Inside telecommunications Issue 12

Regulation

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US ruling reignites net neutrality debate

Net neutrality remains a thorny issue in the telecommunications industry, with regulators historically keen to limit operators’ ability to charge content providers for data so as to safeguard an open internet.

To date, US legislation has epitomized such attitudes, yet a US court decision in January has reignited debate over the best approach to regulate internet traffic.

The FCC’s Open Internet Order of 2010 had required ISPs, both network and cable operators, to treat all web traffic equally, regardless of source. It has since been queried on a number of occasions before a challenge by Verizon Communications led a US appeals court to repeal two of the three mainstays of this legislation. The court has decided that while the FCC does have the authority to regulate broadband access, it does not have a mandate to impose anti-discrimination rules on broadband providers.

The court’s decision has raised anxiety among consumer protection groups that uncensored access to the web is under threat, with the prospect that ISPs could in time prioritize certain internet services or block some types of traffic.

While operators have long argued that charging content providers is justified in view of the heavy network investments required to meet data traffic demands — particularly for bandwidth-hungry video services — over-the-top (OTT) service providers continue to stress the need for an open internet and an unfettered end-user experience.

All considered, the ruling in itself hardly marks a paradigm shift in internet policy, yet it has sent shockwaves through the industry, underlining idiosyncratic national and regional approaches to the issue.

Looking ahead, it is clear that the debate over net neutrality will continue, whether driven by operator demands to develop new business models in the face of heavy network or investment, by OTT players eager to safeguard their current business models, or by governments and regulators as part of a wider set of themes relating to internet governance and consumer rights.

India receives clarity on M&A regime

In early December, M&A rules were announced for India’s mobile industry, paving the way for consolidation in one of the world’s most overcrowded markets, where 13 operators compete for subscribers.

An empowered group of ministers (EGOM) approved a previous recommendation from the Telecom Commission, allowing two or more service providers to merge as long as their post-deal market share does not exceed 50% of the country’s subscribers.

Following the announcement of new guidelines, long-held hopes for consolidation can be realized. The new M&A policy — which is still awaiting final Cabinet approval — also offers an exit option to operators that are struggling to remain financially viable or have not been able to surrender underutilized spectrum or licenses. The new guidelines also come as operators are participating in a new spectrum auction.

Adapting both M&A and spectrum auction rules will generate greater confidence in the Indian telecommunications landscape, cementing two different routes for operators to gain scale.