Impact of Net Neutrality on Consumers

Impact of Net Neutrality on Consumers

Impact of Net Neutrality on Consumers. On 8th February 2016, the Telecom and Regulatory Authority of India (TRAI) released the Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016. Clause 3 of the Regulations provided 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 to the consumer on the basis of content…”

The said regulation had sparked off a debate among consumers and service providers on the utility of net neutrality in India.[1]

Net Neutrality Explained

The term ‘Net Neutrality‘ was coined by an academician Tim Wu, who stated that it was best defined as a network design principle. The concept was discovered in response to efforts undertaken, and the resulting altercation by the Federal Communications Commission (FCC), a USA-based regulatory body, to require broadband providers to share their infrastructure with rival firms.

The concept of net neutrality provides for three major changes in internet services:

  • All websites or applications should be treated equally by Internet Service Providers(ISPs).
  • It should be possible to access them at the same internet speed, and
  • The cost structure shall be uniform irrespective of any factor.
Significance of Net Neutrality

Consumer rights advocates believe that the implementation of net neutrality has more advantages than disadvantages. It is a basic consumer right that a user should be able to enjoy internet services without any discrimination or restriction to the same. In its absence, the internet may be fragmented and not comparatively easily accessible to those consumers who are unable to pay for certain services. These advocates have also raised a contention that if limitations on internet services are leniently lifted, broadband providers will begin selling the internet in “bundles”. Under a bundling system, access to a greater number of applications would invite greater pressure on the pockets of consumers. Being able to use social media sites like Twitter, Facebook and Instagram could thus require paying for a premium social media package.

Further, discrimination of internet services could lead to the market being more dominated by bigger players, potentially restricting consumers’ access to small-scale, but innovative services. A monopoly is a dangerous agent here. If established, customers can be deprived of their knowledge of better but lesser-known start-ups, denying them their right. In a contrasting way, it could also lead to healthy competition among different providers to provide their best services to sail in the market, thereby benefitting the consumer.

Why Net Neutrality is Impractical?

Net Neutrality is often misunderstood as akin to the concept of Open Internet, which is more like a genus to the species of Net Neutrality. The concept of Open Internet pertains to the optimum utilization of full resources of the Internet and that the means to operate on it are easily accessible to all individuals and businesses. Now while open internet can be asserted as a matter of right in this era of globalization, Net Neutrality is more of a conceptual aspect that has to be analyzed throughout before it can be granted the status of a right.

Smooth implementation of Net Neutrality demands fulfillment of a number of conditions. These conditions include the intrinsic need to protect networks from disruptive attacks like malware, the management of the flow of heavy Internet traffic, the need to comply with legal obligations including regulations passed by the TRAI, maintenance of acceptable levels of quality of service (QoS) and many more. This requires the network to be managed with acceptable tools for traffic management. Being a developing country, India has to progress a lot in terms of groundwork required for achieving the above criteria.

As can be observed in the case of services like Swype and Google Hangout driving away broadband services designed for video calls, Net Neutrality can lead to disastrous consequences. It can potentially lead to one provider driving all its rivals out of business and ending up controlling the entire supply of a good or service. This would enable a monopolist to raise prices high enough to recoup all the losses it incurred to wipe out rivals. This strategy would enrich the monopolist with the general public suffering every time it uses an essential product or service that the monopolist supplies. The recent case of Reliance Jio on Predatory Pricing is an example of that.

Conclusion

The debate over the pros and cons of imbibing the concept of net neutrality may be interminable, but what needs to be pondered over and prepared for is the challenges it poses to Indian consumers how can they be overcome efficiently.

[1] Consultation Paper on Differential Pricing for Data Services”, the Telecom Regulatory Authority of India, December 9, 2015

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