Net neutrality:DoT report better than TRAI, but with riders

Below is the transcript of Nikhil Pahwa's interview with Anuj Singhal, Sonia Shenoy & Menaka Doshi on CNBC-TV18.

Menaka: Let’s get down to the question which is that if you were to pay heed to what the Department of Telecommunications (DoT) has recommended in its report, and it is only a report, it is not the final decision, would you say that Whatsapp messages, Skype calls, these will all continue to remain free?

A: There is no single answer to that question because they have looked at these aspects separately. Whatsapp messaging is going to remain unregulated thankfully and also in terms of Voice over Internet Protocol (VoIP) or Whatsap calling or Viber calling, international calls are going to remain open and free without license but it is the domestic VoIP calling which they want to bring under a regulatory framework and there seems to be a misconception here that they cannibalize on telecom operator revenues because frankly telecom operators make money from data every time you make a Whatsap call or a Viber call and these services are actually cheaper for consumers, so they benefit consumers. So, just in terms of the pure regulation of messaging and calling, messaging remains unregulated but they want calling to be regulated and they want Whatsapp and Viber…(interrupted)

Menaka: So actually this DoT report is a big improvement on the suggestions made in the TRAI discussion paper which even indicated that maybe should we consider licensing all these OTTs as they call it or over the top apps that run on your phone, whether it is Whatsap or Skype or Viber or any of that. At least this paper doesn’t indicate any of that, in fact it says that specific OTT (over the top) communication services dealing with messaging should not be interfered with at all, only in the case of VoIP, that is when you are making a domestic call using Skype or any other such app, then they are saying do not allow for regulatory arbitrage because that puts the telecom service provider at a disadvantage. So, it is not a clear win but at least it is a better position than the TRAI discussion paper?

A: Absolutely but then any position would be a better position than the TRAI discussion paper because that paper was an extreme position and a position which frankly I don’t think any regulator in the world should have taken or could have taken, had they been operating independently is the way I see it. It was just wild but that doesn’t mean that the DoT report also doesn’t have its own issues because what they are saying is that zero rating is going to come under a regulatory framework where it will be approved on a case by case basis.

Menaka: What does zero rating mean and why is it a problem if it comes under a permission or a regulated framework?

A: Frankly in my opinion, zero rating should not be there because what it means is that access to certain services becomes free for consumers, but it means the institution of a carriage fees for the internet business or it means that they have to go through a content provider or a social network like Facebook which might do a tie-up with the Reliance Communications. Invariably, it means that for all the internet businesses, in order to reach those consumers which are accessing the internet for free, they would either need to tie up with the telecom operator or go with Facebook and be in a situation where they might have to pay them for their service to be provisioned. So, it is almost like converting the internet into a direct to home (DTH) service.

And carriage fees do not really work for start-ups, just the way they do not work for TV channels as well. It puts them, the distributer in complete control of the content provider and if our businesses in India have to succeed and become global businesses, they need less regulation in the country. So, while it is going to be looked at on a case by case basis, frankly in our opinion, zero rating should have been banned outright because it means that there is additional discretion that the mobile operators had and in this case, a path of the mobile operators have been discretion, it also means that the regulator has additional discretion.

Menaka: We are a slightly curious bunch here at CNBC-TV18. While we are in favour of net neutrality and we back you if you launch yet another campaign against the DOT report as well. We are also concerned or interested in knowing how any of this will impact telecom revenues.

A: The difference between using Viber and calling, choosing the regular phone is that telecom operators have exclusive rights to spectrum. So, if you make spectrum open enough and deregulate spectrum so that every app developer can buy access to spectrum and there can be a white label infrastructure provider for the retail consumers, we would not be having this argument. But the point is that telecom operators have exclusive access to spectrum. So, they cannot be treated the same as a Viber or a Whatsapp call because they are riding on the telecom operator network and consumers are paying for those calls.