The term ‘net neutrality’ was coined in 2003 by a Colombia University professor, Tim Wu; he also predicted that it would be difficult to sort out. Indeed, it continues to be hotly debated in the US and in Europe, mostly because there is no set framework or law governing it across jurisdictions.

In India, the concept of net neutrality doesn’t exist legally — it is just an idea. With Trai publishing a consultation paper on over the top service (OTT) providers like Flipkart, What’s App and Facebook, and the CCI keeping a close watch on the developing relationship between Airtel and OTTs, there is debate aplenty.

Proponents of competition/antitrust law argue that it is particularly well suited for addressing the concerns raised in the longstanding debate surrounding net neutrality in a manner that best serves consumers. However, critics argue that antitrust law is not sufficiently broad in scope as it does not address the non-economic goals of net neutrality, including the protection of free speech and political debate. Whether competition law would represent an effective remedy for net neutrality in practice, remains untested.

In 2013, the European Competition Commission started an investigation against major telecom service providers for abusing their dominant position to throttle data-heavy services such as YouTube and Skype. The EC however closed the investigation for lack of evidence.

Scrutinising the field



Interestingly, it’s not just the TSPs that are being scrutinised. Dominant OTTs such as YouTube have also been accused of anti-competitive conduct. Last year, Impala (the independent music companies’ association) filed a complaint against YouTube for offering worse terms to small music labels than those already signed by major labels — making them agree to draconian terms, a kind of market abuse.

The economic relationship between OTTs and TSPs is multifaceted. At one level, TSPs provide the network infrastructure that OTTs use (a vertical relationship) and on another, some OTTs provide services (SMS/VoIP) that compete with the business models of TSPs (a horizontal relationship). In India, the Competition Act, 2002, frowns upon any arrangement between companies and unilateral conduct by a dominant company which distorts competition and harms consumers.

A case of dominance against a TSP is difficult to prove, but a similar case against an OTT can be made out. For example, Facebook and WhatsApp are dominant players with an over 50 per cent market share in India. A case under Section 3 (anti-competitive agreements) can be made where it can be shown that the companies enforcing an anti-competitive agreement have some market power, resulting in barring entry for new companies and foreclosing competition. For example, Airtel and Flipkart with a market share of 31per cent and 44 per cent respectively, can be said to have market power in India.

Falling foul



But, the biggest question for industry and consumers is the types of practices of TSPs and OTTs that make them fall foul of competition law. There are several, including:

Charging different prices/terms from similarly placed OTTs such as Snapdeal and Flipkart; giving preferential treatment to cash-rich OTTs (WhatsApp/YouTube) by creating high speed browsing channels so that a consumer prefers to only visit selective websites — what’s worse than no internet is slow internet.

Any agreement to block rival OTT website or degrading its services; blocking OTT services where TSP is directly competing with OTT (VoIP/ SMS): Airtel and WhatsApp both provide calling and messaging services.

Forcing consumers to buy a particular pack of internet with limited OTT services; for instance, the pack provides for Amazon but not Flipkart; refusal to deal with a particular OTT or only on one-sided terms.

Dominant OTTs (Facebook) pressuring TSPs for favourable treatment vis-à-vis others; TSPs giving preferential treatments to their own OTT services, such as Airtel Wynk Music.

The critical question, however, is not whether anti-competitive conduct should be barred; it is whether we can identify the best regulatory regime for addressing this concern and which approach best enhances consumer welfare. Reportedly, the CCI has written to Trai expressing its preliminary opinion on the consultation paper being ambiguous. This is the right time for the CCI and Trai to sit across the table and deal with the issue.

In the absence of a law on net neutrality, competition law quite clearly offers a far superior approach to addressing potential problems.

The writer is a competition lawyer at J Sagar Associates, New Delhi