TRAI Leaves Door Slightly Open for Free Data, Recommends New ‘Third Party Aggregator’ Model

The telecom regulator also takes aim at India’s Universal Service Obligation Fund and says it should be tapped for providing free 100 MB to rural Internet users.

R.S. Sharma. Source: eletsonline

TRAI Chairman R. S Sharma Credit: eletsonline

New Delhi: The Telecom Regulatory Authority of India (TRAI), on Monday, proposed a new method by which corporate and non-corporate entities could potentially provide free data to Indian Internet users without violating the regulator’s order on net neutrality.

“To increase participation of other entities for incentivising free data, there is a need to introduce third-party (aggregator) to facilitate schemes which are TSPs-agnostic and non-discriminatory in their implementation,” the telecom regulator said in its list of recommendations on free data.

Earlier this year, the question of providing free data, and how it could negatively impact net neutrality and market competition in India, ended with the telecom regulator coming out with “The Prohibition of Discriminatory Tariffs for Data Services Regulations”. These regulations  precluded service providers from differentially pricing data packets on the Internet on the basis of content.

While the order was largely seen as a victory in the fight for net neutrality, critics had also pointed out that the regulations were too broad-based and might have damaged the larger fight for Internet access by banning potential for other non-discriminatory free data models.

To address some of these concerns, TRAI kicked off a consultation process over “free data” earlier this year and held an open-house discussion on the same in Hyderabad at the end of October.

The results of its consultation process were released today. TRAI is careful to note that “any scheme for the provision of free data should meet certain basic criteria… that it should not be possible for a TSP/ISP to use discriminatory pricing of certain data content as a service differentiator”.

For the purposes of its free-data consultation process, TRAI specifically examined three different ways by which entities could provide free-data: a “Reward Model” where recharge for for data usage could be provided as a reward through a TSP-agnostic platform, a “Toll-free Model”, and a “Direct Money Transfer Model”.

No toll-free

The regulator specifically rules out any Toll-Free model, saying that it basically involves an Internet service provider “getting into an agreement with the aggregator… and the model would constitute a form of zero-rating with a strong discriminatory effect”.

For the other two, TRAI is more upbeat. With regards to a reward model, popularised by entities such as Gigato or Jana, the regulator says it “recognises there are certain benefits of the reward model when it is structured in a manner that is open and non-discriminatory”.

To this end, TRAI believes that there is a “need to introduce third-party (aggregator)” to increase the participation of other entities for incentivising free data.

Why does the regulator refer to these third-parties that could potentially provide free data as aggregators? Under the reward model section of its recommendations, the regulator debates the question of whether a reward model of free data “could be considered as a form of data reselling by a non-licensed body”.

However, it ultimately believes that is not correct because a “distinction between situations where a provider is offering data services and one in which a data is offered to consumers as a stand-alone product to be serviced by a licensed TSP”.

For instance, it appears that TRAI thinks of these new aggregators as a local shop vendor who sells the Internet voucher coupons of various telecom companies such as Airtel or Vodafone. In this case, that local shop vendor is an “aggregator” who sells prepaid recharge coupons that are available for purchase by any person.

Similarly, a new third-party aggregator would “acquire such data packs in bulk with the intention of distributing them to consumers as rewards, without any arrangement with any TSP and allowing the users for accessing any content of their choice should therefore not be regarded as offering ‘data services’”.  

Does this mean Facebook’s Free Basics is back?

It’s not sure to what extent this new third-party aggregator model will work out. Firstly, these are just recommendations that are being put out by TRAI. The Department of Telecommunications will likely have to approve and sign off on this as well.  Under its list of recommendations on how these new third-party aggregators (that would offer free data) should look, TRAI also makes it clear that:

  •  Any scheme for free data must be TSP-agnostic and must not involve any “arrangement between the TSP and the aggregator/content provider”
  •  Any aggregator who wants to offer free data will need to register with the DoT.
  •  The registrant must be a company registered under the Indian Companies Act, 1956.

This means that if Facebook, or even Gigato and Jana, wants to offer free data it needs to register with the DoT and be a company registered under the Indian Companies Act.

Free 100 MB data- Cashless India

Equally important are TRAI’s suggestions under the “Direct Money Transfer Model”, which is implicitly a government-incentivised or a government-subsidised scheme.

As TRAI puts it, “in order to bridge the affordability gap for the persons residing in rural areas and to support Government’s efforts towards cashless economy by incentivising digital means, the authority recommends that a scheme under which a reasonable amount of data say 100 MB per month may be made available to rural subscribers for free”.

Most importantly, the cost of the implementation of this scheme, TRAI suggests, should come out from India’s Universal Service Obligation Fund (USOF). This fund, experts say, has largely been underutilised. Former TRAI Chairman Rahul Khullar has also pointed out “the usual bureaucratic process of decision making prevails” with regards to the USOF. And that most of the accumulated USOF money has often been used to fill the department’s budgetary hole.

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