‘Telcos may go intranet to bypass Trai’s order’

Existing and new 4G players are planning to offer content such as movies and sports through private servers as they plan to take the intranet route to bypass Trai’s order banning differential tariffs over the internet.

What is the issue?

New entrants in this sector are planning to take intranet route to offer various services. The intranet route would be encouraged by the exemption given to the channel in Trai’s order on differential tariffs.

• Telcos may attempt to monetize such an opportunity/regulatory exemption. The mobile operators could selectively choose data/content and charge carriage fees from content providers/ e-commerce players for providing them access on their intranet platforms. 

Concerns:

• At present, telcos monetize data connectivity and charge for data usage. But, 4G new entrants are looking at leveraging intranet-based data offerings in an attempt to take market share. They may disrupt the traditional data business model, leveraging intranet-based data offerings.
•  This would also severely violate the tenets of net neutrality as the mobile companies – which will include new ‘4G entrants’ – would subsidize the content, and may even provide it for free, as they look for ways to capture customers.
•  The 4G entrants may also attempt to tweak the traditional business model by providing more value to subscribers via aggregating movie and other content. So, 4G entrants may offer all such intranet-based content virtually free to subscribers in addition to their basic data plan. 

Is it allowed under TRAI rules?

Trai’s suggestion that rules prohibiting differential pricing will not be applicable to intranet-based offering, will allow telcos to have a B2B model by charging content providers/e-commerce players a carriage fee and in turn subsidizing subscribers’ data services.

What are intranet services?

Intranet services are a network based on internet protocols belonging to an organization accessible only by that organization’s members, employees and others with authorization. The essence of such services is that they would not be available to the public from the internet.

• For telcos to provide such services, they will need to store all content on their servers and to avail themselves such offerings, subscribers will still need data connectivity. As data is stored on the servers of telcos, there will be a need for telcos to increase spend on data centers. 

Limitations of Intranet:

There may be physical limitations, even with significant investments in data centers. Social network sites may push daily updates; e-commerce sites may push their deals and look for better conversion rates. Movie-based content may have to be provided free by telcos to bring footfall to intranet platform.