How Net Neutrality Is Hurting Telecom Revenue and thus Growth and Development

Youtuber Bhuvan Bam earns INR 4 lakh for every video he makes. His fame – creativity aside – is enabled by communication systems that allow him to broadcast his videos, and others to view them. All he pays is a monthly fee to his ISP.

For every 10% increase in mobile broadband penetration, India’s GDP rises by one per cent. Telecom is vital to India’s economy, yet its financial health is dire straits. From operators such as Jio reducing data tariffs across the board through its dirt-cheap rates to restrictive government policies, the sector is grappling with a debt of INR 4.6 lakh crores against revenues which are less than half that – INR 2 lakh crores.

Our telecom sector pays some of the highest taxes in the world. Where telcos in China are taxed at 11%, Indian players pay approximately 32% of its revenue as taxes, including 18% GST and another 15% in levies such as license fee and spectrum use charges.

With 2018’s Union Budget failing to cut down on these taxes, the sector has been “orphaned”, according to Cellular Operator Association of India (COAI) Director General Rajan Mathews. It is time for radical measures to rescue Indian telecom, such as the repeal of net neutrality.

An “anti-neutral” net would allow the sector to create new channels for monetisation. Video consumption is a perfect example here; reduced data prices and the proliferation of smartphones has meant that an average user spends upto 12 hours a month watching only videos.

Content creators have leveraged that appetite to earn mega-bucks while paying nothing for using the infrastructure which telcos have invested in. Signing up to Google AdSense allows users 55% of advertising revenue from a video. Advertisers pay at a cost-per-click or cost-per-view model, with the average rate per thousand in India being INR 450. A career as a Youtuber is even more lucrative when coupled with other avenues such as brand integration and sponsorship.

It is only fair that telecom operators get a share of that revenue. If net neutrality is rolled back, ISPs could charge creators for accessing and uploading on video platforms. This wouldn’t affect everyone – tiers based on revenue and number of subscribers could be instituted and only the ‘top tier’ creators would have to pay.

Besides developing better infrastructure, the increased revenue would be used to train manpower that can help cope with increasing demand for data consumption. The government has reiterated its commitment towards a digitally-powered future with the latest Budget; it now needs to actively assist the backbone that is telecom.


Keywords: Net neutrality in India, Is net neutrality good or bad for India?, Net neutrality India

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