Last week, India became the sixth country to see the launch of Internet.org, the outcome of a Facebook tie-up with Anil Ambani’s Reliance Communications. Internet.org is a service that promises to bring the internet to you for free. But of course, you need a Reliance mobile connection to get that access. Plus the Internet.org app brings to you not the internet, but only a limited part of the internet, which directly challenges the net neutrality principle.

Facebook CEO Mark Zuckerberg posted about the possibilities of Internet.org, “More than a billion people in India don’t have access to the internet. That means they can’t enjoy the same opportunities many of us take for granted, and the entire world is robbed of their ideas and creativity.”

But even as this is said, it is clear that for Facebook, Internet.org is no act of philanthropy but an essential commercial move. Internet.org’s definition of the “internet” is 38 websites or services, noticeable among them Facebook itself, to the exclusion of prominent competitors like Google.

So what Internet.org neatly does, even as the current user market moves towards saturation, is create new markets for Facebook. It can acquire new users for Facebook from amongst the population not currently connected to the internet. Furthermore, by limiting the idea of the internet to merely these 38 services, it develops among these new users, a taste for Facebook and allied services. And Facebook has money to make from all of this: new users mean new data to sell and new money to make from advertising.

Access for users is a mere corollary to this. There also remains the point whether Internet.org can bring real access to even the limited bouquet of services it claims to, considering that Reliance Communications does not extend coverage to all parts of India.

Competition vs. net neutrality

One significant question which then arises is: Does the business model of Internet.org amount to fair play in the competition of the market? Can the agreement between Reliance and Facebook concerning provision of free Facebook but not rival social media such as Twitter, for example, be said to be anti-competitive?

Internet.org is a product borne out of an agreement for vertical integration in violation of net neutrality, such that the Reliance Communications internet service gives preferential treatment to the services included in Internet.org. So one may ask: Can the violation of net neutrality amount to a violation of competition regulations?

This has been a fraught discussion with no easy answers. A recent meeting in Berlin between EU decision-makers and stakeholders saw Gesche Joost, the German government’s internet ambassador, state that net neutrality is an important precondition for free access to the internet and fair conditions for competition on the internet. This comes even as the European Parliament discusses a proposal which could mean the end of net neutrality by creating options for better traffic management and access.

What has been the opinion in India? A case of similar preferential treatment of content has been one of the subjects of a Competition Commission of India’s decision, whereby the Mukesh Ambani owned-Reliance India Ltd. subsidiary Infotel, proffering to offer broadband on 4G spectrum, entered into an agreement with Network 18 for preferential access to its content.

The CCI held that such an agreement was not anti-competitive because Infotel’s preferential access did not give it an elevated position in the distribution market because of “the intrinsic open access characteristic of an ISP.” But in a case like Internet.org where certain content is made available to one ISP, i.e. Reliance, in a manner it is not made available to others, the “intrinsic open access characteristic of an ISP” disappears. Can such an agreement then be deemed anticompetitive? It will be interesting to see what position the CCI might take on this.

Meanwhile, TRAI too has not seen vertical integration agreements as an inherent evil, at least in the context of broadcast media content and distribution; in fact it notes the advantages of efficiency and cost which come with vertical integration, without harming competition. If a similar rationale can apply to wireless internet services and content, then Internet.org remains safe because such a scenario will assume that violating net neutrality may not necessarily harm competition.

Regulating for a competitive market vs. regulating for equal treatment

In the past, however, TRAI has attempted to use both — Market Competition and the Net Neutrality principle — to govern the internet services market. This is significant because often state and economic advisors will see regulation for net neutrality viz. regulation for equal treatment, as the antithesis of a competitive market, simply because net neutrality regulates and in the telecommunications market, the lack of regulation produces maximum competition. In this context, TRAI’s mixed approach can provide an interesting reference point for the way forward.

TRAI’s recommendations on local loop unbundling (though they have not been implemented) suggest regulation for a competitive market. Local loop unbundling refers to the introduction of competition at the ISP level by opening up the last mile infrastructure (which refers to the physical infrastructure, both wired and wireless, that connects the actual users to the telecom network) to non-discriminatory use by ISPs which will then connect directly to the internet.

This method has proven very successful in the European Union and the UK to create conditions where the market mechanism itself drives down the prices for internet access, while ensuring equal treatment of traffic/internet content. That is because, nominally, if an ISP does not provide equal access to all internet content, users would shun it.

On the other hand, TRAI’s recommendations on VOIP services have regulated telecom companies so that they provide equal access to VOIP services. In this way, it relied on a regulatory approach for equal treatment, rather than merely relying on market mechanisms.

This admittedly was at a time when VOIP call quality was considerably poor, and VOIP services could not be said to be substitutes for telephone calls. But as the VOIP service quality improves, the regulation for equal access approach begins to come into conflict with the regulation for competitive market approach.

Consumer interests can be satisfied by either approach, albeit with different risks. Regulation for competitive markets runs more risks for equal access to content on a single ISP, and therefore for diversity of content and sources on a single ISP network. Conversely, regulation for equal access i.e. for net neutrality runs the risk of creating incumbents in the telecom market à la USA, where telecom companies pass off their regulatory costs to the user in the form of high prices and bad service quality.

Is net neutrality better than Internet.org?

The critical question is “who is the target user of Internet.org?”. If it is the citizen uninitiated to the internet, he runs the risk of lack of options in accessing different kinds of content on the internet. But why not run that risk if he is unable to access any content on the internet as of now? Particularly when Internet.org is available for free? Net neutrality then, is an empty concept for such a consumer. Prices are his real problem.

Upon the launch of Internet.org, lawyer Prashant Reddy was quoted in the Hindu as saying, “One needs to see how the public understands the principles of net neutrality…There is no outcry when data packs are offered free but controversy erupts when a service provider tries to charge subscribers for services, as in the case of Airtel recently.”

This is a pertinent observation because it points to the very hollowness of the principle of net neutrality for a large swathe of the Indian population which cannot afford internet access, or avails itself of only extremely poor service quality even when paying for it. In essence, consumers are outraged at prices and what they get for it, not at the violation of some far-off principle.

The problem here is not the lack of understanding on the part of the consumer-citizen regarding the significance of net neutrality. The problem rather, is the theoretical poverty of net neutrality as a concept, when it just assumes access to the internet as a given.

In a country like India, where actual internet access is definitely not a given, advocacy on equal access to all content on the internet (in other words, net neutrality) becomes a moot point for most of the population. It is true that Internet.org is no philanthropic mission to bring internet access. But unless net neutrality positions refine themselves and respond with equally usable, if not better, solutions, for the very real issue of internet access and pricing for consumers, nobody should judge an Internet.org user.

Published on: 21 February 2015. First published in The Hoot.