There is a reason TV broadcasting, cable TV, voice services and the Internet are covered by different regulatory frameworks. History partly is to blame. Common carrier regulation has been applied when “natural monopoly” is assumed. At least in some countries, an entirely different model–namely “freedom”–has been used for content products. That is why telephone, natural gas, water and electricity systems use common carrier or utility regulation, while newspapers, magazines and Internet content are largely unregulated.
In between are other communication or content industries and apps that fall between utility and “free speech” models. And that is where much friction occurs, as highly-regulated service providers compete directly with less-regulated rivals. That means harmonization is needed, even when it does not happen immediately.
Broadly, two directions are possible: more freedom for all contestants, or more regulation for all contestants. Some will prefer regulation; others more freedom.
That now is taking one form in India, where regulators ponder whether mobile service and app providers should be allowed to offer free access to at least some apps, to encourage sampling of the value of the Internet, even when there is no direct revenue model (mobile service provider does not get paid by app provider; nor does app provider get paid by service provider), only the expectation that users will eventually become customers.
About 25 percent of one billion Indian mobile service subscribers use mobile data plans, representing about 300 million accounts. It goes without saying that app and service providers would like to boost that to 100 percent. “How” to do so is contentious, though.
Telecom Regulatory Authority of India (TRAI) has pressured Reliance Communications to halt its offering of Free Basics access, for example, and now TRAI is seeking comments from stakeholders on data plan pricing that offers either free or discounted access for some apps.
Some might argue that regulation of Internet services using a voice common carrier model is itself an issue. “The regulatory guidelines till now on discrimination and transparency in tariff offers were more focused to address the regulatory concerns in voice telephony,” says TRAI.
As TRAI rightly says, in stating common carriage principles, the “service provider shall not, in the matter of application of tariffs, discriminate between subscribers of the same class and such classification of subscriber shall not be arbitrary.”
Pricing of access to Internet apps sometimes varies. “Under one form, the service provider selects the content, which is offered free or bundled together at reduced rates,” TRAI notes. “In another form, one content provider creates a platform where other content providers can apply, and be selected.”
The platform creator then partners with service providers to provide free Internet access to those content providers, for the subscribers of those service providers. That seems clearly the issue TRAI is most concerned about as it is the principle underlying Free Basics, for example.
TRAI does not yet seem to be looking at other forms of sponsored data access, such as ad-supported access.
Two key principles of tariff regulation are non-discrimination and transparency. Some might not agree that either discrimination or opacity are dangers with Free Basics, but that is among the issues TRAI wants to consider.