In a Blow to Facebook's Free Basics, Trai Rejects Differential Pricing

The Telecom Regulatory Authority of India (Trai) on Monday dealt a blow to Facebook's plans to offer free mobile Internet through its controversial Free Basics service, by outlawing differential pricing for data packages.

Facebook has met a backlash in India from "net neutrality" advocates, who say that because Free Basics only allows access to selected websites it violates the principle that the entire Internet should be available to everyone on equal terms.

"Today we have come out with a regulation that essentially mandates no service provider shall charge differential pricing on basis of application, platforms, websites, or source. No ISP can enter into any arrangements based on discriminatory pricing," said Trai Chairman Ram Sewak Sharma at a press conference in Delhi on Monday.

"No service provider shall enter into any arrangement, agreement or contract, by whatever name called, with any person, natural or legal, that has the effect of discriminatory tariffs for data services being offered or charged by the service provider for the purpose of evading the prohibition in this regulation," Trai's ruling reads.

Responding to the Trai ruling on Monday, Facebook said in a statement, "While disappointed with the outcome, we will continue our efforts to eliminate barriers and give the unconnected an easier path to the Internet."

(Also see: Free Basics vs Net Neutrality Debate - Explained)

Trai's new regulations will come into effect immediately, and no new launches of prohibited packs, plans or vouchers shall be permitted. Violators will have to pay a fine of Rs. 50,000 per day, capped at a maximum of Rs. 50 lakhs. Trai said that it will keep a close watch on the implementation of the mandate by the service providers and may undertake a review after two years or at an earlier date as it may deem fit.

This will not affect any packs, plans or vouchers with unexpired validity subscribed by a consumer before today, but no plans or vouchers will be valid beyond six months from now.

"We have used the term discriminatory pricing instead of differential pricing because it in that paper had a particular context. What we are saying that packets on Internet, the pipes should not decide. Pipes should be agnostic to the packet," Sharma said.

The ruling suggests that Free Basics, which was aimed primarily at people in poor rural areas, will not be allowed to continue in its current form.

"Trai has today issued the 'Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016' that disallow service providers to offer or charge discriminatory tariffs for data services on the basis of content being accessed by a consumer," Sudhir Gupta, Trai secretary, said in a statement.

"While formulating the regulations, the authority has largely been guided by the principles of net neutrality seeking to ensure that consumers get unhindered and non-discriminatory access to the internet," Gupta said.

The policy may be reviewed every two years or sooner, Trai said. Reduced tariff for accessing or providing emergency services, or at times of public emergency has also been permitted. Trai said that it will keep a close watch on the implementation of the mandate by the service providers and may undertake a review after two years or at an earlier date as it may deem fit.

Critics of Free Basics, which had been suspended temporarily while the regulator's consultation was ongoing, include many of India's leading technology entrepreneurs.
India's 1.2 billion people make it a vitally important market for Facebook, which is still locked out of China, with the second biggest number of users outside of the United States.

Written with inputs from AFP