Hullabaloo over Net Neutrality

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Parag Kar Vice President, Government Affairs, India and South Asia at QUALCOMM
Originally Internet was designed not to fail catastrophically like the conventional systems, thereby enabling nations to counter nuclear attacks. Now with the passage of time, the conventional systems also have become capable of carrying Internet traffic. This has blurred the line of distinction between services – empowering the fringe players to offer voice, messages etc at a fractional cost than the telecom companies. Hence the telecom operators are no longer able to monetize these (voice, messages etc) in the same manner as they used to in the past – forcing them (the telecom players) to evolve to a new model. While they are in the process, the non-telecom players are becoming increasingly concerned. They fear that a telecom player controlling the network can unfairly tilt the balance to their disadvantage.

Telecom networks primarily offer two kinds of services. One kind requires a lower latency and therefore the packets carrying these services (like peer to peer voice, video etc) are given preference. Whereas the other kind (browsing, email etc) run on a “best-effort” basis, and the packets carrying these are even dropped to make way for the former. Now, if the networks had infinite capacity, it can carry all packets with the lowest latency possible. But, the wireless networks practically cannot have infinite capacity and therefore packets of some services have to be prioritized to ensure fidelity. 

Hence, a wireless network cannot be fully “net neutral”. But the smaller content providers fear that those with deep pockets can get “fast lanes” even within the pipes meant for running packets on a “best-effort” basis, thereby significantly degrading the quality of their services. Even the bigger players (with deep pockets) have concerns. They are apprehensive that the telecom operator with ultimate control over the access networks can promote platforms discreetly and push them in slower lanes. Hence, the genesis of the “net neutrality” debate is this fear of the “possibility of misuse” of access networks by the telecom operators for narrow commercial gains. 

All platforms must proactively define rules: The Internet runs on various platforms owned and controlled by providers. It is not limited to telecom operators alone but includes the content providers as well. The customer using these platforms expect a fair treatment. Hence, the platform providers must transparently state these rules up front to boost confidence in their customers. But what if some players in the chain violate these rules? They will be penalized by their customers who will move to competing platforms playing by fair means. Hence, it is possible for the market to self-regulate driven by this feedback mechanism. However, sometimes in absence of adequate competition, some players can abuse their dominant position due to lack of alternatives before the customers – resulting in “market failures”. In situations like this, adequate regulations are necessary to prevent such mishaps. But, stifling the platform providers with arduous rules in anticipation that the spirit of “good governance” will always be violated, will leave the platform providers with little room to innovate and monetize their investments. This is true for all kinds of platform providers – both the telecom operators and the content providers. Then why this debate is only centered around the telecom operators alone, when there are platform players running on the fringe controlling a sizeable amount of the Internet traffic?

Bottleneck resources must be priced optimally: The quantum of investments on networks is directly proportional to the cost of acquiring bottleneck resources like spectrum; ROW (right of way) etc. The higher the price of these bottleneck resources the lesser will be the network’s capacity to carry Internet traffic. As we have seen earlier, if the networks have sufficient capacity and coverage then the prioritizing packets may not be necessary. You might have already experienced this – WhatsApp voice calls work pretty well over a fatter data pipe than when it is thin. Indian operators have spent more than 50% of their capex in buying spectrum, and a huge amount (more than 10% of the revenue) goes to govt as license fees.  Also, note that China does not pay for spectrum and license fees. Then the Indian operators have to pay a fortune to the state government as fees for granting ROW. The result of all this – the availability of inadequate resources for expansion and increasing network’s capacity to run data – resulting in network congestion. 

Therefore, how can we expect the networks to be neutral when it is highly congested due to unavailability of resources at an optimal price? Shouldn’t this issue be also part of the “net neutrality” debate?

In India, unlike in other countries, the Internet runs over wireless networks. As the penetration of wireline networks is dismally low. Hence, it important that we focus our energy to increase the capacity of the wireless networks – making more spectrum available at an optimal price, and enhancing network capacity by installing more base stations. This will create more space in the telecom network to run Internet traffic and therefore will help minimize conflict between the content players (requiring a fair access) and the operators (wanting to offer innovative services to monetize their investments).

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