India faces critical policy choices regarding net neutrality and the potential regulation of online apps. At stake is India's opportunity to enter the digital economy, where the internet is leveraged to create inclusive access; and through which India's prodigious intellectual resources are harnessed to drive innovation.
A neutral net and vigorous innovation will also provide many of the solutions to address some of India's most critical challenges - education and training, healthcare, citizen services, market and process efficiency, transparency, empowerment, to name a few.
India is still in the early stages of the digital age. It has earned a deserved reputation in the field of information technology (IT). It now aspires to the next level of innovation and to make it a key driver of economic growth. Talented Indians have made important contributions to this phenomenon in the West and now, the challenge is to create a similar ecosystem driven by Indians in India. The Telecom Regulatory Authority of India (Trai) has the opportunity to set policy based on sound economic thought, understanding of the nature of technological innovation, with a clear grasp of the platform that a neutral net provides - as an essential and enabling "nervous system".
Net neutrality is fundamental for both vigorous economic development and for vibrant innovation. Anything less would dilute the power of competitive forces and choke innovation, one of the most important and promising drivers for economic growth.
Policymakers must view the internet as a public resource, even though much of it is privately invested and operated. The rules of the road must require telcos/internet service providers (ISPs) to provide a level playing field with unprejudiced treatment for all who wish to use the internet, without arbitrary distortion of the public resource to preferentially serve the interests of some, including their own.
This principle can be applied without conflicting with legitimate requirements to manage the mix of internet traffic. Net neutrality precludes a gatekeeper exercising direct or virtual control, for the gain of the gatekeeper or its partners. For example, e-marketplaces that slant the public resource to unfairly restrict access based on business deals with a few would be a violation of this concept.
Innovation is not a tidy process. It draws on both creative and analytical faculties. Innovation thrives at crossroads, but languishes if relegated to service roads of superhighways. The journey from idea to fiercely competitive marketplaces is perilous and fragile and requires sophisticated ecosystems that are sensitive to this process. Ongoing interactions, data exchanges, market access and calibration, ability to access talent and technology, financiers and the like, at speed, are critical to an effective innovation process. Unhindered access and a level playing field are critical requirements.
Use of this public resource is ultimately reducible to transport of digital data. Telcos/ISPs provide internet connectivity and data transport. Customers pay the telcos/ISPs for use of the internet by selecting from a menu of options - typically, connectivity and choices for speed and the amount of data usage. Such arrangements are appropriate and provide telcos/ISPs the means for return on their investment. The notion that various apps, especially OTT (over the top technology, better termed internet platforms and services) apps, are getting a free ride is plain wrong. Apps are initiated by subscribers and resulting data transport is paid for under subscription plans.
The idea of licensing apps is incorrect and regressive. It would be an ill-conceived approach to addressing concerns, including those relating to security and social harmony. Effective advanced technologies exist to spot improper use of apps and to intervene quickly. The unintended and perverse side effect of an app-licensing policy would be devastating. It would choke the embryonic Indian ecosystem for innovation and disconnect India's technology talent - discovered and undiscovered - from a major engine of future economic growth and drive innovation offshore.
There appears to be a pervasive misunderstanding about internet-based calls and media exchange, or VOIP (voice over internet protocol), where apps such as Skype are under attack. This fallacy of a free ride has been addressed earlier. VOIP is an important technology innovation that has become mainstream in advanced economies for a variety of uses. Its chief advantage is that infrastructure and operating costs are dramatically lower than traditional switched or mobile networks. VOIP connections crossing over from internet to landlines or mobile attract additional charge, for "last-mile" termination.
Consumers - individual and organisations - benefit from technological innovation through new and enhanced capabilities and lower costs. Sometimes, this results in our ability to do things that would have been unimaginable. With VOIP/video consider doctors diagnosing patients via telemedicine, migrant farmers interacting with new-borns remotely, or a small town entrepreneur pitching to a venture capitalist in Silicon Valley. Telcos/ISPs should be free to offer VOIP services as a distinct option based on undistorted costs. Steps that distort the value/cost visibility and availability to consumers would be unsound policy and harmful to the public interest.
VOIP is not a silver bullet solution. While lower in costs, VOIP has drawbacks - it is highly sensitive to network quality and congestion. VOIP would not work when power is interrupted or without internet connectivity. Customers can best judge what they need.
India is at an important crossroads for internet policy. It deserves the high road, not another entry in the list of lost opportunities.
The writer is a former chairman of Nasscom and Accenture India. He is now at the Tepper School, Carnegie Mellon University. These views are his own
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
