The Internet has been a means of providing continuity in employment and education to many in the midst of the COVID-19 pandemic. Stakeholders throughout the Internet ecosystem have had to step up to provide connectivity—both to those previously unconnected, and those already connected but with increased demand. Internet service providers (ISPs) in Sri Lanka have been no exception.

Responding to a request of the Telecommunications Regulatory Commission of Sri Lanka (TRCSL), many fixed and mobile Internet service providers began providing special packages targeting those working and studying from home.

The basic premise is that these packages should allow for cheaper access to the Internet to allow individuals to engage in their work and/or studies. This attempt to reduce the cost of Internet use is one that should be commended. Sri Lanka’s data prices are amongst the lowest in the world, but it is unaffordable to many, particularly those in lower-income deciles. More generally, the unstable economic environment has led many to take pay cuts; cost savings from operating from home (such as reduced transport costs) may not sufficiently negate other increases in expenses such as utilities.

Despite the basic premise being the same, the packages are quite varied, as shown below. Operators place restrictions on different elements of access such as the time of access, the volume of data accessed, platforms accessed to create bundles.

A deeper dive into these packages have allowed us to identify some considerations for Internet service providers and TRCSL. Some are symptomatic of the study and work from home packages and short-term considerations, while others may be food for thought when identifying principles for service provision on a more long-term basis.

Data pricing should include taxes to reduce information asymmetries

The targeted study and work packages have highlighted a long-standing issue in telecoms pricing– the inclusion of taxes in pricing.  Publishing prices inclusive of taxes tackles information asymmetries of many sorts. Most simply, it allows consumers to easily assess what they can afford vs what they cannot. Some operators have begun doing this, while others haven’t. This isn’t a standardized practice even amongst those who do publish prices inclusive of taxes—there are instances where an operator advertises the price of some packages with taxes and others without. While some effort to include taxes in pricing should be commended, the inconsistency in the pricing of packages brings forth an additional challenge—it makes price comparison challenging.

This was clear when assessing these targeted work and study packages. Let’s assume that I wish to purchase a fixed broadband package with a 30GB cap. TRCSL has helpfully compiled all the special packages on their website. A quick scan of this compilation would indicate that I have two options, which we’ll call package A and B for illustration.

While key information such as prices and allowable data limits are recorded, it would still be difficult for me to determine which is cheaper. A quick calculation may indicate that package B is more economical—that I’d be paying Rs. 7 per GB as opposed to the Rs. 14 per GB if I went with option A. However, package B’s prices don’t include taxes, making it challenging for consumers to make a fair comparison with the information presented.

Is net-neutrality violated, undermining competition?

Many of these packages whitelist platforms, restricting access to MS Office 365 (including MS Teams), Zoom and a few other select platforms. In fact, we see limits placed on access to the breadth of the Internet in non-education and work specific packages as well. These bring out more fundamental and deep-seated questions around Net Neutrality—the idea that ISPs must treat all content on the Internet equally.

Different schools of thought would view this matter differently. Market purists could argue that operators are free to choose how to bundle and monetize access. On the other hand, others could argue that bundling of this sort is an anti-competitive practice. This is because these restrictions can create a lock-in effect of sorts. Let’s assume a new consumer wishes to have a videoconference. If they found a package that allowed them to conduct this videoconference at a lower price than usual, they would be inclined to use this package. Since the package only allows for cheaper calls through select platforms, (say Zoom and WebEx) they would be nudged to use one of these platforms over the many others that are not included in the package.

This is not to suggest that the operators have teamed up with select platforms to actively promote their content. It is entirely possible that operators chose these platforms by including those that were anyway popular amongst their customer base. However, regardless of intention, the practice can create an unequal playing field, driving smaller platforms out of the market. It is in this spirit that packages of this sort are not to be found countries like India with strong Net Neutrality rules.

Are these packages a means of facilitating self-control?

But we must further examine if there are non-price considerations for why there is a market for such packages. Consumers may also purchase these packages not because they want to only use select platforms, but because they also wish to not access other types of platforms while working or studying. It could be a means of creating self or parental control. Dialog’s ‘Work and Learn’ packages seem to cater to this market. They have created an exclusion list, where they determine which platforms consumers cannot access, as opposed to what they can access.

To be clear, we don’t necessarily see all the platforms on this specific exclusion list as ‘distractions’ to all– our own research in numerous South and Southeast countries indicate that many use these platforms to earn a living. However, if there is a market for packages with restricted content, we can see how an exclusion list approach has the potential to be less anti-competitive than the whitelisted approach. For example, if a consumer were to wish to conduct a videoconference, they would not be nudged by the package to use Zoom (included in the whitelisted package) over say, Jitsi (not included in the whitelisted package).

Of course, if facilitating self or parental control was the only consideration, there are other workarounds– many browsers and platforms allow for parental controls to be set. We do, however, know that few would have the skills to do this at present– only 32% of mobile users knew how to locate and change the settings on an application or service in 2018.
Therefore, taking the considerations around cost and content control, there may be a case to promote the exclusion list approach over both a whitelisted approach and a complete ban in the short run.

In conclusion…

Some offices have begun reopening physical offices, and schools are due to open beginning end June. However, many establishments would be unable to resume operations at full capacity full time until health and safety guidelines are relaxed. This means work and education specific packages would continue being relevant for the foreseeable future.

These special work and education packages have also provided us with an opportunity to consider some deep-seated issues around pricing and competition in the telecom sector. Our take is that all consumers would benefit from understanding what their tax-adjusted prices are. The net-neutrality angle is one that needs to be assessed further, while also considering other factors such as the effectiveness of deep packet inspection. Pushing the exclusion list approach is one way of balancing between competition and market needs for work and education models in the short-run.