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Can telcos exploit loopholes in TRAI ruling?

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Can telcos exploit loopholes in TRAI ruling?

TRAI's ruling on differential pricing has now made it impossible for operators to levy separate tariffs for services/applications based on content. However, there still remains a possibility that they could utilize a small loophole in the ruling to provide their own apps at a discounted rate. This stems from the fact that TRAI has mentioned that closed networks are not subject to the same rules on pricing differentiation.

It has been pointed out by some observers, like IAMAI, that this loophole could be exploited by telcos. For example, it is feared that, operators like Airtel or Reliance Jio could use this to provide their own apps to their users for free or discounted pricing in a closed circle.

When asked about his views on this, Amresh Nandan, Research Director at Gartner said, "Yes, that possibility may arise. Considering the discriminatory pricing, regulation is primarily for internet, it is possible to create applications specifically for intranet and offer different kinds of services / pricing. However this may not mean blocking other applications or content. In such a case, it is not violating net neutrality."

To be fair, TRAI has taken cognizance of this fact and has mentioned in its ruling that if an operator is found to be using this to "defeat the purpose of the regulation", then TRAI would intervene. Meanwhile, Ashutosh Sharma, VP and Research Director at Forrester, opined that bringing zero rating under the umbrella of net neutrality has simplified the regulatory process. “I believe it is a very good step because now service providers and content providers have absolute clarity on the rules of the game and field is level for everyone,” he opined.

He agreed that a slight potential that the aforementioned loophole might be misused did exist in any closed network that is excluded from TRAI’s regulation. He also pointed out that the penalty of Rs 50,000 (with a cap of Rs 50 lakh) did not seem very daunting.

Telecom operators, meanwhile, will now have to think of new ways of circumventing the new rules.
Pointing out that the TRAI ruling just emphasizes the influence that marketing reach and consumer insights of telecom operators has, Abhay Doshi, SVP (Product and Marketing) at Flytxt said there were numerous alternatives available to telcos. Giving some examples, he said telcos could provide marketing reach to other industries by reverse bundling their recharge coupons with discounts for products and services, e.g. spend this amount and get redeemable cashback or direct free product, subscription or discount. “The opposite is already happening today where you buy a product and get talktime/data free,” he noted.

“They could build, partner or acquire trending VAS services and bundle them as freemium version like how Microsoft offers Skype with its OS or how Google Map comes pre-installed with every android mobile OS. I believe it is only a matter of time before OTT players start building apps exclusively for telecom operators so that they can tap into the operator’s extensive reach, captive audience and deep consumer insights,” he noted.

Another option, according to him, is to start offering their own digital services by either building it in-house or acquiring another service provider. For example, Airtel has its own music streaming service, Wynk.

As, TRAI's ruling is only about discrimination based on content, they could look at other models that are within TRAI's rules. One example could be Equal Rating as proposed by Mozilla, wherein a brand sponsors a certain number of data for the consumer and gets a "Brought to you by" mention.

"Mozilla has been exploring 'Equal Rating' model with Grameenphone in Bangladesh. It appears to be a good model from inclusion perspective, where people with no / little disposable income can get access to internet. However in some sense, it can also be undemocratic by affecting social behavior in a certain way. So it needs to be explored further," opined Nandan.

He also added that telcos would definitely explore other opportunities as the rise in data traffic and content demand is of interest to all telcos. "It is important for them to identify ways that helps data monetization more effectively than what it is happening today. So they will definitely explore," he said.

TRAI Chairman RS Sharma told media that the regulator will now turn its focus on the other issue that has long been demanded by proponents of net neutrality, namely, throttling and fastlaning. 

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