This is the second part of the previous article titled the same.
Market Forces and Net Neutrality: Is Net Neutrality truly Competitive?
For the consumers, absence of net neutrality gives rise to more choices in the market. ISP’s can offer an array of schemes catering to the specific needs of the consumer. With the advent of paid prioritisation, consumers who need faster connections to high volume websites and streaming services can avail the services from the ISPs without affecting the quality of service of those not using such services. Going back to the pipes analogy, there would be separate pipes of different dimensions to cater to the needs of every individual and every website. the market forces would determine the allocation of bandwidth and pricing structures rather than a blanket regulation.
In the absence of net neutrality regime, it can be theorised that low income families satisfied with limited speed in exchange for connectivity stand to benefit. Since high speed lanes are compensated for by the websites utilising them, the ISPs have the liberty of lowering the prices of basic net packs in order to attract more customers[1].
‘Zero rating’ is another concept which would be permissible under a regime free of net neutrality. It refers to the ISPs not charging data prices upon access to select websites and services,[2] while not denying access to others[3]. Zero rating significantly lowers the financial barrier of accessing internet based services since select services are free. Net neutrality advocates argue that zero rating internet is contrary to the free market principles since it limits the open market. This argument can be countered if we redefine what a market is in the case of the internet. The access to the internet is controlled by the ISPs. Zero rating provides the ISPs with the freedom to offer versatile services tailor made for the consumers. If ISPs can reach an agreement with certain websites and services in order to slot them under the ambit of zero rating, the customer in the open market eventually has more choices to choose from. Zero rating and free markets can co-exist in consonance to each other.
In a country like India where the average income is low and internet infrastructure is in its nascent stage albeit on the rise, zero rating can be a powerful policy in ushering a wave of new consumers into the world of the internet.
In principle, a regime which supports zero rating gives websites an incentive to enter into zero rating agreements and thus invest in ISP infrastructure. The ISPs also have an incentive to offer the best zero rating agreements which would attract the maximum number of consumers. The consumers get a multitude of choices offered by the free market. The competition among the ISPs would drive down the prices to reasonable levels.
Websites which come under the ambit of zero rating often launch slimmed down version of their applications in order to consume less data[4]. Examples such as Facebook Zero and Wikipedia Zero come to mind. Facebook Zero was a text only iteration of Facebook that was launched in developing countries. Facebook did not pay carriers for this content, but instead adapted its application to fit existing, limited infrastructure, helping carriers to use it as a sort of “freemium” model, hoping additional subscribers would pay for full access. Facebook and its partners saw impressive increases in data plan sales for partnering operators, causing it to expand the program, which lead to the subsequent launch of the Free Basics program under the internet.Org initiative. Free Basics is an open platform for governments, nonprofits, and commercial websites to offer a slimmed-down version of their content for free. Critics argued that it was essentially a walled garden which offered access to only a part of the internet. What they have missed is the fact that websites were free to enter the Free Basics initiative provided they launch applications in line with the standards set by the Free Basics initiative, which essentially calls for slimmed down iterations which consume less data. The ISPs/carriers have an incentive to support the Free Basics program as it might lead to additional users who subscribe in order to get full access to the internet. The consumers again have a choice between an internet experience consisting of a selected assortment of free applications/websites or a subscription to the full experience. In India, Free Basics was summarily struck down by TRAI on the basis of it being discriminatory[5]. TRAI’s myopic view on the concept of discriminatory pricing and product differentiation is unfortunately a defeat for consumer driven free markets.
Conclusion
Perhaps the biggest reason for the unanimous public support of net neutrality lies in its semantics. The word ‘neutrality’ when associated with the internet undoubtedly has a positive connotation to it. The alternative model of the internet free from the shackles of net neutrality relies on the free markets in order to produce optimal results for all the stakeholders involved. In the absence of the net neutrality regulations, the ISPs have the ability to charge the websites for preferential treatment which can include benefits such as fast lanes, lower latency, etc. The websites also have an incentive to pay for preferential treatment because the end consumer stands to benefit from enhanced performance of their websites and services. The end consumers have the luxury of choice. They can choose to select ISPs and their services tailor-made to suit their consumption needs. A market driven model for the internees the potential to reach a point of equilibrium that would satisfy the needs of all the entities in the market. Net neutrality restricts the choice of the consumers in favour of greater control in the hands of the State. The central assumption of which net neutrality lies, i.e. all data is equal is a fundamentally incorrect notion, as highlighted earlier.
Doomsday predictions foretelling the death of the internet are therefore, perhaps, misplaced. The internet in the US is now in the hands of the free market. The next few years shall prove to be crucial in our understanding of the way markets operate. The biggest issue surrounding the discourse on net neutrality is its highly polarised nature in the United States as well as the TRAI’s reluctance to see the notion of discrimination beyond its inherently negative connotation. The internet is perhaps the greatest modern day entity created by man. It has stood the test of time. Alternative approaches to the regulations surrounding the internet, need to be scrutinised in order to enhance the functionality of the internet.
This post has been authored Aratrika Choudhuri of the 4th year and Ravi Shankar of the 1st year of the West Bengal National University of Juridical Sciences.
[1] Why is competition policy important for consumers ?, http://ec.europa.eu/competition/consumers/why_en.html
[2] Zero Rating, http://whatis.techtarget.com/definition/zero-rating
[4] Facebook launches zero, a text only mobile site for carriers.https://techcrunch.com/2010/02/16/facebook-launches-zero-a-text-only-mobile-site-for-carriers/
[5] Facebook’s Free Basics service has been banned in India, https://www.theverge.com/2016/2/8/10913398/free-basics-india-regulator-ruling
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