Indian Startups Criticize Telecom Operators in Net Neutrality Showdown Over ‘Hafta Vasuli

Net Neutrality Showdown

Three points you will get to know in this article:

  • Industry Experts Criticize Proposed Network Levies and Warn Against Departure from Net Neutrality
  • Infibeam Avenues’ Vishwas Patel criticizes proposed network levies as ‘hafta’
  • In September, 132 Indian startup founders denounced Indian telcos’ revenue-sharing proposal in a letter to TRAI.

Several months back, Indian startups engaged in high-stakes public clashes with tech giants, vying for control of the Internet & Mobile Association of India (IAMAI). The local contenders even took search giant Google to court over its billing policy, sparking a metaphorical tug-of-war as they sought to assert their dominance.

While initial perceptions suggested that this tense standoff widened the gap between Indian startups and big tech, a remarkable twist unfolded. In an unexpected collaboration, both Indian startups and major tech companies have united against a shared adversary: Indian telecom operators.

At the core of this alliance lies a proposition put forth by Indian telecommunications companies, advocating for over-the-top (OTT) platforms to bear the brunt of their infrastructure expenses.

Taking a lead in the discussion, Indian startups have vehemently opposed the implementation of this proposition, expressing concern that such a maneuver would run afoul of the fundamental tenets of net neutrality and exude an unmistakable aura of gatekeeping. There’s a palpable worry among Indian entities that these directives might eventually engulf smaller players, compelling them to dance to the tune of telecom operators’ ‘whims and fancies.’

In the latter part of September, a collective of 132 trailblazing minds steering Indian startups united with a common purpose. Their unified voice echoed through a letter penned to PD Vaghela, the esteemed chairman of the Telecom Regulatory Authority of India (TRAI), expressing their apprehensions regarding any potential propositions.

Among the distinguished signatories were luminaries such as Vijay Shekhar Sharma from Paytm, Nikhil Kamath representing Zerodha, Ritesh Malik of Innov8, the visionary Vishwas Patel from Infibeam Avenues, Sameer Nigam of PhonePe fame, and the trailblazing Anupam Mittal, founder of People Group, to name a few. Their joint effort reflects a commitment to safeguarding the interests of the dynamic Indian startup ecosystem.

Patel emphasized that startups won’t succumb to the desires of telecom companies, as the suggested revenue-sharing arrangement poses a serious threat to net neutrality in India.

“According to the terms outlined in their license agreement, startups are obligated to provide internet services to paying users without discrimination. However, imposing network fees on Over-The-Top (OTT) services might lead to telecom operators acting as gatekeepers. Patel raised a crucial concern: What happens if an OTT platform can’t afford the fee? Will customers lose access to that specific service?” Patel questioned.

Acknowledging that the current issue primarily involves major OTT players, Patel expressed concern that telecom operators might extend payment mandates to smaller players, particularly startups. He emphasized that such a move could have disastrous implications for the indigenous startup ecosystem.

The Main Dispute

The story grabbed national attention when TRAI released a discussion paper in July, addressing the regulation of OTT communication apps. The paper delved into the exploration of establishing a mechanism to oversee these apps and scrutinizing issues surrounding the selective prohibition of specific applications.

Originally intended to solicit input from relevant stakeholders, the situation escalated significantly following the public disclosure of comments made by telecom operators. Notably, telecom giants such as Reliance Jio, Airtel, Vodafone Idea (Vi), and BSNL advocated for a novel framework. This proposed framework aimed to obligate OTT players to ‘contribute’ to network expenses based on their bandwidth consumption.

The matter gained prominence due to its unforeseen twists, especially after telecom operators’ viewpoints were unveiled to the public.

They strongly rejected allegations that implementing such a measure would infringe upon the principles of net neutrality, advocating instead for a regulatory structure to oversee Over-The-Top (OTT) platforms on a level playing field with telecommunications companies.

In swift response, prominent startup co-founders nationwide united and penned a letter to the Chairman of TRAI, vehemently criticizing any potential proposal. They emphatically urged the preservation of internet neutrality, underscoring its paramount importance.

The Ghost from The Past

At first glance, the clash between emerging startups and established telecommunication companies may appear as a recent development, but it has been simmering for a good five years. The roots of this conflict can be traced back to 2018 when TRAI released a comparable document, an initiative that faced strong opposition from industry bodies and a wave of backlash from users on the internet, leading to its eventual abandonment.

A mere two years prior, Facebook attempted to introduce ‘Free Basics’ in India—an initiative offering users complimentary internet access but with a catch: access was restricted to a select few curated websites. This venture was undertaken in collaboration with Airtel.

However, Facebook’s Free Basics initiative quickly escalated into a significant controversy, marking the moment when Indians were first acquainted with the term ‘net neutrality.’ Ultimately, Facebook chose to shelve Free Basics in 2016, mirroring the fate of TRAI’s 2018 paper, which also met a similar demise.

Startups Pose a ChallengeTop of Form

Once the remarks became widely accessible, Indian entrepreneurs turned to Twitter to voice their discontent regarding any potential shift that might ‘jeopardize’ net neutrality. Leading the charge was Nithin Kamath, the co-founder and CEO of Zerodha, emphasizing that the essence of a Digital India hinged upon the internet retaining its openness, accessibility, and neutrality for one and all.

In the backdrop, Nikhil Pahwa, the driving force behind Medianama, spearheaded a coalition of Indian visionaries. Together, they crafted a compelling letter addressed to the TRAI chairman, earnestly seeking unwavering support for preserving net neutrality in India. In a remarkable turn of events, a total of 132 Indian startup leaders rallied behind this cause and affixed their signatures to the petition.

Now, delving into the essence of the fervor surrounding net neutrality in the ecosystem—what exactly is it? According to the Department of Telecommunication (DoT), net neutrality is the principle that the internet should impartially treat all data, irrespective of its nature, application, service, device, sender, or recipient.

This definition serves as the cornerstone of the missive dispatched by the startup founders. It serves as a cautionary stance against any inclination toward the “over-regulation” of internet services, particularly those falling under the umbrella of OTT services.

As a pivotal ambassador of the Indian economic landscape and the thriving internet innovation ecosystem, we express our earnest appeal to the authorities to sustain their backing for the principles of net neutrality. We also wish to highlight the importance of exercising caution in the realm of internet services, specifically those categorized as OTT services, to prevent unintended discriminatory consequences. Our sincere plea is rooted in the belief that preserving the open nature of the internet fosters innovation and inclusivity, ensuring a harmonious digital future for all.

Highlighting the inherent distinctions in structure and function between telecommunications companies and internet applications, the creators emphasized that subjecting Over-The-Top (OTT) services to regulatory oversight would shift the balance in favor of telecommunications firms. They also raised concerns about heightened compliance demands and the use of ambiguous terminology by telecom operators in their submissions to TRAI.

In a surprising turn of events, Indian startups and big tech companies have united against a common rival, Indian telecom operators. The telcos have proposed that over-the-top (OTT) platforms bear their infrastructure costs, a move vehemently opposed by startups. They argue that this violates net neutrality principles and could lead to gatekeeping by telecom operators. Over 130 startup founders have written a letter to the Telecom Regulatory Authority of India (TRAI) expressing their concerns. The battle between startups and telcos is not new, as a similar debate on net neutrality emerged in 2018. The government’s decision will have significant implications for the startup ecosystem and related industries.

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