Net Neutrality Battle: Startups Defy Network Usage Fees

Indian startup founders unite to defend Net Neutrality, resist telecom fees, and oppose licensing for online services, taking on telecom giants. These founders also highlight the contradiction with the Indian government's Startup India initiative. Read on

Swati Dayal
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As many as 128 Indian startup founders have signed a letter in support of Net Neutrality, against network usage fees by telecom operators, and against the idea of imposing telecom licensing on online services.


These startups have rallied behind the cause of preserving net neutrality, resisting network usage fees proposed by telecom operators, and opposing the notion of subjecting online services to telecom licensing.

Prominent figures such as Nithin Kamath of Zerodha, Ankur Warikoo of Webveda, Aloke Bajpai of ixigo, Ritesh Malik of Innov8, and Akash Gehani of Instamojo are among those who have added their voices to this crucial issue.

What is Telecom Operators' Network Usage Fee Proposal?


Telecom giants Airtel, Jio, and Vi have approached the Telecom Regulatory Authority of India (TRAI) with a request to permit them to levy a "network usage fee" on startups, based on factors like traffic volume and user counts. In response, startup founders contend that this move resembles an attempt to bring certain types of online applications under the same regulatory framework as traditional telecommunications services.

What is the Startups' Plea to TRAI?

In a letter addressed to Dr. P. D. Vaghela, Chairman of TRAI, and Akhilesh Kumar Trivedi, Advisor (Networks, Spectrum, and Licensing), the startup leaders urged TRAI to reject the demand for network fees on substantial traffic generators.


They also urged TRAI not to impose telecommunications licensing on internet companies, thereby upholding the principles outlined in the 2016 Regulations rather than diluting them.

Support for Net Neutrality

The backdrop to this conflict includes the Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016, which TRAI introduced in February 2016. This regulation sought to prevent discriminatory pricing for consumers based on content and garnered support from numerous startups in their commitment to net neutrality.


What are the Concerns around "Overregulation"?

The startup founders caution TRAI against overregulating internet services labelled as "Over-The-Top" (OTT) services, as this could lead to discriminatory outcomes. They emphasize that internet services are already subject to regulation under the IT Act, 2000, and express their strong opposition to subjecting these services to a regulatory framework similar to that of telecom providers.

Differences Between TSPs and Internet Applications


The letter underscores the differences between traditional telecom service providers (TSPs) and internet applications/service providers. It emphasizes that the internet comprises complex networks that deliver services demanded by consumers, distinct from telecom operators' value-added services.

The Risks of Regulatory Convergence

The founders highlight the perils of a regulatory framework that empowers TSPs to favor one website, application, or service over another. They argue that this approach could result in discrimination, unequal competition, entry barriers, and increased compliance burdens, ultimately benefiting large multinational corporations capable of adhering to such regulations.


How Will This Impact the Indian Startup Ecosystem?

Moreover, the founders contend that granting TSPs control over these factors could significantly harm the thriving Indian startup ecosystem, creating an uneven playing field.

Contradiction with Government Initiatives: Startups’ Concerns

The startup founders have raised concern that the demand for imposing licensing and cost obligations on OTTs directly contradicts the Government of India's Startup India initiative. The founders stress that support for net neutrality is an integral component of these initiatives, ensuring that telecom and internet service providers do not discriminate against online apps and services based on factors such as availability, speed, or access cost. Ultimately, the choice should remain with the end user alone.

In this unified and impassioned plea, Indian startup founders have underscored the importance of preserving net neutrality and preventing undue regulatory burden on the dynamic and innovative landscape of internet-based businesses in the country.