consultations on over-the-top (OTT) services that deliver audio, video and other media over the internet without the involvement of a multiple-system operator in control of distribution and content.
Another announcement by Bharti Airtel came a few days later. It assured consumers that it would not launch the higher priced data packs for VoIP.
Why did Bharti Airtel do a U-turn? Possibly, the company wanted to get a feel of regulations on OTTs before the fourth generation (4G) war began. While Bharti Airtel has already rolled out 4G in select cities, the real skirmish for data-dominant 4G will begin when Mukesh Ambani-controlled Reliance Jio rolls out its services. Given Reliance's disruptive pricing after it entered the voice business in 2002-03, it may well set the 4G market afire too. Also, companies like Vodafone, Idea Cellular and Telenor are readying to jump on the 4G bandwagon. After rolling back its plans, Bharti Airtel said in a statement: "We have no doubt the consultation process will have a balanced outcome, which will not only protect all stakeholders' interests and the sector's viability, but also encourage much-needed investment in spectrum and the roll-out of data networks to fulfil the objective of digital India." One thing that Bharti Airtel's move ensured is that the regulatory framework for OTTs will be framed much earlier than expected.
Despite figures that show Bharti Airtel is earning well from data (in the quarter ended September 2014, data revenue jumped 74 per cent with data volume doubling in India, while the consolidated mobile data revenue, which accounts for more than two-thirds of its incremental revenue, grew 66.7 per cent that quarter at Rs 2,540 crore), the company felt OTTs were eating into its revenues. While Bharti Airtel's move did not run afoul of norms simply because the principle of net neutrality has not been enshrined as law, the global experience has been that consumers do not respond to such changes. KPN and TeliaSonera, two European telecom operators, had attempted to charge extra for VoIP in 2012, but had to retreat following hugely negative reactions from customers. It was the same story in the United States when it was proposed that Netflix and Hulu should be provided fast lanes for premium services.
To explain the dynamics, we can take the analogy of a toll road that levies different taxes for different types of vehicles, depending on what sort of use they make of the road. But the toll is never determined on the basis of how much of the road space a vehicle takes up. Similarly, if a cellular network is considered a highway, different services exert different pressures on it. Instant messaging and net browsing consume little bandwidth compared to VoIP and video streaming at specific times. Bharti Airtel can well ask its subscribers to pay higher when they consume higher data packets per second and less when they consume less data. But asking them to pay a high fee for a particular service may not be justified. It would be akin to asking larger, wider cars to pay a higher toll on highways.
Who should have net control?
"Net neutrality is a concept that might not be easily followed in India," explains Hemant Joshi of accountancy consultancy Deloitte Haskins & Sells. "In the West, data rates are high and the availability of spectrum is higher. Indian rates are among the lowest in the world, while the required spectrum is not available. Following net neutrality in India might lead to an unviable proposition for cellular carriers." He, however, says that if one company introduced its own rates and the entire sector stayed silent, it wasn't likely to work in favour of that company. "The regulator should look into the issues concerned and finalise guidelines that not only protect consumer interest but also ensure sustainability for operators," he says.
While saying that "business must be viable and sustainable", the company has assured it is committed to making VoIP services "extremely affordable and attractive by ensuring adequate minutes for a very small charge on VoIP". It has even promoted its own VoIP service, Airtel Talk, to foreign callers. However, it added that "VoIP services in their current form are not tenable for us."
Consumers have always been receptive to moves that make services cheaper, not the other way around. Among many such instances, In March last year, Telenor's India entity, Uninor, started offering Facebook and WhatsApp together for just Rs 1 a day or 50 paisa an hour, and Rs 15 a month for unlimited data usage. In the context of the rates for other data services that the company offered at the time, this new move appeared to violate net neutrality. But there were no consumer questions; they rejoiced in services becoming cheaper.
"Globally, discussion are on to make regulators, associations and carriers work together to make the internet accessible, open and free," says Tarun Pathak, senior analyst (mobile devices and ecosystems), Counterpoint Research. "Operators should think of smarter ways to recover their investments than to pass them on to end users, which is by far the easiest option."
Pathak adds that operators have realised that increase in mobile data usage through OTTs alone can't offset their declining revenues. "Operators always had the resources and opportunity to become what WhatsApp or other OTT players have become today, but they somehow missed the trend and now it is unfair to make customers pay for that missed opportunity," he says.
An analyst with a consulting firm says the use of Skype on mobile phones in India has increased due to lower data charges. "While these applications have helped mobile operators boost data usage, a move to charge higher for a particular service will hamper the growth," he cautions.
Bharti Airtel's move could have met with success had other operators like Vodafone and Idea Cellular followed suit. Not surprising then that Bharti Airtel had to roll back the higher rates.
