Layton

waste of investors’ money that no TSP would easily try again. It is not logical that TSPs would risk
shareholder returns simply to promote content they like that their customers do not. This point
that TSPs offer content that they want, not what consumers want, is facile and unfounded. Every
decision an operator makes must face the test of market discipline. Consider: is the choice to
rollout 4G that of the TSP or that of the market?
TSPs make content offers every day in an attempt to discover what their consumers want. Most
offers fail in the marketplace. Consumers decide for themselves what they want. It is a dynamic
process to which regulators need not control. The regulator only needs to ensure that rules of the
TTO are followed.
Some important points should be made about vertical content and telecommunications
arrangements that are made in South Korea and Japan. There are countries have chosen vertical
integration of content and communication on purpose and for good reason. These countries are
relatively small geographically and are linguistically homogenous. My research show that these
countries have a higher rate of mobile application innovation even with the vertical integration.
Moreover they, like the Nordic countries, have soft net neutrality rules in place, meaning that they
manage net neutrality with inclusive participatory governance, 38 such as multi-stakeholder
models. Soft net neutrality rules turn out to be better to support emergent content providers on
mobile networks. 39
The lesson for India is that it makes sense to allow TSPs and content providers to create
partnerships to serve their distinct audiences. India is a highly diverse country with people of
multiple languages, tastes, and interests. There is no one service or platform that does it all, nor
should there be a single price for access. TRAI need not be fearful of diversity but embrace the
dynamic, emergent forces which have worked to date.
TRAI notes the following,
Analysis of the terms and conditions of certain offers launched in the market claiming free
access to certain services shows that though there is no charge in accessing the platform
itself, the moment a consumer clicks on any other link which directs him to a different
website or clicks on the pictures or videos, applicable data usage charges is payable. In
addition, if the smart phone has some application running in the background utilizing data,
charges would be payable irrespective of the fact that the customer is using a free facility at
the relevant time. Therefore, there is every chance of such consumers ending up paying for
data usage. Since such ‘free’ facility is availed primarily by non-users of data, they would
not have availed any data packs providing lesser effective usage charges. Tariffs for
wireless data as per default tariffs are considerably higher (up to even 100 times higher)
than the effective tariffs in data packs. The magnitude of price differential is huge and can
have dangerous implications for users of such facilities which are claimed to be free, if not
conveyed to the consumer transparently and effectively. (Paragraph 21)
38 For a review of the three types of legal instruments of net neutrality and the countries where they are used, see my
referenced paper by Springer.
39 See my research published by Springer as part of the Dynamic Coalition on Net Neutrality.
13 | 7 January 2016 | Differential Pricing for Data Services