When there’s competition, light regulation is best
It is decidedly odd that, while there has been no open house meeting on the last Trai consultation paper on net neutrality and licensing of over-the-top (OTT) services likeWhatsApp voice, the Trai—under a new chief—should select issues from the previous round and repackage them in the form of a new consultation. While not getting into OTT, Trai has asked whether—without naming them—an Airtel Zero or Facebook Free Basics is kosher. The arguments are old ones. Apart from allowing a Flipkart to provide free internet access to customers on an Airtel Zero, access to rival sites could get choked by, say, higher tariffs; similarly, a Free Basics can become a gatekeeper to the net by deciding who is on its platform. It is also argued that, while a cash-rich firm—say Flipkart—can afford to be on an Airtel Zero, an I’mReallySmall.com may not; carry that argument to the extreme, and someone will have to subsidise office space for I’mReallySmall in the central business district.
While Facebook has repeatedly said that anyone is free to offer a stripped-down site on Free Basics—this allows it to be lighter and easier to access—and it can be offered by any telco, as long as an Airtel is not choking the speed for those not on its platform, where is the worry? And given the amount of money telcos make from data—22% of Airtel’s revenues come from here and this can double in a few years—and the intensity of competition, doing this would be tantamount to cutting your nose to spite your face.
Indeed, the regulatory principle is to allow market-pricing when there is enough competition—that’s why, while Trai regulated tariffs in the initial years, it stopped long ago. That’s also why, though an SMS costs 1-2 paise to deliver and telcos charge 30-50 paise, Trai doesn’t worry—with number portability, customers can leave an Airtel for a Vodafone in an instant. A company offering a discount to its customers or a bundled movies-cum-data-package doesn’t automatically make it anti-competitive since, for this, there has to be both abuse of dominance and someone has to get hurt—with so many telcos, subscribers will leave at the first sign of foul play. And if Trai still feels there could be a problem in the future, why not clear each Airtel Zero-type plan, as a DoT committee suggested, instead of pre-judging the issue?