16  Special Feature Net Neutrality

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

OVER ZERO RATING

Eight 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

The Raging
Debate
What is Zero Rating
Zero 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.

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)

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 Rating
SACHIN 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 iSPIRT

Flipkart 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 JANARDHANAN

CO-FOUNDER & CEO OF VGULP,

WHICH LISTS DEALS AT PUBS & BARS
Just 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.

he crescendo of shrill
cries outside forced
the top management
of Flipkart into quiet
introspection within.
Last week, it abandoned 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 consumed by users.
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. We will be walking away from the ongoing discussions with Airtel, the company
said in a statement.
Opponents of the practice of zero
rating, vehemently argue it violates 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-

net neutrality. I strongly disagree

with this, Zuckerberg wrote. 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.
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 philosophy of net neutrality; but it is
the specific practice of zero rating
and whether or not it violates net
neutrality that has sparked the current debate.

The Debate
Zero-rating plans give dominant
global web services an advantage
over nascent local competition,
putting small and medium enterprises and local content and service
developers at a significant disadvantage, says Mishi Choudhary,
executive director of SFLC.in, a
not-for-profit organisation for legal services working to protect
civil liberties in the digital
world.
Airtel strongly refutes
that its product violates
net neutra lity principles. Airtel Zero
provides consumers
with more choices
(including one where
their access is paid
for by the app developer), and provides
internet companies
with marketing options that are much
more efficient than
the traditional channel they have used,
the telco said in a statement, adding it backs a
free internet.
Apart from Airtel and
RCom, most ot her
Indian telcos including Idea Cellular,
Uninor and Tata
Teleservices also
have plans offeri n g F ac eb o ok ,
W hatsApp or
Wi k ip e d i a at
nominal charg-

Critics say there

are zero-rating
products. These
havent raised any
hackles, but are
differentiating
between apps
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 discussions between Airtel and Flipkart,
also drew Facebook founder and
CEO Mark Zuckerberg into the debate. Internet.org, a Facebook-led
initiative that seeks to work with
technology leaders and telecom companies 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 latters 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 philanthropic, but we dont believe it
is, says Antony Alex, chief executive of myLaw.net, an online education platform. Ultimately, people
will soon equate the internet with
Facebook and 15-20 sites, etc. Its
essentially monopolistic and anticompetitive. 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 defended Internet.org. Some people
have criticised the concept of zerorating that allows Internet.org to
deliver free basic internet services,
saying that offering some services
for free goes against the spirit of

Free
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 differentiating between apps.
Sharad Sharma, angel investor

The Corporate Angle

Companies that
use zero rating or
sponsored data

Companies that
have been fined
for zero rating

Indias Bharti Airtel offers Airtel Zero

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 year

In 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 caps
Facebook has Internet.org
where partner telcos (Reliance
Communications in India) offer free
access to for no charge
Twitter 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 charges
MTN Uganda has several charging
plans based on popular apps such
as African movies and music videos
streamed directly to smartphones
or tablets

Slovenian 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 year
Deutsche Telekom in
Germany tried to cap the
volume of fixed broadband
while exempting its IPTV
app, but the German courts
screamed foul

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

Paid
improve internet access.
The first billion
internet users in
the world were created
without such plans being
offered, they say.
Savetheinternet.in, an
online campaign to preserve 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 marketing 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 separately, the website said.
The page was created
on April 12 to petition the
telecom regulator against
any move to alter net neutrality, 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 marketing, and student startups can grow
purely on the basis of their product
and consumers sharing it. In a fencedin Airtel Zero, that virality will not exist, 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 internet by telecom operators and ISPs,
should be licensed or regulated.
The regulator has asked stakeholders to send in suggestions by April
24 while counter-arguments need
to be submitted by May 8. Trai will
subsequently come out with its recommendations on the subject.
The telecom ministry has separately 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 Experience
The telecom industry points to the US
regulator Federal Communications

Commissions (FCC) decision not to

include zero rating in its net neutrality 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 neutrality, 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, compromised or discriminated against.
Hemant Joshi, partner at consultancy firm Deloitte Haskins & Sells
says differential pricing is not just
in telecom alone. For example, airlines 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 hospitality 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 rationale to charge different applications according to the data traffic
generated and the type of connectivity parameters (high availability,
reliability, secure, etc), says Joshi.
Globally, the issue of net neutrality 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,

Telecom industry
points to the US
regulator FCCs
decision not to
include zero rating
in net neutrality
guidelines
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 internet, 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 ministers comprising representatives of
all 28 European Union countries.
In 2010, Chile became the first country to adopt provisions around net
neutrality in its telecommunications
law. In 2014, it also barred the practice of giving big companies zerorating access to their services. The
Netherlands, in 2011, joined Chile by
banning carriers from following a
differentiated tariff structure for internet-based communications services. 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

What are Countries

Doing About It
Countries that
have banned
zero rating
Chile, Norway, the
Netherlands, Finland, Iceland,
Estonia, Latvia, Lithuania,
Malta and Japan
WHY: 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 thirdparty 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 rating
Brazil, US, Canada, Mexico, Ecuador, Peru,
Israel, EU, UK, Belgium, France, South
Korea, Colombia, Uruguay, Argentina
WHY: 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 zerorating 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.

The Most
Important
Battlefield
The 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

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 2011
Verizon files lawsuit against FCC
and wins in January 2014. Court
rules that FCC has no authority
to enforce net neutrality rules
May 2014
FCC 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 2014
President 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 2015
The 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

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 services
No Blocking: Broadband providers
may not block access to legal
content, applications, services or
non-harmful devices
No Throttling: Broadband providers
may not impair or degrade lawful
internet traffic on the basis of
content, applications, services or
non-harmful devices
No 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 affiliates
FCCs 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