A response to Airtels justification of

its net neutrality violation

By Nikhil Pahwa ( @nixxin , +NikhilPahwa ) on December 27, 2014

Airtel sent us a statement explaining the rationale for its net neutrality violation,
wherein it started differential rates for Internet Telephony (VoIP), as opposed to other
Internet services. As we explained earlier, a COAI paper mentions what the industry
association refers to as OTT, which it believes eats into telecom operator revenues:
VoIP, Instant Messaging (IM), Applications (Apps), Cloud Services, Internet Television,
IPTV, M2M Machine to Machine (M2M) communications, Social Networking. So, all
digital services are under threat of being carved out as separate packs.
Also read: Net Neutrality, a simple explanation.
Airtel believes that what it is doing is right, so we decided to fisk its statement, backed
by data:

Airtel: Over the last twenty years, we have invested over Rs. 140, 000 crores
in rolling out telecommunications services in every nook and corner of the
country. In addition, we have paid over Rs. 50, 000 crore in terms of
government levies in just 5 years.

MediaNamas take:
1. On investment made in telecom: In just the last two and a half years, Airtel has
earned Rs 141,545 crore in revenues, and Rs 16,211 crore in profit. Over 20 years,
theyve substantially more money, which is great return on their investment. Theyve
invested for the return theyve gotten.

2. On government fees: They were able to build their business because instead of a
fixed license fee, the government reduced their initial costs by allowing them to pay a
revenue share. When they earn more money, they pay more government levies. When
they earn less money, they pay less levies. Nothing wrong with that: theyve built a
great business, and earned money for their shareholders, but its not that Airtel
invested this money for philanthropy or for contributing to the government exchequer.

Airtel: Going forward, we are committed to rolling out data networks across
the country. In order to ensure this, our business must be viable and
sustainable. Our voice services that are enjoyed by every one of our
customers provides us the capacity to continuously invest in and upgrade
our networks on an ongoing basis. We, therefore, believe that VoIP services
in their current form are not tenable for us as a business. As a result, we will
charge separately for VoIP services.
MediaNamas_Take:
1. Airtel or Infratel? Correct me if Im wrong, but networks are going to be rolled out
by Bharti Infratel, not Bharti Airtel. Bharti Airtel provides consumer services, while
Bharti Infratel provides tower services to telecom operators, and will invest in
networks. Bharti Airtel will not be directly investing in networks, so how is cost of
networks a Bharti Airtel consideration?

2. VoIP is not Airtels business, access to the Internet is: Airtel is an access service
provider, it has a Universal Access Services License. Its business is to provide
consumers with access to voice services over PSTN, and VAS, which includes content
services over PSTN networks, SMS and the Internet. The Internet is an access service,
for which consumers pay Airtel, and VoIP is a service that consumers use via the
Internet. What is provided over the Internet should be none of Airtels concern,
providing the Internet should be. What Airtel is doing is slicing up the Internet into
types of services, and charging for those separately. Which means, and this is a privacy
issue, it checks what you are doing online.
3. Data has contributed to growth in telecom revenues, not taken away from it.
Last quarter, Airtel reported Rs 1,805 crore of Mobile data revenue, up 73.8% Y-o-Y in
India.Data was 14.5% of Airtels revenues for the three month period ending
September 2014, compared with 5.2% at the end of September 2012. Its data customer
base has increased by 43.0% and higher usage per customer by 31.2%. Not counting
accidental usage, Airtel has 40.1 mobile Internet connections active. Data consumption
has increased to 40.1 billion MB from 15.87 billion MB in Q2-FY15. If you just look at 2G
data rates, Airtel now charges Rs 249 per month for what it used to charge Rs 99 a
couple of years ago.
So, when it comes to the Mobile Internet, users have increased, usage has increased,
rates have increased and revenues have increased.
4. On eating into telecom services revenues:SMS and VAS revenue has declined, but
data revenue has increased. Take Idea Cellular, for example, based on our calculations
with Idea Cellular earnings data:

This is Idea Cellular, with 30.92 mobile Internet connections active by the end of
September 2014 (Q2-FY15). Airtel has more data, more consumption, more revenues.

Airtel: However, in line with our philosophy of putting our customers above
all else we are committed to making VoIP services extremely affordable and
attractive by ensuring adequate minutes for a very small charge on VoIP.
As a result, in line with the recent announcement of our VoIP (Voice over
internet protocol) pack, Airtel would like to clarify the following:
Our Customers can enjoy a superior VoIP calling experience on Airtels
network by choosing from a range of new VoIP specific data packs that will
soon be launched. For prepaid users, the VoIP exclusive pack will be priced at
Rs. 75 for 75MB with a validity of 28 days. This will allow customers to make
between 200 and 250 minutes of calling. Similarly, affordable VoIP plans will
soon be launched for postpaid customers. There would be no other charges
in respective of VoIP calls.
MediaNamas take:
1. VoIP is becoming more expensive, not cheaper: We did the math, by taking the Rs
249 and 449 data pack rates from Airtels own site. VoIP calls are becoming 311% more

expensive if you take the Rs 249 data pack, and 470% more expensive if you take the Rs
449 data pack (2.5 GB).

I just got an SMS from MTNL, offering 100 GB of data for Rs 5000 per year.

That is Rs 50 per GB, or Rs 0.049 per MB. Airtel VoIP is 1948% more expensive.
2. Shows how expensive regular calls are in comparison with Internet
Telephony: Also note how Airtel tried to put a spin on it by comparing VoIP with actual
phone calls, by changing the vocabulary from MBs to minutes of usage. Imagine if
you were being charged for watching YouTube on the basis of minutes of videos
viewed or type of content watched. If theres one thing this change in vocabulary
indicates, it is that phone calls are actually priced exorbitantly high. Technology
advancement makes calling cheaper, and Airtel is trying to make more money of it, by
increasing the cost by 470%. Should we really allow the cost of outdated technology to
determine the cost of newer, more efficient technology?

The VoIP update is not applicable with immediate effect. This change will be
implemented in a phased manner over the next few weeks. In all cases, our
customers will proactively be informed about these VoIP charges in advance
through the companys standard communication channels like SMS, USSD
pop-up, email etc.

 Prepaid customers who have purchased data plans before 24th December
2014 are entitled to use all services opted-for till their packs are consumed or
expire, following which, the new terms & conditions on VoIP usage will apply.

MediaNamas Take
- Customers are not informed, consent is not taken: To this, all I have to say is that
the last two times my data pack charges have been increased by Airtel, I have neither
been informed, nor has my consent been taken in order to subscribe to a more
expensive plan. In fact, I found out about the latest increase a couple of days ago, when
I called up Airtel customer care to confirm this anti-net neutrality move. They say they
sent me a message on November 7th, but Ive never received it. Tomorrow, Airtel can
increase rates by 10 times, and I would only find out via my post-paid bill. Really, the
TRAI should ensure that telecom operators take customer consent before subscribing
them to higher cost plans. Ive now discontinued the data plans on Airtel altogether,
and am looking to port out.