Net Neutrality & The Debate Around It

Net Neutrality & The Debate Around It

[op-ed snap] Tech taxes are the wrong solution to real problemsop-ed snap


Mains Paper 3: Economy | Effects of liberalization on the economy

From UPSC perspective, the following things are important:

Prelims level: Tech tax, SEP, Finance bill, OECD

Mains level: Levy of tech taxes in various countries and how it would affect digital economy


Increased focus on tech taxes

  1. “Tech tax” can be described as finding ways to tax capital income and IP [intellectual property] income
  2. The concept of a tech tax is gathering momentum
  3. The European Union (EU) has been grappling with it since March this year India introduced it in the Finance Act 2018
  4. Australia is considering it and so are a number of other countries
  5. These moves take aim at legitimate problems which will grow in scale as IP comes to play an increasingly important role in traditional sectors such as automobile

Problems in taxing digital economy

  1. The digital economy’s combination of intangible capital and disaggregated business models creates an almighty headache for governments when it comes to taxation
  2. Businesses that depend on monetizing user data for revenue, for instance, may realize millions of dollars of value from a tax jurisdiction without having a significant, taxable presence in it
  3. The revenue can be registered to dummy head offices set up in low tax jurisdictions
  4. The difficulty of pricing intangible capital accurately undercuts measures such as the arm’s length principle meant to keep companies reasonably honest when indulging in transfer pricing for tax avoidance purposes

Digital economy does not favour developing countries

  1. New technologies can have downsides for developing economies
  2. They show a bias towards skill and education when it comes to job creation
  3. This reduces the labour arbitrage advantage developing economies have
  4. The overall shift in income distribution from labour to IP doesn’t help

Other issues that have affected trust in the digital economy

  1. The Russian misinformation campaign via social media during the 2016 US presidential election
  2. The difficulty of keeping fake news in check
  3. User data privacy missteps
  4. The disconnected realities that tech evangelists seem to inhabit

Raises urbanization but at the cost of poor

  1. In 2011, San Francisco city phased out the payroll tax and replaced it with a gross receipts tax—a popular move with tech companies since they often have large workforces before they have revenue
  2. The tactic worked and tech companies flooded into formerly blighted parts of the city
  3. The unemployment rate fell by almost two-thirds over the next few years
  4. But with the growth came disruption as gentrification pushed poor residents out of their houses and home prices rocketed to well over the national average

India’s position in this regard

  1. India has introduced the ‘significant economic presence’ (SEP) concept in the Finance Act this year
  2. It means that if a company has a SEP in India, it has tax liabilities here whether it is based here or not

The problem in applying SEP concept

  1. The problem is creating thresholds that don’t stifle competition or open New Delhi up to accusations of protectionism
  2. An even bigger problem is finalising such a regulatory change without becoming entangled in existing bilateral tax treaties

Way forward

  1. The transnational nature of digital businesses demands a multilateral response rather than a patchwork of rivalrous measures
  2. This is difficult at a time when protectionism is on the rise, but all the more important for it
  3. The Organisation for Economic Co-operation and Development’s work on a new framework for base erosion and profit shifting could be used to shape an effective response to the digital economy
Net Neutrality & The Debate Around It

Telecom Commission approves net neutrality, new telecom policyPriority 1


Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

From UPSC perspective, the following things are important:

Prelims level: Particulars of new telecom policy

Mains level: Debate of net neutrality in India


TRAIs Recommendation on net neutrality

  1. Internet access in India will remain unfettered with the government accepting the telecom regulator’s recommendations to introduce one of the strongest net neutrality protections in the world.
  2. To implement Net neutrality, the regulator had recommended that the terms of licence agreements that govern the provision of Internet services in India be amended “to incorporate the principles of non-discriminatory treatment of content along with the appropriate exclusions and exceptions.”
  3. It had then suggested that Internet of Things, as a class of services, should not be excluded from the scope of restriction on non-discriminatory treatment but certain critical services should be exempt from these rules.
  4. DoT will also frame a policy on traffic management practices for service providers and separately set up a body of industry representatives and civil society to monitor and enforce net neutrality norms.
  5. It has further recommended establishing a multi-stakeholder not-for-profit body for the monitoring and enforcement of these principles.

Net neutrality approved

  1. In a move that will ensure open and free internet in India, the government has approved the principle of net neutrality.
  2. This means that telecom and Internet service providers must treat all data on the Internet equally, and not discriminate or charge differently by user, content, site, platform, or application.
  3. They cannot engage in practices such as blocking, slowing down or granting preferential speeds to any content.
  4. The Telecom Commission (TC) — which is the highest decision-making body in the Department of Telecom, approved the recommendation made by the Telecom Regulatory Authority of India (TRAI)

Critical services are exceptions to this

  1. Certain emerging and critical services will be kept out of the purview of these norms.
  2. A separate committee has been set up under the Department of Telecom (DoT) to examine what these critical services will be.
  3. These may include autonomous vehicles, digital healthcare services like remote surgeries or disaster management.
Net Neutrality & The Debate Around It

Google appeals against Competition Commission of India’s ‘search bias’ verdict


Mains Paper 2: Polity | Statutory, regulatory & various quasi-judicial bodies

From UPSC perspective, the following things are important:

Prelims level: National Company Law Appellate Tribunal (NCLAT), Competition Commission of India

Mains level: Rules governing business competition in India and their enforcement measures

Appeal against ‘abusing its dominance’ charge

  1. Online search giant Google has filed an appeal at the National Company Law Appellate Tribunal (NCLAT) against a judgment from India’s competition watchdog that found it guilty of “search bias”
  2. The antitrust watchdog had fined the U.S. firm ₹1.36 bn for ‘abusing’ its dominance


  1. In February, the Competition Commission of India (CCI) had imposed a ₹1.36 billion fine on Google, saying it was abusing its dominance in online web search and online search advertising market
  2. The Commission found that Google, through its search design, had placed its commercial flight search function at a prominent position on the search results page to the disadvantage of businesses trying to gain market access


National Company Law Appellate Tribunal (NCLAT)

  1. National Company Law Appellate Tribunal (NCLAT) was constituted under Section 410 of the Companies Act, 2013 for hearing appeals against the orders of National Company Law Tribunal(s) (NCLT), with effect from 1st June 2016
  2. NCLAT is also the Appellate Tribunal for hearing appeals against the orders passed by Insolvency and Bankruptcy Board of India under Section 202 and Section 211 of IBC
  3. NCLAT is also the Appellate Tribunal to hear and dispose of appeals against any direction issued or decision made or order passed by the Competition Commission of India (CCI)
  4. The President of the Tribunal and the chairperson and Judicial Members of the Appellate Tribunal shall be appointed after consultation with the Chief Justice of India
  5. The Members of the Tribunal and the Technical Members of the Appellate Tribunal shall be appointed on the recommendation of a Selection Committee consisting of—

    (a) Chief Justice of India or his nominee—Chairperson;

    (b) a senior Judge of the Supreme Court or a Chief Justice of High Court— Member;

    (c) Secretary in the Ministry of Corporate Affairs—Member;
    (d) Secretary in the Ministry of Law and Justice—Member; and

    (e) Secretary in the Department of Financial Services in the Ministry of Finance— Member

Net Neutrality & The Debate Around It

Google fined ₹136 crore by Competition Commission for ‘infringing anti-trust conduct’


Mains Paper 3: Economy | Effects of liberalization on the economy, changes in industrial policy & their effects on industrial growth

From UPSC perspective, the following things are important:

Prelims level: Competition Commission of India

Mains level: Provisions for securing consumer interests in India

Google penalised for unfair business ways

  1. The Competition Commission of India (CCI) has imposed a fine of ₹136 crore on search engine major Google for unfair business practices in the Indian market for online search
  2. The penalty is being imposed on Google for “infringing anti-trust conduct”
  3. Globally, this is one of the rare cases where Google has been penalised for unfair business ways


  1. The complaints were filed back in 2012
  2. It was alleged that Google is indulging in abuse of dominant position in the market for online search
  3. This is being done through practices leading to search bias and search manipulation


Competition Commission of India

  1. Competition Commission of India is a statutory body of the Government of India responsible for enforcing The Competition Act, 2002 throughout India
  2. It is responsible to prevent activities that have an appreciable adverse effect on competition in India
  3. CCI consists of a Chairperson and 6 Members appointed by the Central Government
  4. It is the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India
  5. The Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007, follows the philosophy of modern competition laws
  6. The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations (acquisition, acquiring of control and Merger and acquisition), which causes or likely to cause an appreciable adverse effect on competition within India
Net Neutrality & The Debate Around It

What is net neutrality and why does it matter?


Mains Paper 3: Science & Technology | Awareness in the fields of IT, Space, Computers, robotics, nano-technology, bio-technology

From UPSC perspective, the following things are important:

Prelims level: Net neutrality

Mains level: Laws that provide benefits to organizations rather than consumers

Net neutrality rules scrapped in the U.S.

  1. The Federal Communications Commission voted in favor undoing the Obama-era “Net neutrality” rules that have been in place since 2015
  2. It will also forbid states to put anything similar in place
  3. “Net neutrality” regulations, designed to prevent internet service providers like Verizon, AT&T, Comcast and Charter from favoring some sites and apps over others

What is net neutrality?

  1. Net neutrality is the principle that internet providers treat all web traffic equally
  2. Internet service providers should restrict themselves from blocking or slowing down specific websites on purpose or allowing companies to pay for preferential treatment

What telcos want?

  1. Big telecom companies hate the stricter regulation that comes with the net neutrality rules and have fought them fiercely in court
  2. They say the regulations can undermine investment in broadband and introduced uncertainty about what were acceptable business practices
  3. There were also concerns about potential price regulation


Read all about net neutrality here

Net Neutrality & The Debate Around It

[op-ed snap] A neutral Internetop-ed snap

Image Source


Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Guidelines by the TRAI and other issues discussed in the newscard



  1. The article talks about a famous issue of Net Neutrality

Guidelines by the Telecom Regulatory Authority of India (TRAI)

  1. The TRAI has finally came out with clear guidelines in favour of Net neutrality that are consistent with its earlier stand on Facebook’s Free Basics proposal
  2. After consultation papers issued recently, the regulator reiterated that there cannot be discriminatory treatment of websites on the Internet by service providers

Warning by the TRAI and what it means

  1. In particular, TRAI warned providers against the practice of blocking certain websites and tinkering with content speeds
  2. This means that service providers such as telecom companies cannot stand in the way of a consumer’s access to content that would otherwise be provided to her without any undue hindrance
  3. They cannot charge consumers for access to certain content, or receive payment from websites promising greater promotion of their product over the rest

Some exceptions

  1. TRAI has been careful to allow some exceptions that allow companies to discriminate between content if it helps them regulate the flow of traffic or offer “specialised services”

Some important concerns related to the net netrality

  1. While TRAI’s new guidelines will help the cause of building the Internet as a public platform with open access to all, the concerns of service providers should not be dismissed altogether
  2. The Internet has spread all over the world, so widely that many believe it is now an essential good
  3. But the infrastructure that serves as the backbone of the Internet has not come without huge investments by private service providers
  4. The Internet has spread all over the world, so widely that many believe it is now an essential good
  5. But the infrastructure that serves as the backbone of the Internet has not come without huge investments by private service providers
  6. So any regulation that severely restricts the ability of companies to earn sufficient returns on investment will only come at the cost of the welfare of the public

How will the new policy resolve these concerns?

  1. TRAI has been open to adopting a nuanced view that differentiates between various forms of content instead of imposing a blanket ban on all forms of price differentiation
  2. The new policy will still allow companies to justify the costs incurred in providing niche content to consumers
  3. At the same time, TRAI’s measured response is likely to effectively address the problem of anti-competitive practices adopted by certain providers
Net Neutrality & The Debate Around It

Internet must be open: TRAI backs net neutrality


Mains Paper3 | Awareness in the fields of IT, Space, Computers, robotics

The following things are important from UPSC perspective:

Prelims: Net Neutrality, TRAI

Mains level: This article talks about the recommendation given by TRAI with regard to net neutrality.



  1. The Telecom Regulatory Authority of India (TRAI) recommended upholding the basic principle of net neutrality by keeping the Internet open and prohibiting any service provider from discriminating on the basis of content by either blocking, throttling, or “fast-laning” any apps, websites or web services.
  2. The recommendations follow a consultation process, after the Department of Telecommunications (DoT) sought TRAI’s views on the issue with an aim to “finalise a viewpoint” on net neutrality.
  3. The regulator’s proposal to adhere to the tenets of net neutrality comes days after the US Federal Communication Commission said it would repeal the 2015 laws that aimed at upholding this broad principle of neutrality.


  1. No one owns the Internet, so it should be open and accessible to everyone.
  2. Service providers have the power of becoming gatekeepers of the Internet but they should not indulge in doing so with this important platform
  3. The use of Internet should be facilitated in such a manner that it advances the free speech rights of citizens, by ensuring plurality and diversity of views, opinions and ideas.
  4. The recommendations also call for keeping Internet of Things (IoT) within the purview of non-discriminatory restriction, with the exception of critical services.
  5. TRAI has also suggested allowing telecom and Internet service providers to deploy “reasonable” traffic management practices from time to time, given that such interventions are proportionate, transient and transparent in nature.
  6. To monitor and investigate whether service providers are adhering to the rules, the regulator also suggested that a multi-stakeholder body be set up, led by industry, and comprising members representing different telecom and Internet service providers, large and small content providers, representatives from research, academia, civil society organisations and consumer bodies.

CDN exemption

  1. The regulator has also suggested exempting content delivery networks (CDNs) from the scope of net neutrality rules, arguing that CDNs add efficiency to the network by reducing latency, mitigating congestion and freeing up network capacity for other purposes.
  2. CDNs are a layer in Internet networks (outside public Internet), used by content generators to store their data at suitable geographical locations.
  3. Experts suggest that the CDN exemption could strengthen the position of integrated operators which also provide content.
  4. The proposed regulations are likely to give integrated operators an upper hand versus pure play connectivity providers.
  5. But according to telecom companies, CDN exemption would be taken care of by the regulator’s recommendation that the service providers should be restricted from entering into any arrangement, agreement or contract that has the effect of discriminatory treatment based on content, sender or receiver, protocols or user equipment.

Concerns over Consultation process

  1. However, Cellular Operators Association of India (COAI) said the suggestion to form a committee to review and decide on network management violations is “unnecessarily bureaucratic”, and not in keeping with “light touch regulation or the ease of doing business”.
  2. The DoT is already well positioned to investigate any violation of license conditions and it already has all the necessary enforcement mechanisms in place.
  3. Hence, such a heavy-handed approach is not necessary, as is now being proposed by TRAI.



Net Neutrality & The Debate Around It

TRAI seeks comments on free data

  1. Context: Net Neutrality debate in the backdrop of selective free data services
  2. TRAI has issued a consultation paper on free data seeking comments from stakeholders
  3. Question: Whether business models which provide free data could be allowed without violating the differential pricing norms
  4. This move is aimed at giving consumers more choices for accessing the Internet
Net Neutrality & The Debate Around It

Facebook-TRAI tussle over Free Basics escalates

  1. A war of letters broke out between the TRAI and Facebook over what the regulator called the social networking giant’s “crude” attempt.
  2. At turning the consultation over differential pricing of data services into an “orchestrated opinion poll” on its Free Basics product.
  3. The social networking site hit back in a statement, stressing that the expression of support for Free Basics is “highly relevant” to the debate.
  4. Facebook said it “attempted to cooperate” with TRAI.
Net Neutrality & The Debate Around It

TRAI received only 21 counter comments on Net neutrality

TRAI had earlier invited public comments to firm up its views over services that lead to differential pricing of data. 

  1. TRAI only received 21 comments from individuals and organisations countering 24 lakh submissions over its paper on differential pricing of data.
  2. Price differentiation will allow TSPs to cater to specific consumer requirements.
  3. Including facilitation of access to those segments that are currently unconnected or poorly connected.
  4. The social network has come under severe criticism.
  5. On the ground that such a platform can limit access to websites or applications based on discretion of Facebook.
Net Neutrality & The Debate Around It

Differential pricing- a threat to net neutrality

The differential pricing paper by the TRAI has been at the centre of a storm about net neutrality, with Facebook and its zero-rated platform called Free Basics on one side, and supporters of an unfettered internet.

  1. Differential pricing (as defined by TRAI) is the practice of telecom companies offering tariff plans at zero or discounted tariffs to certain contents of certain web sites/applications/platforms.
  2. Such models come at a cost of lowering consumer choice and giving rise to oligopolistic competition.
  3. Poor and non-internet web savvy users will never know the advantages of the internet in its entirety under such limitations.
  4. Wider internet access is a noble goal, but we will not achieve it by betraying the goal of an innovative, fair, transparent and vibrant internet.
Net Neutrality & The Debate Around It

Differential pricing for data services opposed

Nasscom said that Airtel Zero and Free Basics violate principles of net neutrality by differentiating internet access for certain types of services.

  1. All data tariff plans should ensure unfettered right of choice for the consumer.
  2. The telecom carriers or their partners should not have a say in what content can be offered at favourable rate.
  3. Howver, it said that TRAI should have powers to approve differential pricing for data services considered to be in public interest.
  4. Nasscom has proposed a suitable oversight mechanism to check that the TSPs continue to abide by the principles of net neutrality.
Net Neutrality & The Debate Around It

IIT faculty to move TRAI against Free Basics

  1. Atleast 40 faculty members from the IITs at Mumbai, Delhi, Khargapur and the IISc, Bangalore have signed the petition lambasting Free Basics of Facebook, as misleading and flawed.
  2. Free Basics, a Facebook initiative to offer free access to a few sites.
  3. Facebook’s ‘free basics’ proposal is such a lethal combination, having several deep flaws, beneath the veil of altruism wrapped around it in TV and other media advertisements, says the petition.
Net Neutrality & The Debate Around It

[op-ed snap] India’s commendable steps towards multi-stakeholder modelop-ed snap

With the government’s decision to call for public comment and response, the recent consultations on net neutrality are a step in the right direction.


  1. Countries such as the U.S. and Germany have advocated a ‘multi-stakeholder’ model that consults governments, industry, civil society and technical community while making decisions that affect the Internet.
  2. Before publishing the net neutrality report this month, the Department of Telecommunications conducted a series of consultations.
  3. Although these consultations were closed and only for invited parties, the committee reached out to a wide range of experts and stakeholders.

The department’s decision to call for public comment and response to the report is commendable, especially since the department is under no legal obligation to do this.

Can you think of other local areas where such models can be implemented? Pros/ Cons?


Net Neutrality & The Debate Around It

[op-ed snap] DoT’s unsound recommendation on Net Neutralityop-ed snap

  1. The Department of Telecommunications’ recent report on net neutrality has recommended to bring over services that provide voice calls via the Internet (like WhatsApp) under licensing.
  2. This means the govt can impose conditions for granting of licenses, and this might turn out to be an exercise in curbing free expression.
  3. The DoT’s report is by no means final and binding. But still it’s a travesty of logic according to some.

Fun Fact:

The report is laced with quotes, including this one from Archibald Putt: “Technology is dominated by two types of people: those who understand what they do not manage, and those who manage what they do not understand.” It is to be hoped India doesn’t live up to this.

Net Neutrality & The Debate Around It

How to have an informed debate on Net Neutrality?op-ed snap

We all know the cons of doing away with Net Neutrality. Broadly, we do. Add to this – when an uninformed citizenry gets to decide on bigger matters like this – Flipkart ends up getting 1 rating in plenty 😉

  1. But let’s for a moment – take a step back and see a possible rationale to this.
  2. In the telephone networks, 1-800 toll-free numbers allow businesses to subsidize users’ access fees, but that same mechanism is missing for Internet data services.
  3. This is possibly what Airtel Zero wanted to achieve? Maybe!
  4. Should we have fast lanes for different services – Video on Demand vs. Content only?
  5. Yes, because certain type of traffic need faster delivery, such as video streaming, while others such as emails and file transfer don’t!
  6. But will the network providers chide away from the lower tier/ slower lane services?
Net Neutrality & The Debate Around It

The real threat to Net neutrality (2/2)

  1. The Telecom providers need to assess the Impact of Voice over Internet protocol (VoIP) on their traditional voice telephony.
  2. But having said that, if operators start to treat the same type of traffic differently for different websites, e.g., slowing speeds or charging differently for access to Google versus Yahoo, then it can be a slippery slope.
  3. And this is precisely what the public opinion was in the last few days.
  4. Another aspect: The creation of fast lanes and paid prioritization with two tiers of service. Video streaming v/s Content streaming.
Net Neutrality & The Debate Around It

The real threat to Net neutrality (1/2)

  1. TRAI recently released a consultation paper on over-the-top (OTT) applications.
  2. One aspect of the Net neutrality debate is whether the throttling of certain types of traffic by network operators should be acceptable under certain conditions.
  3. Why throttle? Because some applications and their users are heavier on the Internet in that they generate more traffic and consume more bandwidth.
  4. Network operators need this flexibility with their pricing to manage network congestion and monetize their resources.
Net Neutrality & The Debate Around It doesn’t violate Net neutrality: Mark Zuckerberg


  1. Zuckerberg says promoting an open Internet for everyone is important, but so is connecting people at low cost.
  2. In many countries, there are big social and economic obstacles to connectivity.
  3. The Internet isn’t affordable to everyone, and in many places awareness of its value remains low.
  4. In India, already rolled out free basic services on the Reliance network to millions of people in TN, Maharashtra, Andhra Pradesh, Gujarat, Kerala and Telangana.

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