India has been in the throes of a long-gestating debate on net neutrality – the principle that all data on the internet should be treated equally.
This began in March, when the Telecom Regulatory Authority of India (TRAI) authored a consultation paper proposing a regulatory framework for over-the-top (OTT) internet services such as WhatsApp and YouTube. The consultation, which closed in April, ignited debate on a wide range of policy issues, including concerns about privacy, security and consumer awareness.
In the eye of the storm is Airtel Zero, a recently launched platform that allows customers to access mobile applications at zero data charges, akin to a toll-free number where cost is shifted from the caller to the company. However, not everyone is convinced. Indian e-commerce company Flipkart pulled out of Airtel Zero over public protests against abuse of net neutrality principles and consumer choice. The wave of public outcry was supported by a number of pro-consumer advocates, including Bollywood celebrities and the comedy group, All India Bakchod.
Meanwhile, Facebook chief executive Mark Zuckerberg continues to insist that Facebook’s own Internet.org service does not abuse net neutrality and is aimed at providing access to those communities in India where even basic internet is unavailable.
While the vast majority of consumers in India are in favour of net neutrality, telecom companies are on the other side of the fence, wishing to have greater flexibility to determine how data travels over their networks. It’s not difficult to guess why – an entirely “neutral” internet limits their prospective revenues from bandwidth-hungry OTT services – and, after all, the network infrastructure needed to support these services is not going to build and maintain itself.
A sign of things to come?
However this plays out in India, a specific net neutrality law in the country may set a precedent for other countries in Asia.
In emerging markets, the “splinternet” question remains unanswered – that is, will services such as Internet.org lead to multiple parallel internets, each offering only a limited bundle of services? In that respect, the internet ends up looking more like the traditional cable TV bundle, something that net neutrality advocates are desperate to avoid. Governments and incumbent operators in these emerging markets will find themselves having to balance the need to connect the “unconnected” with the fact that the quickest path to doing so may involve tie-ups with commercial operators, which may then wish to exert a level of control over the services that users can access.
In all markets, wider and faster connectivity will in turn drive the rapid growth of OTT services and, in particular, the relatively bandwidth-hungry online video services. 2015 is already being described as the year of online video, with Netflix making its first move into Asia and regional ventures such as iFlix and HOOQ (a joint venture between Singtel, Warner Bros and Sony) rolling out. More content and services, and more users, means added pressure on network infrastructure and on ISP business models, and that makes it increasingly likely that those ISPs will look to enter commercial arrangements with the OTT operators.
The ISPs themselves are moving further into content production and distribution, which, in the view of the pro-neutrality camp, is likely to create a dangerous conflict of interest. In a world where ISPs operate both the pipes and the content services, some consider it inevitable that those ISPs will favour their own offerings over those of their competitors, thereby skewing the market and creating barriers to entry.
Meanwhile, all of these developments need to be viewed in the context of the race to be the Silicon Valley of Asia. Governments are keen to create ecosystems that are favourable to technology and digital media startups – and the pro-neutrality camp argues that it will be impossible for startup OTT businesses to compete without net neutrality rules. However, governments need to balance this goal with the need to maintain a favourable environment to protect the legitimate business interests of more established local and international companies.
Whatever happens in India, the still hotly debated questions there are equally applicable to every major market in Asia, from the highly developed markets such as Singapore and South Korea to emerging markets such as Myanmar. Some governments are taking the position that their existing quality-of-service and competition rules sufficiently address the issue. However, the net neutrality question isn’t going away and it seems a safe bet that we will see some kind of specific net neutrality regulations in Asia before long. The outcome of this debate will likely shape the way that users in Asia engage with the internet for years to come.
Azmul Haque is a consultant and Matt Pollins is a principal associate at Olswang Asia
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