India policy update: Differential pricing on the Internet

In early February 2016, The Telecom Regulatory Authority of India (TRAI), an agency that regulates internet infrastructure, released a document titled “The Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016”, which outlines the current policies on internet tariff plans. Although the report does not explicitly refer to the year-long controversy over Facebook’s Free Basics/ initiative, the public policy was created to regulate internet service providers. The TRAI banned internet service providers from charging users differential prices for data services on the basis of the content available.. TRAI wrote in press release that it was “guided by the principles of net neutrality” and that it sought to ensure customers have  “unhindered and non-discriminatory access” to the internet, making “data tariffs for access to the internet to be content agnostic.” In effect, it has outlawed Free Basics, and other schemes like it that aimed to provide discounted pricing for limited access to the internet.

In April 2015, TRAI issued a controversial consultation paper that appeared to dismiss the concept of net neutrality. Afterwards, Telecom Minister Ravi Shankar Prasad tried to calm the ensuing public outcry by stating that the internet should be linked to “the common man” in a “non-discriminatory manner”. A few months later, in December, TRAI issued yet another consultation paper on differential pricing for data services, where it asked if telecom operators should be allowed to have different pricing for accessing different websites, applications and platforms. Comments and counter-comments were invited until January 7 and January 14, respectively. An open house discussion was held on January 21, and further time to submit additional comments was given up to January 25. While the consultative period was on, Facebook launched a massive media campaign to address concerns about Free Basics and asked users to send emails to TRAI asking the regulator to allow the program.

The new order mandates that:

1.       No service provider shall offer or charge discriminatory tariffs for data services on the basis of content.

2.       No service provider shall enter into any arrangement, agreement or contract, by whatever name called, with any person, natural or legal, that has the effect of discriminatory tariffs for data services being offered or charged by the service provider for the purpose of evading the prohibition in this regulation.

3.       Reduced tariff for accessing or providing emergency services, or at times of public emergency has been permitted.

4.       Financial disincentives for contravention of the regulation have also been specified.

TRAI  made an exception for intranets or closed communication networks, saying that these can have differential data pricing. However, it says that if a closed network is used to evade the prohibitions, the exception will not apply.

TRAI notes that it will keep a “close watch” on the implementation of the new regulations and might undertake a review in two years or even earlier if necessary.