TRAI rules against differential pricing for telecom services; imposes penalty of Rs 50,000 per day for offenders

NEW DELHI: In what is clearly a major win for crusaders of net neutrality, the Telecom Regulatory Authority of India (TRAI) has ruled against differential pricing and said no service provider will enter into any arrangement or contract that has the effect of discriminatory tariffs for data services.

TRAI reserved the right to either ask a service provider to withdraw any discriminatory tariff or impose a penalty of Rs 50,000 per day (subject to a maximum of Rs 50 lakh) for discriminatory tariffs charged by service providers. The decision of the Authority as to whether a service provider is in contravention of this regulation will be final and binding. 

‘The Prohibition of Discriminatory Tariffs for Data Services Regulations 2016,’ issued today comes into effect immediately and will be reviewed every two years.

TRAI said allowing service providers to charge differently for data could compromise the entire architecture of the internet. "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 has been issued after reviewing the responses received by the regulator to its Consultation Paper on Differential Pricing for Data Services issued on 9 December last year. As was reported earlier by, major broadcasters like Star India, Sony Pictures Networks India and Zee Network submitted their comments to TRAI in favour of net neutrality citing the drawbacks of differential pricing for telecom services.

TRAI said the paper was issued because two key principles of tariff regulation - non-discrimination and transparency were getting impacted from such practices and required consultation. 

While almost all the broadcasters opposed differential rates, the telecom and internet service providers felt that this was necessary particularly in view of the deluge of over the top (OTT) services expected to come in.

The general economic concept of 'price differentiation' covers all practices where a seller of goods or provider services charges different prices from different consumers, either for exactly the same goods or service or for slightly different versions of the same goods or service. The 'service' being referred to in the context of differential pricing of data services is the units of data or bits that a person consumes in order to access the internet. This understanding is also qualified by the fact that the current regulation refers to a particular category of price differentiation - that is content-specific. 

While ruling out differential pricing in such cases, TRAI put a proviso: “Provided that this regulation shall not apply to tariffs for data services over closed electronic communications networks, unless such tariffs are offered or charged by the service provider for the purpose of evading the prohibition in this regulation.”

It also 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 penalties will be imposed only after the service provider has been given a reasonable opportunity of representing against the contravention of the regulation. The amount payable by way of financial disincentive under these regulations will be remitted to such head of account as may be specified by TRAI.

The regulator also said, “Nothing contained in these regulations shall affect any packs, plans or vouchers with unexpired validity subscribed by a consumer before the date of commencement of these regulations, provided that no such pack, plan or voucher shall be valid beyond a period of six months from the date of commencement of these regulations.”

Explaining the rationale for the paper, TRAI said, “Some practices have come to the notice of the Authority wherein differential tariffs were offered based on the content, websites, applications, platforms.”

It also said the appropriate regulatory response on the issue of differential pricing must necessarily be grounded in a sound understanding of the basic architecture of the internet. Any proposed changes in business models and commercial practices must also be seen in the context of the need to preserve the unique architecture of the Internet as a global communication network.

The Internet and Mobile Association of India (IAMAI) welcomed the Regulation as a bold and fair move. It said net neutrality would be ensured with TRAI explicitly clarifying its stand in a very clear and transparent ruling about differential tariffs and agreements. The association had taken a ‘no exception standpoint’ against differential pricing.

“This ruling vindicates the associations stand on the issue. The internet Start-up eco-system and the internet user community are delighted,” IAMAI said. 

IAMAI has also welcomed the move that TRAI will be the ultimate authority to decide the cases of violations of this ruling and that the decision of the authority will be final and binding. 

However, the association voiced a concern on the exceptions as to how this will pan out. The association hoped that the exceptions to the rule will not be misused by the TSPs. The exception states “...regulation shall not apply to tariffs for data services over closed electronic communications networks...”

Meanwhile, the campaigner claimed a massive victory and said “History has been created!” It said nearly 3.75 lakh users had supported Net Neutrality. 

The nationwide campaign that unfolded over almost a year was started by Sandeep Pillai, a techie from Kollam in Kerala.

Latest Reads
FM P-III auction: EMD, bidders initial eligibility declared

NEW DELHI: Even as the day of the e-auction of the second batch of FM Phase III on 25 October 2016 approaches, the Government has released the earnest money deposit (EMD) by the pre-qualified bidders and the initial eligibility points (IEP) of each of these.

Regulators I&B Ministry
FM P-III second batch auction from 25 Oct; 14 in fray

NEW DELHI: The e-auction of the second batch of FM Phase III will commence on 25 October 2016 from 09.30am.

Regulators I&B Ministry
Free data, net neutrality: Discussion on TRAI paper to be held

Given the complicated issues around net neutrality, an open house discussion is to be held in Hyderabad this month on Telecom Regulatory Authority of India’s consultation paper on free data. The OHD will be held at Hotel Trident in the Telangana capital on 24 October 2016.

Regulators TRAI
Prasar Bharati advisor reviews DD marketing and policies

Former Ministry of Information and Broadcasting (MIB) Secretary and now Prasar Bharati advisor Sunil Arora yesterday asked Doordarshan to adopt the best policies of the industry, even as he approved the planned auction of slots on DD National.

Regulators I&B Ministry
Suresh Panda may be Prasar Bharati interim CEO; liberal DD auction criteria recommended

Suresh Panda, member (personnel) in Prasar Bharati is expected to take over as the acting chief executive officer of the pubcaster after the incumbent CEO Jawhar Sircar demits office on 4 November.

Regulators People
Govt. accepts Jawhar Sircar's request for early retirement

A media-savvy chief executive of Prasar Bharati Jawhar Sircar used the social media to announce yesterday that the Indian government has accepted his resignation from the pubcaster and acceded to his request for an early retirement.

Regulators I&B Ministry
Carriage fee in interconnect draft aimed at reducing litigation

NEW DELHI: The draft of the Interconnect regulations issued by the Telecom Regulatory Authority of India has given a formula for calculation of the carriage fee. The carriage fee for each month or part thereof during the term of the interconnection agreement shall be calculated as given below:-

Regulators TRAI
TRAI issues comprehensive interconnect draft guidelines

Indian broadcast regulator came out today with its third set of draft guidelines within five days --- this time on interconnection issues. With an aim to bring about more uniformity and transparency in the broadcast carriage sector, TRAI attempts to tackle spiralling carriage cost, rampant...

Regulators TRAI
TRAI attempts greater transparency via auditor empanelment

While it remains to be seen if the provisions of the Interconnect draft will have a salutary effect on the cases pending before the Telecom Disputes Settlement and Appellate Tribunal but the Telecom Regulatory Authority of India appears to have learnt some lessons, at least as far as subscription...

Regulators TRAI

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories