According to TRAI, allowing service providers to charge differently for data could compromise the entire architecture of internet. TRAI further said no new launches of prohibited packs/ plans or vouchers shall be permitted
The Telecom Regulatory Authority of India (TRAI) on Monday barred telecom services providers from offeriing differential pricing for data services.
"No service provider shall enter into any arrangement or contract that has the effect of discriminatory tariffs for data services," TRAI said in its final guidelines on the issue.
According to TRAI, allowing service providers to charge differently for data could compromise the entire architecture of internet. TRAI said no new launches of prohibited packs/ plans or vouchers shall be permitted.
"Prohibition of discriminatory tariff is necessary to ensure that service providers continue to fulfill obligations in keeping internet open and non-discriminatory," TRAI said.
The regulation will come into effect immediately and will be reviewed every two years.
TRAI further said that if the norms were violated, companies would have to pay a penalty ranging from Rs 50,000 to Rs 50 lakh.
"By way of financial disincentive, an amount of rupees fifty thousand for each day of contravention, subject to a maximum of rupees fifty lakh," according to the TRAI press release.
This implies products such as Airtel Zero and Facebook's Free Basics will not be allowed in the country.
TRAI had issued a Consultation Paperon on 'Differential Pricing for Data Services' in December, 2015, and received over 24 lakh responses, with majority coming from Facebook's Free Basics campaign. Based on the responses received and the internal deliberations, TRAI has issued these regulations.
The Authority has therefore mandated the following:
a) No service provider shall offer or charge discriminatory tariffs for data services on the basis of content.
b) No service provider shall enter into any arrangement, agreement or contract, by whatever name called, with any person, natural or legal, that has the effect of discriminatory tarlffs for data services being offered or charged by the service provider for the purpose of evading the prohibition in this regulation.
c) Reduced tariff for accessing or providing emergency services, or at times of public emergency has been permitted.
d) Financial disincentives for contravention of the regulation have also been specified.
TRAI Chairman RS Sharma came down heavily against differential pricing. "Anything on the internet cannot be differentially priced," he said.
However, he also said in case of 'grave' emergencies, service providers need to report to TRAI in 7 days. "Differential prices can be offered in case of 'emergencies'," he said.
"A service provider may reduce tariff for accessing or providing emergency services, or at times of grave public emergency:
Provided that such tariff shall be reported to the Authority within seven working days from the date of implementation of the reduced tariff and the decision of the Authority as to whether such reduced tariff qualifies under this regulation shall be final and binding," the TRAI press release said.
The TRAI also said it prefers to call it discriminatory pricing rather than differential pricing.
IT industry body Nasscom too has welcomed and congratulated TRAI on its 'bold' move. Nasccom president R Chandrashekhar in a statement said that the TRAI announcement resounds with the submission made by Nasscom earlier.
Industry expert Sanjay Kapoor told CNBC-TV18: "The whole idea is to make sure that if any new innovation is made, just because it is from a small company or group, it should not be deprived of a consumer opinion or offtake and from that perspective what the government is trying to do is a step towards that."
However, Kapoor added that the whole tariff play is a whole lot complex than what is visible. There are published tariff and standard tariff. And bulk of the customers don't go for standard tariff. "They go for packs and that is where innovation comes into play and I don't know how any such tariff order can cut into such localised innovations."
Meanwhile, social media giant Facebook, which has been pushing hard for "free basics" and arguing in favour of differential pricing, has come out with a statement and expressed disappointment. "Our goal with free basics is to bring more people online with an open, non-exclusive and free platform. While disappointed with the outcome, we will continue, our efforts to eliminate barriers and give the unconnected an easier path to the internet and the opportunities it brings."