Comments on the report issued by the Indian Department of Telecommunications, on Net Neutrality

1. Specific Comments on DoT Committee Report on Net Neutrality
In addition to the general comments, please note the following specific comments on the DoT
Committee Report on Net Neutrality (the “Report”). (Capitalised terms/abbreviations herein have the
meanings given to them in the Report.)
Firstly, the bedrock assumptions on which the TSPs’ opposition to net neutrality is based, are not sound.
OTT applications/players are not cannibalising the revenues of TSPs. Data is a significant source of
revenue for TSPs, and world over, consumption of data has only increased. Data is set to (at least
nearly) replace voice at some point in the future, and it is in the TSPs’ interest to improve infrastructure
and technology for data services, rather than attempt to claim cannibalisation and prop up regulatory
constraints on data-based innovations such as OTT communication services.
Secondly, as regards registration of TSPs, ISPs, etc., the requirement for registration flows from the
provisions of the Indian Telegraph Act, 1885 (“ITA”), and relates in essence not to the transmission of
text, voice and video messages, but to the infrastructure and resources surrounding such transmission.
By way of explanation, Section 4 of the ITA provides that the Central Government shall have exclusive
privilege of establishing, maintaining and working telegraphs, but may grant a license to do so, to any
person. The term “telegraph” itself means any appliance, instrument, material or apparatus used or
capable of use for transmission or reception of signs, signals, writing, images and sounds or intelligence
of any nature by wire, visual or other electro-magnetic emissions, radio waves or Hertzian waves,
galvanic, electric or magnetic means. It is therefore apparent that it would be entities setting up the
telegraphs (as defined in the ITA) that would be subject to license, and not entities utilising such
telegraphs. As a matter of fact, TSPs‟ main function vis-à-vis the internet is to provide “dumb pipes”
which are required to be licensed under the ITA. The provision of services or transmission of messages
using such “dumb pipes” does not have to be licensed, under the ITA. OTT players providing
communication services are merely utilising spectrum/infrastructure provided by TSPs, which is already
licensed in accordance with the ITA. Requiring OTT players to once again take licenses in this respect
would be to require multiple licenses for the same resource.
Further, requiring OTT players to separately pay for use of TSPs‟ networks would effectively permit the
TSPs to charge multiple times for the same network/infrastructure access. On the one hand, the user
must pay the TSP, and on the other, the OTT player must also pay the TSP. In addition, it is likely that
OTT players would attempt to pass down the increased costs to the users. The net effect would
therefore be that the users would have to pay additional charges for accessing the internet, and
accessing specific services, while in any case augmenting TSPs‟ data revenues. This would cause a
windfall to TSPs, at the cost of the users and OTT players. Therefore, OTT players must not be required
to pay for use of the TSPs‟ network, over and above data charges paid by users. Additionally, such a
policy would inherently favour established OTT players with sufficient funding, over nascent start ups
who may not be able to pay such rates.
It is also important to bear in mind that competition is beneficial to the user. One of the TRAI‟s main
objectives, as stated on its website, is to “provide a fair and transparent policy environment which
promotes a level playing field and facilitates fair competition.” OTTs have not, by innovating, “stolen”
profits from the TSPs; rather the TSPs have failed to innovate to keep on par with OTTs. Market
disruption and innovation are generally perceived as positives and not negatives, in developed
economies. Trying to contain or curtail OTT players in order to favour brick-and-mortar players is
protectionist, in a manner that will not encourage brick-andmortar players to innovate and capture
market share themselves.
As regards arguments of evasion of taxation or other laws, as a matter of fact, many other Indian
companies and foreign investors, including certain TSPs, have had and continue to have longstanding
taxation battles with the revenue authorities in India. This issue is irrelevant to the considerations at
hand, and should not have a bearing on them.
As regards security and data concerns, it may be noted that OTT players are subject to privacy
regulations under Indian laws, to the extent applicable. As regards OTT players who are situated outside
the country, it is pertinent that a notification dated August 24, 2011 made pursuant to the Information

2. Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or
Information) Rules, 2011 has specifically clarified that the rules pertain to bodies corporate or persons
located within India.
With respect to matters of national security and breach of existing laws of the land, it may be noted that
OTT players are required to comply with notices of law enforcement authorities and orders of
jurisdictional courts. Morever, OTT players have a record of cooperating with Indian agencies in
investigations and court proceedings. Consequently, this situation does not call for intervention.
There is also an argument set out in the DoT Report that net neutrality benefits only a small section of
the population with smartphones, at the cost of a much larger population not having access to the
internet. It may firstly be noted that there are newer manufacturers of smartphones at prices much more
competitive than flagship brands such as Apple, LG, Samsung, etc. Moreover, there is an impetus for
mobile hardware manufacturers to come up with more reasonably priced handsets, and opportunities
for new players in this area. Throttling the internet would only help established players and prevent new
players from entering the hardware segment, which would not benefit the consumer in any way.
Harini Sudersan
Advocate, India
Attorney, California