META Meta Platforms Inc

By Sean McLain 

NEW DELHI--Hundreds of people showed up at an auditorium in India's capital on Thursday for a surprisingly passionate hourslong debate over whether Facebook and others are undermining freedom of the Internet by offering free services that give people limited access to the web.

Representatives of India's cellular service operators joined net-neutrality activists, startup executives and regular Internet users for an open-house discussion hosted by the Telecom Regulatory Authority of India. The discussion centered on the importance of the principle of net neutrality, which holds that the Internet is a public good and all data on it be treated equally.

Discussion of the concept that was little known in India until last year has exploded into a full-blown war of words between some net neutrality advocates and supporters of Facebook.

Since last year, Facebook, along with India's fourth largest telecommunications company Reliance Communications Ltd., has been offering what it calls Free Basics, an online service that allows free access to a limited selection of Internet websites.

The social-media giant has been teaming up with cellular companies in many emerging markets to offer Free Basics as introductory taste of what the Internet has to offer. If users stay on the free service they aren't charged data fees while surfing.

Facebook's high-profile attempt to offer the service, which included an extensive advertising campaign and a visit to India by founder Mark Zuckerberg, triggered a growing backlash from people who say the service violated net neutrality.

Critics of Free Basics and similar services say companies are trying to restrict access to only a portion of the Internet. Facebook said it supports net neutrality and its program is designed to create new Internet users and doesn't violate net neutrality.

As the debate has heated up in recent months, the TRAI told Facebook to stop offering the service so regulators could gather the opinions of more stake holders about how regulations should apply.

The discussion on Thursday was the penultimate step in the Indian regulator's weekslong decision-making process. In its call for reactions from people with opinions about what should happen, it received more than 1.5 million written responses. The regulator was overwhelmed by the "responses on responses," said R.S. Sharma, chairman of the authority. A decision by the regulator is expected before the end of this month.

In the TRAI auditorium, a crowd of corporate executives, startup founders and young software coders were given a few minutes each to present their arguments to a panel of officials seated onstage. More than 30 people spoke, elaborating on their letters to the regulator or to respond to others' assertions. Many took aim at Facebook.

Allowing Facebook's Free Basics to operate in India would "destroy the innovative tapestry of this country once and for all," said Pulak Bagchi, head of legal and regulatory affairs at Star TV's India unit. Star TV is owned by 21st Century Fox, which was once part of News Corp, owner of The Wall Street Journal.

If they are allowed to, Internet service providers would pick and choose which services users could access for free, putting others at a competitive disadvantage, Mr. Bagchi warned.

Facebook's representative, who identified herself only by her first name Deepali, reasserted the company's position that its service wasn't created to try to control or restrict the Internet. She asked the regulator to allow "innovative models that expand access and bring more people online, such as Free Basics."

Indian cellular and broadband service providers argued that allowing some services for free is just part of healthy competition which is good for consumers. Indian consumers have benefited from price competition on everything from airfares to pizza, and competitive price cutting on the cost of making a phone call has put India's cellular rates among the least expensive in the world.

"The TRAI allowed differential pricing for voice [calls], and voice tariffs really crashed," said Amit Mathur, a vice president at Reliance Communications, referring to the price competition allowed early in the century. Allowing companies to compete on price for Internet services would drive down prices in a similar way, he said.

Others pointed out that telecommunications companies are public utilities. They can set the price for their services, but they shouldn't be allowed to decide how consumers use it. A phone company restricting where people can surf on their smartphones would be such as the companies telling people which businesses they are allowed to call on their phones.

(END) Dow Jones Newswires

January 21, 2016 13:03 ET (18:03 GMT)

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