Indian authorities today took the dramatic step of banning “differential pricing” for data services, effectively outlawing controversial offers such as Facebook’s Free Basics and Airtel Zero.
“No service provider shall offer or charge discriminatory tariffs for data services on the basis of content,” the Telecom Regulatory Authority of India (TRAI) said in its statement.
The ruling deals a major blow to Facebook , whose Free Basics offer was designed to let mobile customers in emerging markets use some Internet services entirely free of charge.
Authorities say a penalty of 50,000 Indian rupees ($735.50) a day, capped at an overall fine of INR500,000 ($7,355.50), will be levied on service providers who violate the ruling, although players will have a six-month period in which to ensure they are able to comply with the new regulations.
Indian telcos had been in favor of differential pricing and have been upset by the new ruling. Indeed, some players have argued it will have an impact on the government’s ambitious Digital India program.
“The telecom industry is disappointed with TRAI’s decision to rule out differential pricing,” said Rajan Mathew, the director general of the Cellular Operators Association of India (COAI), in a statement. “COAI had approached the regulator with the reasons to allow price differentiation as the move would have taken us closer to connecting the one billion unconnected citizens of India.”
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Even so, experts believe the new rules are in keeping with the global trends in favor of net neutrality. “TRAI notification favoring net-neutrality is in line with what we’ve seen in the US,” says Amresh Nandan, a research director atGartner Inc. “The European Union has also ruled in favor of treating all Internet traffic equally, although some of their amendments allowed for differentiation and have been a subject of intense criticism.”
In seeking to uphold net neutrality, TRAI is also looking to protect India’s burgeoning startup community. “Start-ups today are heavily dependent on the open access of the Internet and any direction to control it can have a detrimental effect on them,” adds Nandan.
The issue of net neutrality has been in the public domain for almost a year. TRAI had previously asked Reliance Communications Ltd. , one of India’s biggest mobile operators, not to offer Facebook’s Free Basics in India. The launch by mobile market leader Bharti Airtel Ltd. (Mumbai: BHARTIARTL) of Airtel Zero, an app offering free access to some applications, had further put the spotlight on the issue.
TRAI had then come out with a consultation paper on the issue. Media reports suggest that Facebook’s strategy of trying to sway public opinion in its favor did not go down well with government authorities. TRAI had described Facebook’s tactics as an “orchestrated opinion poll” and asked the web player to refrain from such moves. (See Zuckerberg Defends Internet.org Against Indian Critics.)