India Deals Death Blow to Facebook's Free Basics

Indian authorities have joined the US and Europe in passing net neutrality legislation.

Gagandeep Kaur, Contributing Editor

February 8, 2016

3 Min Read
India Deals Death Blow to Facebook's Free Basics

Indian authorities today took the dramatic step of banning "differential pricing" for data services, effectively outlawing controversial offers such as Facebook's Free Basics and Airtel Zero.

"No service provider shall offer or charge discriminatory tariffs for data services on the basis of content," the Telecom Regulatory Authority of India (TRAI) said in its statement.

The ruling deals a major blow to Facebook , whose Free Basics offer was designed to let mobile customers in emerging markets use some Internet services entirely free of charge.

It could also prevent operators from offering subsidized data packages for popular services like Twitter Inc. , Facebook and WhatsApp. (See DoT Pushes for Net Neutrality in India .)

Authorities say a penalty of 50,000 Indian rupees ($735.50) a day, capped at an overall fine of INR500,000 ($7,355.50), will be levied on service providers who violate the ruling, although players will have a six-month period in which to ensure they are able to comply with the new regulations.

Indian telcos had been in favor of differential pricing and have been upset by the new ruling. Indeed, some players have argued it will have an impact on the government’s ambitious Digital India program.

"The telecom industry is disappointed with TRAI's decision to rule out differential pricing," said Rajan Mathew, the director general of the Cellular Operators Association of India (COAI), in a statement. "COAI had approached the regulator with the reasons to allow price differentiation as the move would have taken us closer to connecting the one billion unconnected citizens of India."

For all the latest news from the wireless networking and services sector, check out our dedicated Mobile content channel here on Light Reading.

Even so, experts believe the new rules are in keeping with the global trends in favor of net neutrality. "TRAI notification favoring net-neutrality is in line with what we've seen in the US," says Amresh Nandan, a research director at Gartner Inc. "The European Union has also ruled in favor of treating all Internet traffic equally, although some of their amendments allowed for differentiation and have been a subject of intense criticism."

In seeking to uphold net neutrality, TRAI is also looking to protect India's burgeoning startup community. "Start-ups today are heavily dependent on the open access of the Internet and any direction to control it can have a detrimental effect on them," adds Nandan.

The issue of net neutrality has been in the public domain for almost a year. TRAI had previously asked Reliance Communications Ltd. , one of India's biggest mobile operators, not to offer Facebook's Free Basics in India. The launch by mobile market leader Bharti Airtel Ltd. (Mumbai: BHARTIARTL) of Airtel Zero, an app offering free access to some applications, had further put the spotlight on the issue.

TRAI had then come out with a consultation paper on the issue. Media reports suggest that Facebook's strategy of trying to sway public opinion in its favor did not go down well with government authorities. TRAI had described Facebook's tactics as an "orchestrated opinion poll" and asked the web player to refrain from such moves. (See Zuckerberg Defends Against Indian Critics.)

– Gagandeep Kaur, contributing editor, special to Light Reading

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About the Author(s)

Gagandeep Kaur

Contributing Editor

With more than a decade of experience, Gagandeep Kaur Sodhi has worked for the most prominent Indian communications industry publications including Dataquest, Business Standard, The Times of India, and Voice&Data, as well as for Light Reading. Delhi-based Kaur, who has knowledge of and covers a broad range of telecom industry developments, regularly interacts with the senior management of companies in India's telecom sector and has been directly responsible for delegate and speaker acquisition for prominent events such as Mobile Broadband Summit, 4G World India, and Next Generation Packet Transport Network.

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