Through Another Lens: Understanding Telecom Operators’ Concerns [Net Neutrality]

FULL DISCLOSURE: I am the founder of Yippster, an operator billing solution. This may bias my views on the subject. On the other hand, I have had a better chance to interact with telecoms and understand their point-of-view.

Mobiles in India are the Unique Identifiers
Mobiles in India are the Unique Identifiers

The Telecom sector, a major pillar of India’s digital future, also has concerns which are smothered by the mainstream narrative on ‘net neutrality in India’. I wrote this Q&A from my understanding of their concerns:

What started this passionate debate in India?

TRAI released a consultation paper, asking public opinion on ‘Over The Top’ (OTT) services. The term OTT is not well defined and may have different ‘types’. Depending on who you ask, OTT can mean everything on the internet, or just a few services like WhatsApp.

What’s so special about WhatsApp?

WhatsApp is often cited as the ‘little start-up’ guy that telecoms are trying to bully. In reality, Facebook paid USD 22 Billion or Rs. 1,37,115 Crores for it. This figure is greater than the net worth of many telecoms.

What!?!

Exactly. From a telecom operator’s point of view, WhatsApp is no longer a ‘startup’. It is also the ‘type of OTT’ that telecoms dislike because it gives telecom-like services to its users ‘over the top’ of telecom’s infrastructure. Telecoms believe this is unfair practice and should be regulated.

Why do telecoms think that WhatsApp’s services are unfair to them?

For a telecom to ensure one user connects to another, SIM cards, towers, and other expensive stuff is required.

For WhatsApp to connect one user to another, it has to hope that the telecom operators are doing their job.

Can you elaborate on how WhatsApp works ‘Over the Top’ of telcos?

Telecom operators spend a lot of money doing a lot of things, but for the present discussion, they do three important things: a) buy licenses to assign mobile numbers, b) acquire large number of users, and c) assign said mobile numbers to these users.

WhatsApp straight up uses these numbers as usernames, as if it owns this system. Compare this to its parent company, Facebook, where a user’s account cannot be used by another service without Facebook’s authorization. Further, WhatsApp uses these numbers to offer telecom-like services: its users can send a message or call anyone with a phone number. No prior ‘friend request’ required, no privacy concerns. In other words, WhatsApp is less like an internet-only social media network and more like a pseudo-telecom network ‘Over the Top’ of real telecom networks

What is the harm in letting WhatsApp exist as it is?

WhatsApp is a popular service that genuinely saves cost for users. But WhatsApp will not exist if there were no telecoms (and phone numbers), making it a parasite from telcos’ perspective. Their concern is that, like any respectable parasite, WhatsApp will feed on its host until there is no host.

Eventually, we may be left with fewer telecoms. Or no telecoms at all. In which case, everybody will be on BSNL/MTNL and we will all party like its 1989 (watch this video)!

https://www.youtube.com/watch?v=HyPB-PVOyNw

Then why the intense one-sided debate on net neutrality?

Because it mixes the issue of OTT players like WhatsApp with other internet services and websites.

How did that happen?

The same TRAI paper also asked some broad questions on a scenario best described as ‘telecoms ruining the internet for everyone’. The said ruining would happen if telecoms decide to ‘throttle’ (slow down) internet data which passes through their networks to certain internet services and websites unless these services/ websites pay telecoms a fee.

You said ‘if telecoms decide to’. Is this actually happening?

No, the last part is not actually happening; telecom operators are not ruining the internet. If they were, they would deserve the flak, and this hash-tag driven rage will make sense. To get a perspective, compare the premise for this debate in India to the one in the US, where a major ISP, Comcast, did throttle the traffic of Netflix, a popular video streaming service.

To be clear though, telecoms in India do want TRAI to regulate services like WhatsApp.

Can you imagine what will happen if a telecom operator, especially a big telecom operator, decides to ‘screw the internet’?

Yes. Smaller telecom operators will look at this as an opportunity and offer a net neutral internet. Consumers, using MNP, will switch to those supporting net neutrality. Market economics will play out, most certainly in favour of net neutrality.

Why are telecom operators being vilified for something they have not yet done?

Telecoms are big companies doing the government’s job of universal connectivity. Big companies which do government’s jobs are generally objects of wrath. In this case, pre-emptive wrath for an imaginary problem.

Addendum:

I wrote this article to shed some light on the telco side of the story, but some readers have pointed out that I offer no solution at the end. I am thinking of some options, and I will be happy if readers can also think of some and email them to me at anant.kochhar@yippster.com

Addendum 2

One solution maybe to regulate WhatsApp-like OTTs which use telecom-assigned phone numbers as their primary method of user signup, and which have crossed a certain threshold of users, so that they are no longer considered ‘startups’. Because WhatsApp is so huge, regulations may actually be necessary from a security and privacy point of view as well.

8 comments

  • The excuses you make are so lame, a layman like me could pick holes in them.
    “Telecoms are big companies doing the government’s job of universal connectivity. Big companies which do government’s jobs are generally objects of wrath. In this case, pre-emptive wrath for an imaginary problem.”
    Telecoms run for profits not to do government’s jobs. When you run a for profit business you don’t get to say you were just doing others’ job.
    “WhatsApp is a popular service that genuinely saves cost for users. But WhatsApp will not exist if there were no telecoms (and phone numbers), making it a parasite from telcos’ perspective. Their concern is that, like any respectable parasite, WhatsApp will feed on its host until there is no host.”
    Last time I checked, users were paying telecos for data. No one’s getting a free ride. Stats show data revenue has more than compensated revenue drop in SMS/VAS.
    “Telecom operators are not ruining the internet”
    They already ruined it. Looked at average internet speeds in our country? Even Pakistanis have better speeds than us.
    Please put a sponsored tag next time

  • I put a full disclosure right on top, and rest assured that I am not making any excuses for anyone; just presenting a point of view. I would rather engage on my argument that WhatsApp has created a pseudo-telecom ‘over the top’ of telecoms by appropriating their number system.
    Also, I am no expert on the internet speeds in Pakistan (LOL), but slow internet speeds in India is likely a capacity issue, and not a net neutrality issue.
    -AK

  • Anant, I am not going to stop myself from spilling ‘vitriol’ on your article for being shallow in its perspective. And, trust me, it is going to be long. I hope, you are a technically knowledgeable person since you’re the founder of a tech company.
    Oh, and your big disclosure doesn’t help because your company’s (Yippster) product works only on Airtel and everyone can clearly see, why you might want to write this kind of a biased article with a shallow perspective.
    What started this passionate debate in India?
    It is not just the consultation paper and OTT services. Airtel’s earlier gaffe on charging for VoIP calls and messaging through Skype, Viber, Whatsapp and Airtel Zero had a huge role to play in it, too. Airtel blatantly wanted to promote the extortion plan as a “neutral-equal opportunity marketing platform”. Are you sure that a startup would be able to compete with the deep pockets of big players? It is a threat to the India growth story where almost every new M&A and investment sentiment is inching towards the tech and startup story.
    Your comparison of Whatsapp to a Telecom operator is true but Airtel too has a similar service called Hike. Who is stopping them from running it? Can’t they make profits like Whatsapp? It is because Whatsapp innovated first and is a much better product.
    But, your argument that Whatsapp is a parasite that feeds on Airtel approved Telephone number is baseless comparison. Even Facebook used Google’s email id for signing up and Google used your Static IP for detecting your existence to provide you the ID. Does that mean, Google and Facebook should be considered as parasites feeding on Airtel’s network? Whatsapp could’ve used Facebook login or your email id for signing up users but the telephone number is the most user-friendly feature to build a superior product. If that is the bone of contention for telco operators, Whatsapp can easily connect everyone with just email ids or facebook ids. Sure, there will be loss in the transition but they will reach the same scale again and be independent of telco operators. You see, where I am going with this? It is best, if Airtel and other operators start behaving like Service providers and gain money out of data rather than trying to slice it up into pieces. This only means that Telcos, with the capability to make something like Whatsapp haven’t done it and want to profit on top of someone who did it. What is this, if not arm-twisting monopolizing extortion?
    Telco operators haven’t done this?! Really? Please read through point 2 in this link (https://docs.google.com/document/d/1Q9WhvQszvV9LGm4NpGFI-YdQUUrAlldHmZYVeu65xQs/preview?pli=1).
    Your imagination that a small telecom operator will offer a non-neutral internet and usurp the users through MNP from the big operator who screws the internet is WRONG! There are hardly 5 known names in the industry and none of them are “Small”. And, they have a nicely marketable cartel called the COAI. Look what happened in Cable TV whether in India or the US.
    Govt has been doing its job of connecting India in its limited capacity. Don’t you dare say that, Airtel is doing it for the govt. All telco operators are for-profit companies. Some upstarts shut down or scaled down operations when they weren’t able to make profits or sustain the investment for long-term. So, don’t be all mighty about Operators doing the govt’s job. BSNL is connecting a lot of india along with all these operators.

  • Thanks Sandeep. I take no offence to the ‘vitriol’, but I do take offence to your remark that Yippster works only on Airtel! It works on Idea, Vodafone, and Uninor as well! And soon on Tata, Aircel etc.
    If WhatsApp abandons phone-number based sign-ups, then telecoms will have no grounds to go after it. As far as I know, telecoms do not consider Google or Facebook as OTTs. (As a side note, Google does not pay license fee to issue email IDs and Facebook wouldn’t allow third party services without authorization. But please lets not play the analogies game anymore in this net neutrality debate).
    Telecoms are profit-driven corporations which have earned the anger of the public, because of certain unfair practices in the past, which TRAI, to its credit, has put an end to. But these same telecoms came into existence because the govt., on its own, achieved 0.8 phone connections per 100 persons after 50 years of trying without private participation (Source: http://www.trai.gov.in/Content/telecom_policy_1994.aspx).
    This means that, whilst it is very hard to support the telecoms, it is also very important to support them against pseudo-telecom services like WhatsApp which may spell their doom. Also, consumers will benefit by a little more competition in the telecom sector- trust me, net neutrality will never be an issue. I think the most depressing thing in this entire debate is that many don’t seem to care that there are ‘hardly 5 known names’ for this vast country. Net neutrality became an issue in the US because Comcast and Time Warner Cable (soon to be merged) run a near monopoly in the US on broadband internet.

  • LOL can’t believe this; Looks like you are Rakhi sawant or Digvijay Singh of the Tech, you must have been paid well to write this crap.
    One day Whatsapp walks arrogantly in middle of the road, He gets pushed over by a telco. Telco roars I am the big daddy of the Jungle, if I pull plug on you, you don’t exist. No sooner did he said this a power generator company knocks him on down thundering, Do you know who I am, If I pull plug there wouldn’t be any device which will have power, Your telco network will be useless. You cease to exist, if I don’t let you live. Next moment power generator company gets booted out … who was it, was it consumer or was it government? … or was it someone else?
    Moral of the story is, at the end of any commercial ecosystem, it’s the customer who will pay for the service and he is the king.

  • (I can’t believe I’ve registered an account just to comment, but I’m convinced I should do it anyway.)
    @Anant
    First, let me disclose that I’m a supporter of Net Neutrality. So, you too may find my views biased, just like I found yours biased.
    The moment I read the title, I was happy I’d be able to get an insight into Telecom’s views. But, let me tell you, you arguments didn’t help me understand their side.
    Your arguments that I question are as follows:
    1. “If WhatsApp abandons phone-number based sign-ups, then telecoms will have no grounds to go after it”. As @Sandeep said in his comment, the entire discussion started when they started charging for VoIP service. Everyone knows that So called ‘Whatsapp’ packs exist for a long time. People were okay to pay ‘exclusively’ for Whatsapp. They didn’t raise their voice. All this started when they started charging for VoIP services, which have nothing to do with Mobile Number based sign-ups.
    2. “As far as I know, telecoms do not consider Google or Facebook as OTTs.” If you check the VoIP plan they launched, all calls through VoIP services like Google Hangouts, Facebook Messenger are also charged at normal rate. They may not consider Google/Facebook directly as OTT. But, Airtel certainly intended to treat their services as OTT.
    3. “But these same telecoms came into existence because the govt., on its own, achieved 0.8 phone connections per 100 persons after 50 years of trying”.
    Don’t compare the pace of innovation, after it has happened. Yes, things really happened very fast. Yes, Private operators did/do/will play a key role in connecting the nation. But, this couldn’t have happened without whatever the Govt. achieved in the early 50 years. We have to mind that.
    4. “it is also very important to support them against pseudo-telecom services like WhatsApp which may spell their doom”.
    This won’t spell their doom. I don’t have the link, but it was already made clear that the explosion of data use already compensates telecoms enough that it wouldn’t matter people use less voice calls / SMS. Also, as Sandeep pointed out, Hike, an indirect(or direct? Not sure) product from Airtel has the same views.
    5. This may sound like a U turn, but I am not sure if Airtel Zero violates net neutrality.
    May be I’m not getting this clear, but IMO, “Offering free internet to access some services is NOT same as restricting internet for the amount user pays.”
    When user pays price to buy data and if the carrier restricts data to/from specific services, it violates net neutrality. But, when the user doesn’t pay anything and is able to use certain services from the carrier for free(Mostly reverse charging), it doesn’t violate net neutrality. However, if the carrier gets into unfair practices like letting only selective companies to be able to use Reverse Charging facility, they should be regulated. In case of Airtel Zero, they are offering a platform for everyone, which is not wrong in my opinion.
    Carriers do business to make money and we should not regulate their innovation, unless they begin to be unfair.
    To summarize MY VIEWS,
    Airtel Zero does not violate net neutrality (which is similar to Toll Free numbers, which wouldn’t have existed if people protested earlier for Voice Neutrality).
    Regulating data traffic for specific websites even after I buy data, certainly violates net neutrality.

  • “Market economics will play out, most certainly in favour of net neutrality.”
    LOL at this comment. Reminds me of the situation in the US in the telecom, cable and health care industry. Free markets??

  • Mr. Kochar,
    You started your article stating “other side perspective”… However I smell a third-man-effect-strategy behind it … Backed by Telcos itself. (I don’t mean any offense to you personally).
    Your questions itself are inadequate and favoring telecom.
    I can give you thousand serious reasons why the proposal of telcos is wrong.
    I am really laughing at the pathetic logic presented by Telcos.
    Just as you know… Scientist have made lot of progress on using electrical waves to Communicate brain waves.

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