Over 100 Indian startups, including Paytm, PhonePe, and Zerodha, urged the Telecom Regulatory Authority of India (TRAI) to maintain its unwavering support for net neutrality principles.

Amid calls by the telecom service providers (TSPs) to mandate over-the-top (OTT) platforms to pay a network fee to the former, 128 Indian startups wrote a letter to TRAI chairman P.D. Vaghela cautioning against overregulation of internet services.

In the letter, the startup founders voiced strong opposition to the idea of subjecting internet services to the same regulatory framework as TSPs.

They argued that the foundational premise behind such regulation – the notion that internet services are direct substitutes for traditional services – is fundamentally flawed and unsubstantiated.

Highlighting the dynamic and multifaceted nature of internet applications and services, the letter stressed that categorising them as substitutes or segmenting them into messaging, video, or other categories is an oversimplification.

They emphasised the structural and functional differences between TSPs and internet service providers, asserting that intervention in the regulatory landscape is unnecessary.

“A particular TSP which is offering data services to the consumer does not control the internet infrastructure in its entirety. It is dependent on several other networks to facilitate this task. Thus, allowing a TSP which is at one edge of the internet to charge differentially for data that it does not alone process, could compromise the entire architecture of the internet itself. Were other TSPs across multiple tiers allowed to do this, then the openness of (the) internet as we know, would be altered,” the letter said.

“Allowing price differentiation based on the type of content being accessed on the internet, would militate against the very basis on which the internet has developed and transformed the way we connect with one another,” it added further.

The startups expressed concerns about the potential discrimination, non-level playing fields, entry barriers, and increased compliance burdens that could result from the proposed regulatory framework. 

“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 read.

The letter was also signed by Razorpay’s Harshil Mathur and Shashank Kumar, IndiaMART’s Dinesh Agarwal, Rapido’s Rishikesh SR, among others. 

The letter was sent in response to TRAI’s consultation paper on regulating OTT apps.  Earlier, the telecom regulator made public the responses it received from various stakeholders.

Among the notable submissions, Reliance Industries-owned Jio proposed a framework that calls for OTT players to make contributions towards network costs. Jio’s suggestion was rooted in the idea of restoring a level playing field within the industry. 

Bharti Airtel, another major player in India’s telecom sector, advocated direct financial contributions from OTT players to telecommunications companies. 

However, many have argued that the proposals by the TSPs will dilute net neutrality principles. “Any ‘collaborative framework’ which may result in establishing a revenue-sharing mechanism between OTTs and telecom service providers will violate the net neutrality framework notified by the Ministry of Communications in 2018,” industry body Internet and Mobile Association of India (IAMAI) said earlier.