How FCC has Treated Net Neutrality December 2010 FCC adopts first-ever set of rules to regulate internet access where internet service providers are supposed to give equal treatment to all legal web content on their networks

January 2011Verizon files lawsuit against FCC and wins in January 2014. Court rules that FCC has no authority to enforce net neutrality rules

May 2014FCC chairman Tom Wheeler releases a plan that would allow companies like AT&T, Comcast and Verizon

to discriminate online and create pay-to-play fast lanes. The proposed rulemaking on internet regulatory structure was open for public comments

November 2014President Obama calls on the FCC to take up the strongest possible rules to protect net neutrality, the principle that says

internet service providers (ISPs) should treat all internet traffic equally

February 2015The FCC votes in favour of a strong net neutrality rule to keep the internet open and free. FCC classifies both wired and wireless broadband as a Title II common carrier, giving it more regulatory power in the process. Lawsuits follow

Special Feature Net Neutrality

The crescendo of shrill cries outside forced the top management of Flipkart into quiet introspection within. Last week, it aban-

doned a zero rating agreement with Airtel only eight days after it signed it. Under this arrangement, Airtel users would have been able to access Flipkart.com for free, with Flipkart paying Airtel for data con-sumed by users.

There has been a great amount of debate, both internally and exter-nally, on the topic of zero rating, and we have a deeper understanding of the implications. We will be walk-ing away from the ongoing discus-sions with Airtel, the company said in a statement.

Opponents of the practice of zero rating, vehemently argue it vio-lates the principle of net neutrality. Telecom companies and Internet Service Providers should treat all websites, apps and services just the same no website should be given preference or discriminated against.

A telecom company offering us-

ers free access to one website (with the latter paying the telco for such free access given to consumers), while charging for other websites is discriminatory, opponents to zero rating argue.

What started off as a debate around the now annulled zero rating discus-sions between Airtel and Flipkart, also drew Facebook founder and CEO Mark Zuckerberg into the de-bate. Internet.org, a Facebook-led initiative that seeks to work with technology leaders and telecom com-panies to offer free internet access to the underprivileged, launched services in India in early February.

Under the initiative, users of Reliance Communications (RCom) have free access to Facebook and some other useful websites like OLX, AccuWeather and Dictionary.com, with Facebook paying RCom for the data so consumed on the lat-ters network.

As the Airtel-Flipkart debate raged, Internet.org came in for sharp criticism that this too was a zero-rating scheme violating net neutrality. Mark Zuckerberg makes it (Internet.org) sound phil-anthropic, but we dont believe it is, says Antony Alex, chief execu-tive of myLaw.net, an online educa-tion platform. Ultimately, people will soon equate the internet with Facebook and 15-20 sites, etc. Its essentially monopolistic and anti-competitive. Barring the big boys, all innovation will be stifled. Its a real worry and threat for all of us; theres no philanthropy here.

Zuckerberg waded into the debate last week with a blog post that de-fended Internet.org. Some people have criticised the concept of zero-rating that allows Internet.org to deliver free basic internet services, saying that offering some services for free goes against the spirit of

net neutrality. I strongly disagree with this, Zuckerberg wrote. Net neutrality ensures network opera-tors dont discriminate by limiting access to services you want to use. Its an essential part of the open in-ternet, and we are fully committed to it. But net neutrality is not in con-flict with working to get more peo-ple connected. These two principles universal connectivity and net neutrality can and must coexist.

Still, apps like Cleartrip and some belonging to media firms like NDTV have exited the Internet.org platform after this controversy. The Times Group also committed to exit if its direct competitors did so.

Nobody not Airtel, not Flipkart, not Mark Zuckerberg and Internet.org is arguing against the phi-losophy of net neutrality; but it is the specific practice of zero rating and whether or not it violates net neutrality that has sparked the cur-rent debate.

The Debate Zero-rating plans give dominant global web services an advantage over nascent local competition, putting small and medium enter-prises and local content and service developers at a significant disad-vantage, says Mishi Choudhary, executive director of SFLC.in, a not-for-profit organisation for le-gal services working to protect civil liberties in the digital world.

Airtel strongly refutes that its product violates net neutrality prin-ciples. Airtel Zero provides consumers with more choices (including one where their access is paid for by the app devel-oper), and provides internet companies with marketing op-tions that are much more efficient than the traditional chan-nel they have used, the telco said in a state-ment, adding it backs a free internet.

Apart from Airtel and RCom, most other Indian telcos includ-ing Idea Cellular, Uninor and Tata Teleservices also have plans offer-i ng Facebook, W h at s App or Wi kip edi a at nominal charg-

es, if not for free. Critics say there are also zero-rating products. These plans so far havent raised any hackles, but looked at closely, are in effect differen-tiating between apps.

Sharad Sharma, angel investor

and co-founder of software products think-tank iSPIRT, argues against zero rating. It favours richer apps over others. Over time, this reduces ecosystem innovation as incumbent apps become more powerful, he says.

Critics of zero rating also challenge Zuckerbergs argument that it will

improve in-ternet access.

The first billion internet users in

the world were created without such plans being offered, they say.

Savetheinternet.in, an online campaign to pre-serve a free internet, said in an open communication that zero-rating plans such as Airtel Zero would mean forced marketing expenses

for startups. While it may be seen as an optional mar-keting expense to begin with, once one company comes on board, its competitors will also be forced to join. They will be locked in. Startups that wish to compete with zero-rated companies will have to raise money sepa-rately, the website said.

The page was created on April 12 to petition the

telecom regulator against any move to alter net neutral-

ity, and has so far directed over eight lakh emails to Telecom

Regulatory Authority of India (Trai), backing a free web. Today, they can choose not to spend on mar-keting, and student startups can grow purely on the basis of their product and consumers sharing it. In a fenced-in Airtel Zero, that virality will not ex-ist, and it will become a compulsory cost as an access fee, it said.

The debate over zero rating comes amid a consultation paper floated by Trai on whether over-the-top services, popularly called apps, which are delivered over the inter-net by telecom operators and ISPs, should be licensed or regulated. The regulator has asked stakehold-ers to send in suggestions by April 24 while counter-arguments need to be submitted by May 8. Trai will subsequently come out with its rec-ommendations on the subject.

The telecom ministry has sepa-rately formed a six-member panel to consider arguments on the subject. The panel is expected to submit its report by the second week of May.

Telecom minister Ravi Shankar Prasad though has openly backed a free internet, and said consumers should have free access to all apps.

Global ExperienceThe telecom industry points to the US regulator Federal Communications

Commissions (FCC) decision not to include zero rating in its net neu-trality guidelines. Were saying the same logic should apply in India too. If you look at that (FCC) ruling, were saying that as we develop our definition of net neutrality, we should also go through this debate and ask ourselves, Why should we bring in commercial issues into definition of traffic management or net neutral-

ity, says Rajan Mathews, director general of COAI, the industry body representing GSM telcos

like Airtel, Vodafone and Idea. He added that zero rating is just

one of the options for customers and no customer is disenfranchised, com-promised or discriminated against.

Hemant Joshi, partner at consul-tancy firm Deloitte Haskins & Sells says differential pricing is not just in telecom alone. For example, air-lines charge differently for the space usage for first class, business and economy class and provide priority check-in and specialised service according to the class. The hospital-ity industry charges differently for the size and quality of rooms. The amount of the highway toll varies by vehicle type, weight or number of axles, with freight trucks often charged higher rates than cars.

On this basis, telcos have a ra-tionale to charge different applica-tions according to the data traffic generated and the type of connectiv-ity parameters (high availability, reliability, secure, etc), says Joshi.

Globally, the issue of net neutral-ity came into focus after a tussle between video streaming service Netflix and cable companies in the US. Netflix has been fighting it out with companies like Comcast over demands for higher pay for faster streaming speed. Early this year,

US telecom regulator FCC ruled that the internet should be treated as a public utility and barred telcos from discriminating on the basis of pricing or bandwidth speed. A spate of court cases challenging the rules have already been filed in US courts.

The European Parliament, in April 2014, voted in favour of net neutrality and against a two-tier in-ternet, but it was only the first stage of the process. The proposal to be adopted as law needs to be ratified by the European council of minis-ters comprising representatives of all 28 European Union countries.

In 2010, Chile became the first coun-try to adopt provisions around net neutrality in its telecommunications law. In 2014, it also barred the prac-tice of giving big companies zero-rating access to their services. The Netherlands, in 2011, joined Chile by banning carriers from following a differentiated tariff structure for in-ternet-based communications serv-ices. Then came Slovenia, in 2013, and more recently, Brazil joined the club in April 2014. In India though, the debate is far from finished.

With inputs from Jayadevan PK and Neha Alawadhi

OVER ZERO RATINGEight lakh emails arguing for a free internet hit Trai, Flipkart walked out of a deal with Airtel, Mark Zuckerberg

had to step up and defend Internet.org. Romit Guha and Gulveen Aulakh unravel the fierce debate around zero rating, where a content provider pays a telecom company to ensure it can be accessed free by consumers

Paid

Free

The Raging Debate

The Most Important BattlefieldThe US is the worlds most influential base of internet users and technology companies. How the Federal Communications Commission is handling the net neutrality debate is being watched the world over

What is Zero RatingZero rating is a practice where mobile

operators (like Airtel) do not charge end consumers for access to specific websites or apps (like Flipkart.com), but instead charge the latter for the

data consumed by consumers in accessing the website or app.

FCCs Current Ruling on Zero Rating and Net Neutrality FCCs Stand on Net Neutrality: FCCs Open Internet rules protect and maintain open, uninhibited access to legal online content without broadband internet access providers being allowed to block, impair, or establish fast/slow lanes to lawful content. Open Internet rules are designed to protect free expression and innovation on the internet and promote investment in the nations broadband networks. The new rules apply to both fixed and mobile broadband servicesNo Blocking: Broadband providers may not block access to legal content, applications, services or non-harmful devicesNo Throttling: Broadband providers may not impair or degrade lawful internet traffic on the basis of content, applications, services or non-harmful devicesNo Paid Prioritisation: Broadband providers may not favour some lawful internet traffic over other lawful traffic in exchange for consideration of any kind in other words, no fast lanes. This rule also bans ISPs from prioritising content and services of their affiliatesFCCs Stand on Zero Rating: It implies that it sees zero rating as creative pricing. It allows zero rating of apps and services, but regulators have said that it will look at each case individually

The Argument for Zero Rating

MARK ZUCKERBERG CEO, FACEBOOK

The internet is one of the most powerful

tools for economic and social progressIn many

countries, however, there are big social and economic

obstacles to connectivity. The internet isnt

affordable to everyone, and in many places awareness of its value remains lowThis

is why we created Internet.org, our effort to connect the whole world. By partnering with mobile operators and governments in different countries, Internet.org offers free

access in local languages to basic internet services in areas like jobs, health, education

and messaging But some people have criticised the concept of zero rating that allows Internet.org to deliver free basic

internet services, saying that offering some services for free goes against the spirit of

net neutrality. I strongly disagree with this.

We fully support net neutrality. We want to keep the internet open. Net

neutrality ensures network operators dont discriminate by limiting access to

services you want to use. Its an essential part of the open internet, and we are

fully committed to it. But net neutrality is not in conflict with working to get more

people connected. These two principles universal connectivity and net neutrality

can and must coexist.

(Excerpts from Zuckerbergs post on Facebook last week)

THE WAR

Companies that use zero rating or sponsored data Indias Bharti Airtel offers Airtel ZeroIn the US, AT&T introduced a sponsored data plan in January 2014, which allowed developers and brands to deliver content to consumer smartphones outside their data capsFacebook has Internet.org where partner telcos (Reliance Communications in India) offer free access to for no chargeTwitter Access is a zero-rating plan offered by Pakistans Mobilink and Uzbek telco Ucell under Twitter Zero, since 2013. Indias RCom also offers Twitter Access Djuice Norway offers unlimited Facebook with no subscription and no chargesMTN Uganda has several charging plans based on popular apps such as African movies and music videos streamed directly to smartphones or tablets

Companies that have been fined for zero rating Vodafone offered plans in the Netherlands, where customers watched HBO via HBO Go app without getting charged for data used Dutch Authority for Consumers and Markets (ACM) fined Vodafone 200,000 in January this yearSlovenian operators Telekom Slovenije and Si.mobil were fined by the national regulator Akos for, respectively, zero rating the Deezer music service and the Hangar mapa cloud storage service in January this yearDeutsche Telekom in Germany tried to cap the volume of fixed broadband while exempting its IPTV app, but the German courts screamed foul

The Corporate Angle

GOPAL VITTAL MD & CEO, BHARTI AIRTEL

Airtel Zero has been painted as a move that

violates net neutrality... I wanted to clear the air

and reiterate that we are completely committed to

net neutrality Airtel Zero is a technology platform

that connects application providers to their customers for free... Instead of charging

customers we charge the providers who choose to get on to the platform. Our platform is open to all application

developers, content providers and internet sites on an equal basis... As a company we do not ever block, throttle or provide any

differential speeds to any website. We believe customers are the reason we are in

business. As a result we will always do what is right for our customers.

(Excerpts from an email Vittal sent to group CEOs, employees and customers)

The Argument Against Zero RatingSACHIN BANSAL CEO, FLIPKART

We at Flipkart have always strongly believed in the

concept of net neutrality, for we exist because of

the internet. Over the past few days, there has been a great amount of debate, both internally

and externally, on the topic of zero rating, and we have a deeper understanding of the

implications. Based on this, we have decided on the following: We will be walking away

from the ongoing discussions with Airtel for their platform Airtel Zero. We will be

committing ourselves to the larger cause of net neutrality in India.

(Excerpt from Flipkart statement after it ended its arrangement with Airtel last week)

SHARAD SHARMA iSPIRTFlipkart can pay money to a mobile pperator like

Airtel so it can avail of faster speeds in a congested

network. Zero rating is an edge case of this where a user receives Flipkart

traffic for free. This model tends to favour richer apps, which are often incumbent apps, over others. Over time, this reduces ecosystem innovation as incumbent

apps become more powerful.

ANAND JANARDHANANCO-FOUNDER & CEO OF VGULP,

WHICH LISTS DEALS AT PUBS & BARSJust thinking about a

bigger player like Zomato zero rating their app

was starting to make me sleepless. Many of these guys wouldnt even have

made it big if it was not for a neutral network.

What are Countries Doing About ItCountries that have banned zero ratingChile, Norway, the Netherlands, Finland, Iceland, Estonia, Latvia, Lithuania, Malta and JapanWHY: Most of these countries have found zero rating a discriminatory practice which threatens access to an open, neutral internet. These governments do not let telecoms differentially price their own or third-party internet services. Earlier this year, the Dutch regulator fined Vodafone and KPN for zero rating certain internet-based services while in Slovenia, the regulator fined Telekom Slovenia and Telekom Austria because they zero rated music and cloud-based apps

Countries that havent banned zero ratingBrazil, US, Canada, Mexico, Ecuador, Peru, Israel, EU, UK, Belgium, France, South Korea, Colombia, Uruguay, ArgentinaWHY: Zero rating continues to be a contentious issue in most geographies that have adopted net neutrality. Some of these countries have very clearly defined laws or rules regarding net neutrality, while others have soft laws or are working on proposals to bring in net neutrality. However, most do not have explicit provisions with regard to zero rating, and are having to rethink their position, keeping the interests of various stakeholders in mind. For example, Canada recently fined

two telecom companies for zero-rating some applications. Among the arguments against banning zero rating was the fact that companies will not have any effective mechanism to deal with larger and more established rivals that hog bandwidth, such as Netflix in the US.

Critics say there are zero-rating products. These havent raised any hackles, but are differentiating between apps

Telecom industry points to the US regulator FCCs decision not to include zero rating in net neutrality guidelines

16 THE ECONOMIC TIMES | NEW DELHI | TUESDAY | 21 APRIL 2015