It is Time. The need for Forward looking Policies.

In Depth

It is Time. The need for Forward looking Policies.

John Medeiros | May 2015

TRAI’s consultation paper focuses to a large degree on OTT applications that are used as communications services. We are concerned, on the other hand, with development of high-capacity broadband networks capable of delivering large quantities of high quality video content. As in other countries, we should therefore anticipate that the future principal use of Indian broadband networks will be to provide video, which consumers will use to watch at the time of their choosing on many different kinds of devices.

In much of the developed world, the Internet has in fact become a TV network with some other uses, and Indian policy should be made with that in view. In fact, IP Video traffic made up two-thirds of global internet traffic in 2013; the percentage will rise to around 80% by 20181. For the Asia-Pacific region alone, the corresponding numbers are 63 % in 2013 and 75% by 2018.

The television industry wants and needs to be able to reach consumers with service offers that meet them where they want to be; that means a different future – the content industry is moving online, and THAT means having networks that are capable of accommodating demand. We do not believe the TRAI or the government should adopt policies that result in reducing funds for network investment. Advocates of “networks for all, open to all” sometimes forget that capable networks are costly, and they will not build themselves.

We do not believe a government role in financing such networks is appropriate, both because governments have shown themselves to be incapable of moving with sufficient alacrity and flexibility to accommodate dynamic market demand/technological change, and because we do not think governments need to devote taxpayers’ scarce resources to building networks to be used primarily for entertainment. The private sector could and should mobilize the necessary resources to make these investments, as long as government policy recognizes and facilitates that resource mobilization.

The online content industry in India is only at an embryonic stage of development. Market actors are just beginning to frame consumer offerings to see which can succeed in the Indian context. We are confident that much more experimentation can and must take place in the coming years, and we have two overriding concerns in that regard:

— TRAI and the government must avoid seeing the online content industry as another facet of the mature television content supply industry, ripe for extension of the same regulatory approaches. This would be a colossal mistake, especially at this new stage of development of online content supply in India. Over-regulation will constrain development of newer business models which could be of great benefit to consumers and to India’s overall economic development. Stated differently, in India’s specific circumstances, submission of online content suppliers to the entire panoply of regulations (rate regulation, “must provide,” interoperability, interconnection regulation, etc. etc.) that have evolved in the cable and satellite sectors would kill innovation. We favour leaving sufficient scope for commercial actors to develop new services and offer them to consumers without having to deal with the heavy hand of regulation.

— There are numerous actors, big and small, in the internet economy who see other people’s content as attractive underpinnings for services for which the goal is simply sales of bandwidth or advertising. Development of the online pirate economy saps legitimate content production of its energies (and in turn makes it much harder to finance network development.) In the context of this consultation paper, what that means is that no policy favouring consumer access to the internet (e.g. “net neutrality”) should be interpreted as giving consumers a right to access unlawful (including pirated) content.

“NET NEUTRALITY”

Certainly there are key consumer interests with respect to use of internet services that need to be protected, and key principles that should be established and defended. But in developing their approaches to these issues the TRAI and the government should beware of extending a smothering regulatory blanket over a new and still dynamically-growing industry. The real consumer needs must be balanced against the very real dangers of over-regulation.

To achieve this balance, we urge the TRAI and the government to focus primarily on defining and protecting legitimate consumer interests, without extending extensive regulations into upstream dealings between services and network providers.

THE PRINCIPLES THAT TRAI SHOULD DEFINE AND ATTEMPT TO PROTECT ARE THESE:

Consumer access – Consumers should have access to all lawful content on the internet; there should be no blocking of services whose main business is distribution of lawful content, and no unreasonable discrimination among service providers by network operators. This is what we understand to be the essence of “net neutrality.”
Key information disclosure – Consumers should have a guaranteed right to accurate, comparable and relevant information about the management practices of the operator from which they choose to buy internet service, and about the full costs and conditions of the service they purchase. Legitimate network management measures, including data caps and bandwidth limitations, are inevitable, in current situations of limited network capacity, but they should be clearly specified and understood.
No cross-subsidies – Every consumer should not be expected to pay for network services at rates that subsidize service to the heaviest users. If a consumer doesn’t want to buy Netflix, for example, he/she should not have to pay internet service rates set to provide Netflix-like bandwidth. Differential consumer pricing should be recognized as an essential element in meeting the needs of vastly different groups of consumers.
Non-discrimination at the basic service level – If judged necessary to meet the public concerns expressed during this consultation, the TRAI may define the parameters for a basic level of internet service, setting minimum bandwidth and speed standards, and the types of services that must be supplied in a completely non-discriminatory manner at the basic service level. (At this service level, essential network management practices may still be applied, but policies must be transparent.) Examples of services to be included in the definition of basic services might be all services related to health, education, government service and social messaging.
Internet consumers may then be offered the opportunity to purchase superior service levels (above the basic service). Those who do not buy superior service will find it difficult to access high-bandwidth entertainment applications; this should be expected, as long as consumers have clear and accurate disclosure of any prioritization being applied (e.g. exemption from bandwidth caps, or “zero-rating” of certain services.)

Overall, the approach should be to give consumers clear information and clear rights, and to preserve their downstream access to all the knowledge (but not necessarily all the video) on the internet. Upstream, detailed “interconnection” type regulation of video supplied over the internet should be avoided; an extension of the current pay-TV regulatory framework into the online ecosystem is unwarranted and would be highly damaging to innovation in developing new internet business models.