Net neutrality is the principle that Internet service providers (ISPs) should treat all data that travels over their networks fairly, without improper discrimination in favor of particular apps, sites or services. Even as the Federal Communications Commission (FCC) is pushing a plan to end net neutrality protections in the U.S., India's telecom regulator has called for strengthening the principle of non-discriminatory access to the Internet.

This week the Telecom Regulatory Authority of India (TRAI) recommended amending all existing ISP licenses in India to explicitly prohibit discriminatory traffic management practices. Having rules in place that restrict ISPs and telecom providers' ability to control access to content via their networks is important for a free and an open Internet. Such rules prevent network providers from degrading the quality of service or blocking access to apps to earn revenue or to limit competition.

The FCC's Open Order 2015 had also banned throttling, blocking and paid prioritization in the provision of broadband Internet access service. Unfortunately, as of last week FCC has proposed eliminating these bright-line rules against blocking, throttling, and pay-to-play in favor of a simplistic transparency requirement. Even as the FCC attempts to create a pay-for-play Internet, in India TRAI seems to be adopting a layered framework for regulatory intervention designed around two closely interrelated areas.

Regulatory Parity

First, TRAI has been working to create reasonable and equal rules to govern services provided by telecom operators and Over-the-top (OTT) services. OTT services refers to communication or non-communication based services that ride on telecom operators' networks. In India, TSPs operate under a licensing regime which come with strict obligations. On the other hand OTTs have flourished without such regulations. The disparity in regulation was not an issue when OTT services were new. Their rapid growth over the years and shrinking telecom revenues led to demands for introducing licensing for OTTs or creating restrictions on the services which they may offer.

While it is important to create uniformity in the regulation of functionally equivalent services, calls for regulating Internet based OTT service providers ignore the differences that exist between them and telecom operators. While TSPs operate at both the network and application layer, OTTs can only function at the application layer of the Internet. Therefore, it is inappropriate to bring OTT service providers under the licensing regime similar to those that currently apply to TSPs.

Moreover, the advent of 4G technology has allowed for changes in the network architecture which in turn have helped markets evolve and ushered in regulatory changes. For example, traditional telecom services like voice calls are also capable of being delivered over an IP based network and may share the same infrastructure as Internet based services. Content providers are no longer purely reliant on telecom operators for last-mile access and are using content delivery networks (CDNs) to directly interconnect.

Over the years India has also moved to the Unified Licensing regime under which the Unified License with authorisation for Access Services (ULA) now allows for interconnection between IP Telephony and the telecom network. TRAI's recent interventions suggest a principles based approach that is cognizant of these new, complex and evolving dynamics. In TRAI's Recommendations on Regulatory framework for Internet Telephony issued in October 2017, the authority notes "that as per the present licensing framework, Internet Telephony service can be provided independent of the Internet access service. In other words, the Internet Telephony service is un-tethered from the underlying access network."

Importantly, TRAI's has limited its recommendations on VoIP to communication OTT players. The mandate of licensing and/or regulating non-communication OTTs is that of the Parliament and will require a major overhaul of Information Technology, Telecommunications and Broadcasting legislations. By staying within its mandate and not crafting regulations for non-communication OTTs, TRAI has left the door open for regulating such services through instruments outside of a stifling licensing regime.

Codifying Net Neutrality

In parallel to creating uniformity of regulation TRAI's interventions have also been focused on codifying the principle of net neutrality including its different components and exceptions. In February 2016 TRAI issued an order prohibiting differential pricing which led to Facebook's Free Basics programme to be banned in India. TRAI's latest recommendations on net neutrality focus on modifying licensing terms fall under this second category of TRAI's interventions.

Unlike its order on differential pricing order TRAI's latest recommendations on licensing issues are not binding. This is because while TRAI has the power to frame regulations on issues such as pricing, QoS, and interconnection, the Department of Telecom (DoT) has final authority on matters related to granting or modification of licences in India. But if TRAI's recommendations are accepted by the DoT, ISPs in India will be explicitly prohibited from and penalised for blocking, throttling, slowing down, or granting preferential speeds or treatment to any content on their networks.

The recommendations also lay down a set of principles for introducing net neutrality. TRAI recommends that the principle of non-discriminatory treatment of content should apply specifically to Internet access services. It also suggests that network management should be a permissible exception to net neutrality noting "that allowing TSPs to carry out reasonable traffic management practices is necessary for delivering IP traffic on best efforts, which is essential to the design of the Internet."

TRAI has advised exceptions for "other legitimate purposes" from the requirements of non-discriminatory treatment in the provision of Internet access services. Exceptions have been provided for congestion management, for blocking unlawful content pursuant to a court or government order, and for maintaining security and integrity of the network. Exception from non-discrimination in traffic management has also been recommended for Content Delivery Networks (CDNs) as they do not change the priority of the data packets.

The regulator specifies that exceptions to net neutrality should only be allowed when they meet the basic requirements of reasonableness. In other words, there must be legitimate grounds for network management such as maintaining integrity of the network or for user security and/or if the user has specifically requested for such a service. It also recommends transparency in network management and advises that DoT should retain the flexibility in licensing regime to specify further details and change regulations regarding the scope and assessment of reasonable traffic management practices.

The authority has also advised supplementing "existing disclosure and transparency requirements by framing additional regulations in this regard." While TRAI has not specified what such regulations should look like, the recommendation essentially seeks to introduce a transparency requirement for standardised reporting of network management practices, service information including privacy policy and redressal options and most importantly the exercise of exceptions to net neutrality.

Finally, TRAI introduces the concept of a multi-stakeholder, not-for-profit body led by industry, with ISPs, telecommunications companies, large and small content providers, representatives from research and academia, civil society organisations and consumer representatives be created for monitoring traffic management in India. It is unclear why it recommends that such a cooperation platform be industry led but one reason could be because transparency enforcement applies most to private companies.

Specialized Services

TRAI has introduced the concept of "Specialized Services" in its recommendations on differential access. TRAI defines the concept as “services other than Internet access services that are optimized for specific content, protocols or user equipment, where the optimization is necessary in order to meet specific quality of service requirements.” In other words specialised services refers to services provided on a network that is either physically distinct from the Internet using different pipes or logically distinct from the Internet using access controls over the same pipes.

Following TRAI's definition this includes services that demand high QoS (such as remote surgeries) or for which best efforts delivery is not feasible on the Internet (such as autonomous vehicles). Similarly services being provided over a Closed Electronics Communications Network would qualify for being classified as specialized service. TRAI suggests creating an exception from net neutrality obligations for such special categories of services. Similar exceptions have been provided in in the EU through Amendment 236. On the other hand, regulators in Netherlands, have avoided creating exceptions for specialised services based on the rationale that defining the concept is not necessary to protect the functioning of managed, non-Internet based services.

TRAI's recognition of specalized services is an notable development. Going forward, the concept of specalized services will be relevant for its intervention on creating regulatory parity on a number of issues currently under consultation. The U.S FCC Open Order 2010 states that “specialized services” such as facilities-based VoIP and Internet Protocol-video offerings differ from broadband Internet access service and may drive additional private investment in broadband networks. The FCC had also pointed out that such services can provide end users valued services, supplementing the benefits of the open Internet. It remains to be seen if the definition of specalized services will be tailored and applied in other areas such as Internet telephony and IoT.

The recognition of specalized services is also relevant to the codification of exceptions for net neutrality. Provisioning exceptions for specialized services will allow ISPs to charge for providing guaranteed levels of service and quality for certain forms of data or time sensitive communication. Concerns have been raised that establishing conditions for violations of net neutrality regulators creates the possibility that network operators may prioritise high quality specialised services over the provisioning of "standard" Internet.

Addressing such issues TRAI has laid down the parameters such as for the provision of specialized services. It notes, "While allowing for the provision of specialised services, service providers should ensure that they have adequate network capacity to offer the critical services in addition to the overall provision of Internet Access Services.”

TRAI has also specified some categories that qualify for specalized services, “The license agreement identifies the categories of services that can be offered by licensed service providers. This includes the provision of VoIP and IPTV services, which may also qualify as specialised services under the suggested definition.” It has also recommended that DoT retain the flexibility to "amend the license from time to time to specify the categories of services permitted to be carried out by licensed service providers."

Overall the recommendations are good news for both users' right to a free and open Internet in India and creating a stable regulatory environment for businesses to operate there. The strong recommendations are also reflective of the giant strides the Indian telecom regulator has made in outlining a nuanced approach to this complex issue. TRAI's leadership, its transparency and efforts to listen to the voices of its citizens create a stark contrast with the FCC's regressive approach.