Should TRAI Modify/Reverse its Order on Differential Pricing?

Recently on Feb 8th, 2016, the TRAI came out with an order prohibiting telecom operators to price data services differentially. The idea is to prevent operators to influence internet traffic to favored sites by pricing access to these at a much lower rate - thereby acting as gatekeepers.  The clause 3 of the Feb 8th order is reproduced as under.

"1. No service provider shall or charge discriminatory tariffs for data services on the basis of content.

2. No service providers shall enter into any arrangement, agreement or contract, by whatever name called, with any person, natural or legal, that has the effect of discriminatory tariffs for data services being offered or charged to the consumer on the basis of content. Provided......."

The order in the current form might prevent introduction of new technologies/services, and might lead to the same practice (of tariff discrimination) that TRAI is trying to prevent.Why? Let me explain. 

Providing Free Data to Consumers

Free data can be subsidized either by the operator or by the content providers. The TRAI's Feb 8th order prevents an agreement between an operator and a content provider to offer differential tariffs and hence free data. In that case, how is it possible provide free data? As the TSP agnostic entity suggested by TRAI in their consultation paper on "Free Data" will need a license (the entity will have to deploy traffic management and billing capability to be able to settle revenue with underline operator) and therefore will be governed by the TRAI's Feb 8th order and hence will not be able to enter into an agreement with content providers to offer free data. See my earlier note on this subject - Business Models for "Free Data".

Discrimination by Content Providers

The content providers, on the other hand, can buy pre-paid data packs from downstream retailers, and provide these to the customers who visit their sites. This practice cannot be regulated by TRAI as it does not have jurisdiction. Also, there aren't any rules on ground which can prevent the promoter of an operator to invest in the content provider and have a tacit understanding (with the content provider) of handing out pre-paid data packs only of his company (ignoring others). This is will lead to an outcome that is similar to "Zero Rating" though indirectly. See my earlier note on this subject -  "Content Providers Can Discriminate, But the Operators Can't!". Hence, if the content providers cannot be prevented from discriminating on data tariffs, why restrict the operator's flexibility to innovate on data tariffs? That too when "Zero Rating" can be achieved indirectly through a tacit understanding between an operator and a content provider (not violating the Feb 8th order) .

Enabling Internet Telephony (VoIP)

One of the biggest issue that one needs to address for enabling Internet Telephony in India is to integrate VoIP with the existing IUC (Interconnect Usage Charge) regime. The current IUC regime is based on "conventional voice", which is metered on per-minute basis. The VoIP, on the other hand, rides on data which is charged on a per-MB basis. At this metric, a VoIP call will get priced at a fraction compared to a conventional voice call (4 to 8%). See my earlier note on this subject - "Internet Telephony (VoIP) in India". Hence, unless an operator is allowed to detect a VoIP call and meter it on a per-minute basis, he will not be able to reconcile interconnect charges with the terminating operator. This practice of detecting VoIP calls from data and charging it on a per-minute basis than on a per-MB basis will violate TRAI's Feb 8th order. Hence, internet telephony in India will not take-off unless the IUC rates are brought to "Zero". Bringing the IUC rates to "Zero" will destabilize the industry and question the relevance of the CPP (Calling Party Pay) regime thereby destabilizing the sector. Please note that IUC is an outcome of the CPP regime which prevents the calling party operator to charge for the incoming call to recover its deployment cost.

Conclusion

There could be many other examples where TRAI's Feb 8th order could either become a barrier or will need modification. Also, in the current form it does not prevent "Zero Rating" due to the possibility of a tacit understanding between a content provider and an operator. It light of this situation is reversing/modifying TRAI's Feb 8 order on differential pricing a good idea? 

(Views expressed are of my own and do not reflect that of my employer)