PM IAS NOV 07 EDITORIAL ANALYSIS – Plover Minds Institute LLP

Editorial 1 : A telco double dip attempt that threatens Net neutrality

Context:

In July this year, the Telecom Regulatory Authority of India (TRAI), at the request of the government, invited a comprehensive consultation on the need and possible mechanisms for regulation of ‘OTT services’, which became controversial.

Over The Top (OTT) services:

It refers to media service offered directly to viewers via the Internet. OTT bypasses cable, broadcast, and satellite television platforms—the types of companies that have traditionally acted as controllers or distributors of such content.Examples: content providers such as Netflix, Amazon Prime, and Disney+ Hotstar.

For more than a decade now, telecom companies have seen revenue from traditional streams such as voice calls and SMS come under pressure, as competing OTT services are often free. At the same time, they have had to invest heavily in upgrading their infrastructure to handle increased data traffic, without necessarily seeing an equivalent rise in revenue.
They also complain that OTT services are not subject to the same level of taxation and licensing fees, leading to an uneven playing field. On the flip side, the use of OTT services has led to a surge in data consumption, which is a growing revenue stream for telecom companies.

Flawed argument that affects net neutrality

The OTT consultation has renewed the clamour from the telecom companies that OTT platforms/ content providers be asked to share in the costs of bandwidth. They argue that streaming platforms are free riders, benefiting from the infrastructure built and maintained by the telecom companies.
However, this argument is fundamentally flawed and sets a dangerous precedent that undermines the principle of net neutrality. Telecom companies do not own the Internet; rather, they provide access to it.
Consumers pay the telcos for access services by purchasing data plans. By offering services that consumers desire, OTT platforms generate demand for Internet access. They also pay for the content delivery networks (CDNs) to create pathways that substantially augment the capacity of the internet to deliver their content.
Telecom companies capitalise on this demand (and the availability of OTT content) by providing connectivity to the Internet and charging subscribers for it.
If they fail to cover costs, telecom companies are at liberty to increase their prices, which should go towards maintaining and upgrading their infrastructure. One of the requirements for the operation of a fair market is that the costs and benefits of a transaction are fully accounted for in the exchange price.
Therefore, any attempt to seek cross subsidise instead of fully accounting for the costs could warrant scrutiny from the Competition Commission of India (CCI).
In the marketplace for Internet access, the consumers are free to choose the provider that offers them the highest bandwidth, data volume, and reliability at an affordable price. These are distinct markets because services from one are not substitutable for services in the other.
Therefore, it is logical to maintain a separation of costs between these two markets. The attempt of telcos to double dip by charging both consumers and content providers is not only avaricious but also undermines net neutrality.
If OTT platforms were to acquiesce to the demands of the telcos, the incurred costs would trickle down to subscribers, either through increased subscription fees or degraded service quality for those platforms unwilling or unable to pay the toll. This outcome can only be detrimental to consumers who have come to rely on OTT services for entertainment, education, and professional pursuits.

Net neutrality principle

It says that Internet access providers (ISPs) must treat all traffic originating from and terminating to the Internet in the same way. Professor Tim Wu, who coined the term “net neutrality” in a 2003 paper, proposed the purpose of net neutrality is to promote an even playing field on the Internet, ensuring that all data is treated equally without discrimination by ISPs.
Net neutrality draws from earlier notions and principles concerning common carriage, which posit that service to all customers must be provided on a nondiscriminatory basis.

Basis of TRAI regulation

Net neutrality formed the basis of TRAI’s regulation on prohibition of discriminatory tariffs for data services brought out in 2016. The regulator’s action forced the withdrawal of Facebook’s Free Basics platform and some other offerings in India.
In 2017, TRAI released its comprehensive recommendations, which have largely guided the adoption of this principle in India. These steps taken by TRAI were noted elsewhere in the world.
Body of European Regulators for Electronic Communications (BEREC) and TRAI adopted a Joint Statement for an Open Internet in 2018. The two organisations agreed through this memorandum of understanding to cooperate in developing technological and policy initiatives for net neutrality. Many other countries have also adopted net neutrality, thereafter.

Conclusion:

It is imperative for all stakeholders, including policymakers, to recognise the long term ramifications of acquiescing to the shortsighted demands of telecom companies. Upholding the principles of net neutrality is not merely about preserving the ethos of an open Internet but is also intrinsic to fostering a conducive environment for innovation, competition, and consumer welfare, especially countries such as India where the Internet is going to be the carrier of all Digital Public Infrastructure (DPI).

Editorial 2 : States in Court against their Governors

Context:

Some States ruled by political parties in opposition to the party in power at the Center have approached the Supreme Court (SC) accusing their Governors of using a nonexistent discretion to unreasonably delay the passing of crucial Bills into law. The Bills in limbo cover sectors such as public health, higher education, Lokayukta and cooperative societies.

The accusations

For example, Tamil Nadu has accused its Governor of sitting on the Bills by neither assenting nor returning them.
Kerala, in its separate petition, said that eight proposed laws passed by its Legislative Assembly were pending with the Governor, not for months, but years.
Kerala has asked the Supreme Court to form a 7 judge Bench to review a 5 judge Bench judgement in the 1962 Purushothaman Nambudiri case which held the view that Article 200 did not provide “for a time limit within which the Governor….. should come to a decision on the Bill referred to him for his assent”. The State said that, at the time, the court did not consider the possibility of Governors holding back Bills for an indeﬁnite time.
SC had to intervene in April for the Telangana Governor to clear Bills pending since 2022, compelling the advocate appearing for the State to submit that legislatures in Opposition Ruled States were at the mercy of the Governors, who had become a law unto themselves.

The process of granting assent

Article 200 of the Constitution enables the Governor, when a Bill passed by both Houses of the Legislature, to either declare his assent to the Bill or withhold the assent if it is not a Money Bill, or reserve the law for the consideration of the President.
Article 163 There shall be a Council of Ministers with the Chief Minister at the head to aid and advise the Governor in the exercise of his functions except in so far as he is by or under the Constitution required to exercise his functions or any of them in his discretion.
The top court in the Shamsher Singh case verdict has held that as a formal head of the State a “Governor exercises all his powers and functions conferred on him by or under the Constitution on the aid and advice of his Council of Ministers save in spheres where the Governor is required by or under the Constitution to exercise his functions in his discretion.” The assent or return of the Bill does not involve the discretion of individuals occupying the Governor’s post.

By when should Bills be returned?

The ﬁrst proviso of Article 200 says it should be “as soon as possible”. The Constitution is silent on what exactly this phrase means. Justice Rohinton F. Nariman, in his 2020 judgement in the Keisham Megha Chandra Singh case, said a ‘reasonable time’ would mean 3 months.

Conclusion:

The States have urged the court to interpret the phrase in the proviso and ﬁx a time limit by which Governors should assent or return a Bill. The 1988 Sarkaria Commission report on Centre-State relations had suggested consultation with the Governor while drafting the Bill and ﬁxing a deadline for its disposal.