Founders and top leaders of many prominent startups, including Zerodha's Nithin Kamath and Paytm's Vijay Shekhar Sharma, have written a joint letter to regulator TRAI in support of net neutrality, and cautioned that any move towards "over regulation" of internet services categorised as OTT services could have "discriminatory consequences".
The letter, signed by representatives of 129 startups, calls for the internet to be maintained as an open platform where network providers treat all content, application, and services equally, without discrimination.
This includes not putting a service at a competitive disadvantage, either by imposing additional network fees or other regulatory obligations such as licensing under a telecommunications framework, according to the letter addressed to Telecom Regulatory Authority of India (TRAI) Chairman PD Vaghela.
"As a key representative of the Indian economy and internet innovation ecosystem, we are writing to urge the authority to continue their support for net neutrality principles and caution against any move towards overregulation of internet services being described as Over-The-Top services, which may have discriminatory consequences," the letter said.
The founders made it clear that they are principally against bringing such services under the same or similar regulatory framework as Telecommunications Service Providers (TSPs).
Describing internet applications and services as vibrant, dynamic, and innovative, and rapidly-evolving, the letter emphasised that any move to categorise them as 'substitute' services, or segmenting them as messaging, video and other applications, is "incorrect".
In all, representatives of 129 startups have signed the letter. They include Zerodha's Nithin Kamath, Paytm's Vijay Shekhar Sharma, Haptik's Aakrit Vaish, IndiaMART's Dinesh Agarwal, Instamojo's Akash Gehani, MapmyIndia's Rohan Verma, and PhonePe's Sameer Nigam.
The argument that internet services are direct substitutes of traditional services and thus stealing the telcos' revenues and profits "is unfounded", the letter said.
"We urge TRAI to understand that the regulatory difference between TSPs and internet applications/ service providers do not requisite an intervention, especially because there are inherent structural and functional differences between the two," it said.
The internet is not a simple two-sided market, it added.
"We also believe that the suggested form of regulatory framework, where TSPs essentially have the power to tilt the playing field to favour one website/ application/ service or another, will inevitably lead to discrimination, non-level playing field, entry barriers, and increased compliance burden," the letter said.
Moreover, the suggested methods of categorising an application or services as "large traffic generators" and deciding the "fair and proportionate share/ contribution" are arbitrary and lack clarity, which may lead to such decisions being taken on a case-to-case basis.
Telecom licensing requirements, if extended to internet applications and services, may impose onerous obligations on Internet services, including costly legal compliances, and impact key product decisions which may harm India's vibrant startup ecosystem, the letter said.
"If anything, these obligations will favour large multinational conglomerates who can afford to adapt to such regulations. Giving TSPs the key to be able to control these factors will very likely impact the thriving Indian start-up ecosystem," the letter said.
As per the letter, the demand to impose licensing and cost obligations on OTTs is directly at odds with the government's Startup India initiative.
These initiatives are not complete without the support for net neutrality, a principle that assures telecom or internet service providers don't discriminate for or against online apps and services, on the basis of availability, speed, or cost of access, leaving that choice to the end user alone.
"TRAI must caution against any demand to charge network fees from large traffic generators and prevent TSPs from yet again trying to engage in such rent-seeking behaviour, and not impose telecommunications licensing frameworks on internet companies," it said.
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