Net neutrality is a principle in the realm of the internet, advocating for an open and equal playing field for all online content and services. It ensures that internet service providers (ISPs) treat all data on the internet the same way, without discriminating or charging differently based on the content, source, or destination. Net neutrality safeguards innovation, competition, and consumer choice on the internet. However, recent demands by telecom companies (TSPs or telecom service providers) have raised concerns, especially among startups, about the preservation of net neutrality in India.
In an open letter, the founders of over 120 startups, including Nikhil Kamath of Zerodha and Vijay Shekhar Sharma of Paytm, have beseeched the country’s telecom regulator, TRAI, to uphold the spirit of net neutrality and avoid taking any discriminatory move towards the “overregulation of internet services.” They were referring to the demand by telecom service providers for compensation from OTT players for using their networks.
What is net neutrality?
Net neutrality is the idea that ISPs should provide access to all content and applications regardless of the source and without favouritism or bias. This means that your ISP should not block or slow down access to websites, apps, or services, nor should they prioritise certain content over others. Net neutrality ensures that the internet remains an open and level playing field where users can access the content and services of their choice, and startups and established companies can compete on an equal footing.
Telcos’ demands and the implications
Telecom companies, such as Airtel, Jio, and Vodafone Idea, have recently requested the Telecom Regulatory Authority of India (TRAI) to permit them to charge startups a “network usage fee” based on factors like traffic and the number of users. They have also proposed bringing some types of online applications under the same regulatory framework as telecom service providers.
This move has sparked concern among 128 Indian startup founders, who are advocating for the preservation of net neutrality. They argue that these demands may have far-reaching and detrimental consequences for the economy and the thriving Indian startup ecosystem.
Why these demands may endanger net neutrality
1. Potential discrimination: Allowing telecom companies to charge fees based on network usage could lead to discrimination against smaller startups and content providers who may not be able to afford these charges. This could create a skewed playing field in favour of larger, well-established companies.
2. Entry barriers: If startups are burdened with additional costs and regulations, it could create entry barriers that stifle innovation and deter new players from entering the market. This could limit consumer choice and competition.
3. Contradiction with startup initiatives: The demands to impose licensing and cost obligations on over-the-top (OTT) services run counter to the Indian government’s Startup India initiative, which aims to foster innovation and entrepreneurship.
4. Impact on consumer choice: Giving TSPs the power to control access to certain content or services could limit consumer choice by influencing the availability, speed, or cost of access to specific online apps and services.
5. Inherent differences: The founders argue that there are structural and functional differences between traditional telecom services and internet applications and service providers. They emphasise that internet services are delivered via a complex network of networks called the internet and should not be treated the same as traditional telecom services.
Preserving net neutrality
The open letter to TRAI called for the reinforcement of the principles outlined in the 2016 regulations that prohibit discriminatory tariffs for data services. The startup founders stressed on the importance of maintaining net neutrality to protect innovation, competition, and consumer rights on the internet.