9911796707
TMI Blog2024 (11) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... It is stated that the Informant, having its registered office in Delhi, is a company registered under the provisions of the Companies Act, 2013. It is engaged in the business of providing internet exchange services to customers through its trade name Extreme IX. The Informant provides Internet Exchange Points (IXP) connecting Internet Service Providers (ISPs) and local and international content providers/ Content Delivery Networks (CDNs) (known as peering). The IXP provides physical infrastructure and facilitates physical aggregation for many one-to-one peering arrangements which enhances efficiency and cost reduction with improvement in performance. Without IXP, each ISP may have to individually peer with each CDN which is cumbersome and expensive. For the provision of such service and hardware, entities providing IXPs are usually paid a fee called "port fee". 3. The Informant is the holder of National Long Distance (NLD) Internet Service Provider (ISP)-A Unified Licenses and provides a carrier-neutral, data centre neutral IXP. It is stated that the services of the Informant can be availed by anyone with an Autonomous System (AS) identified by an Autonomous System Number (ASN). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and has since 2015, posted significant profits from its other heads of revenue. It is stated that as the OP does not pay dividends to its members, it has high amounts of surplus at its disposal which allows it to operate independent of competitive forces. The Informant has submitted that the OP is thus engaged in the business of providing IXP services as a commercial venture. It has also pointed out that as stated in its Annual Report for the year 2020-21, the OP has no loans of any kind. 9. It is averred that there are several expenses attached to the provision of internet exchange services that include the cost of equipment (port); cost of housing such port (charges relating to rent, electricity, security, cooling etc.); personnel costs; administrative costs etc. These expenses are incurred irrespective of where the IXP is situated and are associated with the setting up and running of any internet exchange. In the relevant geographic market, i.e. towns/ cities in India in which CDNs/ content providers are not present/ do not have their data centres, an additional cost is required to be incurred i.e. the cost of point-to-point connectivity for the proposed internet exchange in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming internet exchanges. Thus, the Informant has alleged that the OP is incurring costs in respect of point-to-point connectivity (from the data centres of CDNs/ content providers to such towns/ cities) and is also incurring costs for housing and operating these ports. However, these costs are not being passed on to its customer/ ISP. 12. Based on the above, the Informant has stated that the OP is resorting to predatory pricing with a view to reduce or eliminate competition in violation of Section 4(2)(a)(ii) of the Act which is leading to denial of market access to other entities like the Informant as per Section 4(2)(c) of the Act. 13. Accordingly, the Informant has prayed to the Commission to initiate an investigation under Section 26(1) against the OP. The Informant has also prayed for an injunction as an interim relief against the OP to prohibit the OP from offering IXP services free of cost or at reduced rates by giving concession of transportation and/or any other constituent cost incurred by the OP on the ground that there is irreparable harm being caused to the Informant and the balance of convenience lies in the favour of the Informant. 14. The Commission considered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fic within the country for better quality of service (reduced latency) and reduced bandwidth charges for ISPs by saving on international bandwidth. The mandate of the OP is to develop internet exchanges throughout the country in line with the Government's Digital India mission. The long-term objective of the OP includes developing and promoting use of the internet for business, residential and e-governance applications through a collective effort of all members of the internet exchange and thus, the OP has already established 77 Exchange Points in total including tier 2 and tier 3 cities. The OP has, inter alia, submitted that the Informant is hindering the OP's objective by initiating frivolous and vexatious litigations like the present case. 19. As preliminary objections, the OP submitted that the TRAI is the regulatory body established by the Government of India which has been tasked with regulating the telecom sector in the country and has also been tasked with regulating/ supervising the activities undertaken by the OP in order to meet its mandate. The OP further submitted that the Commission lacks jurisdiction in the present matter since the jurisdictional aspects involved i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and incomplete. The Informant has failed to apply established tests and principles followed under Section 19(5), 19(6) and 19(7) of the Act, to delineate the relevant market in case of abuse of dominant position. The OP is an IXP through a physical location by which Internet infrastructure companies such as ISPs, CDNs, web enterprises, communication service providers, cloud and SaaS (Software as a service) providers connect to exchange internet traffic across India. The relevant product market delineated by the Informant only for CDNs and ISPs thus, cannot be taken in isolation and the same if considered, would be erroneous. Therefore, the relevant product market is 'Internet exchange services for peering between ISPs, CDNs, web enterprises, communication service providers, cloud and SaaS providers which connect to exchange Internet traffic'. Keeping in view that the OP is operating in India (including 77 cities and additionally planning to penetrate additional cities), the relevant geographic market should, therefore, be delineated as 'India'. Thus, the relevant market is 'Internet exchange services for peering between ISPs, CDNs, web enterprises, communication service providers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he market such as AMS-IX, Extreme-IX and DE-CIX and there are no entry barriers. The Informant, on the other hand, is a subsidiary of a foreign company ExtremePeering.net having massive cash reserves, resources and technological superiority. The services offered by the holding company Extreme Peering.net and Extreme Labs with Extreme IX is claimed to be a highly successful product. The technology and expertise of the Informant's holding company is superior to that of the OP. Further, size and resources of the OP are to be seen in relative terms and not in isolation. The Informant did not reveal its own size and resources. The Informant currently has a network of over 350 ISPs directly connecting content providers like Google, Facebook, Netflix, Amazon, and Akamai and is operational in Mumbai, Delhi, Chennai, Hyderabad and Kolkata and has the most number of members/ CDNs. 26. The OP has no economic advantage over the competitors and TRAI has time and again recommended that the OP upgrade its capacity. The OP is a stand-alone company with multiple social and developmental objectives whereas the Informant is an Indian subsidiary of a foreign company with access to advanced technology ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, as per the OP, it had first entered the market in Hyderabad in 2021, while the Informant entered the market in 2022. It charged concessional prices with the intent to create a market in Hyderabad and was not competing with any of the players in the market. The OP also contended that the emails relied upon by the Informant have to be properly appreciated. As regards the email dated 29.07.2021, the OP submitted that the offer made in Hyderabad was not to meet any competition since no other player existed in the market and the same was made in collaboration with the government department which is responsible for monitoring the social and economic objectives mandated to the OP. Moreover, the offer made by the OP was temporary and for a limited time with a view to creating a market. The same is also evident from Aeronet's email dated 07.10.2022. Further, another customer (Quicknet Communications Pvt. Ltd./Quicknet) left the Informant due to low business generated by the Informant and not due to low price offered by the OP. The OP submitted that every provision of service involves costs but in the case of not-for-profit organisations unlike profit making entities, the costs are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f OP that the issue be placed before TRAI is wholly misconceived in view of the present lis. The OP has failed to point out any preliminary aspects which may merit interference of TRAI. There is no dispute as to the relevant product market as it is the internet exchange services between content providers, CDNs and ISPs and the relevant geographic market is towns/cities in India in which CDNs/content providers are not present/do not have their data centers. Not all CDNs may have their data centers even in three metropolitan cities and, as such, there may be a cost of transportation involved in carrying traffic even from one metropolitan city to another. Also, since IX services can be provided anywhere in India, the geographic market would be India. The OP is the oldest IX provider in the country and hence, it cannot resort to attractive pricing to penetrate any market in India as a new entrant. 36. The Informant submitted that it has never been its case that the determinant of dominance in this case is market share. The OP is using its revenues from other sources (.in domain) to subsidize provision of IX services below cost and is able to operate independently of competitive forces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r customers by the OP. The OP has offered free services in Hyderabad in the past and admitted with a caveat that it happened during the period September 2021 to December 2022. It did not pass transportation cost for 16 months in Hyderabad and is thus, engaged in predatory pricing or zero pricing. 42. The Informant is suffering on account of termination of contracts by its existing customers after connecting with the OP or are no longer interested in Informant's services due to provision of free/ cheaper services by the OP (such as email of Quicknet). 43. The Informant stated that the harm caused by OP's pricing is irreversible and balance of convenience lies in favour of grant of interim relief. Thus, in view of is submissions, the prima facie case exists. The Informant also relied upon certain judgments to canvass its submissions in the matter. Additional documents filed by the Informant 44. The Informant filed an affidavit containing certain documents (confidential and non- confidential version) on 14.03.2024, to substantiate its submissions made during the preliminary conference on 14.02.2024. 45. The Informant, inter alia, reiterated that transport cost or carriage cost is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia for setting up of a domestic internet exchange and consequently, the OP was envisaged as a central body to handle interconnection of domestic internet traffic between peering ISP members. The OP is carrier neutral and does not compete with the other member ISPs and works on non-profit basis. The mandate has been granted by the Government to the OP which is a public authority, in furtherance of Article 39(b) of the Indian Constitution. Thus, TRAI being the sectoral regulator is the appropriate forum where any complaint or dispute with respect to the OP's alleged malafide or illegal activities can be agitated. Only after proceedings before TRAI have attained finality, the Commission has the jurisdiction to enquire into any alleged abuse of dominance by an entity working in the telecom sector. The OP has relied upon judgments particularly the judgment of the Hon'ble Supreme Court of India in Competition Commission of India v. Bharti Airtel Ltd. (2019) 2 SCC 521 (Bharti Airtel case), to canvass its position and has submitted that TRAI being the regulator would determine jurisdictional aspects on merits and return a prima facie conclusion that there had been a violation of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h practices which are having adverse effect on the competition, to promote and sustain competition and to protect the interest of the consumers and ensure freedom of trade, carried on by other participants, in India. To this extent, the function that is assigned to the CCI is distinct from the function of TRAI under the TRAI Act. Learned counsel for the appellants are right in their submission that the CCI is supposed to find out as to whether the IDOs were acting in concert and colluding, thereby forming a cartel, with the intention to block or hinder entry of RJIL in the market in violation of Section 3(3)(b) of the Competition Act. Also, whether there was an anti-competitive agreement between the IDOs, using the platform of COAI. CCI, therefore, is to determine whether the conduct of the parties was unilateral or it was a collective action based on an agreement. Agreement between the parties, if it was there, is pivotal to the issue. Such an exercise has to be necessarily undertaken by the CCI..." 51. The OP's submission that the entity's existence stems from sectoral regulator's recommendations and thus, it is within the domain of TRAI and not Commission's, does not hold water ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any statutory authority such as TRAI under the provisions of Section 21A of the Act is the prerogative of the Commission and may be exercised in appropriate cases, as deemed fit by the Commission. 53. After having decided the preliminary objection as to jurisdiction, the Commission now proceeds to examine the case on merits. 54. The Commission notes that the Informant has alleged contravention of provisions of Section 4 of the Act. In this regard, the Commission notes that the Informant has delineated (in Information) relevant market as provision of 'internet exchange services for peering between content providers, CDNs and ISPs in towns/cities in India in which CDNs/content providers are not present/do not have their data centres'. On the other hand, the OP submitted that the relevant market ought to be as provision of 'internet exchange services for peering between ISPs, CDNs, web enterprises, communication service providers, cloud and SaaS providers which connect to exchange internet traffic in India'. During the preliminary conference, the Commission noted that both parties made their submissions considering relevant geographic market as 'pan-India'. Thus, considering the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly has a network of over 350+ ISPs. Further, the OP provided the following data: Table 1: Number of connected networks in six markets where the Informant is present Year OP Informant 2016-17 113 33 2017-18 114 151 2018-19 114 272 2019-20 114 363 2020-21 110 426 2021-22 139 520 Table 2: Number of IX points in six markets where the Informant is present Year OP Informant 2016-17 06 05 2017-18 06 08 2018-19 06 13 2019-20 06 15 2020-21 07 24 2021-22 09 30 2022-23 22 38 58. From the aforesaid, the Commission observes that the Informant appears to have more IX points and greater number of connected networks than those of the OP during the period 2016-22 in six markets where the Informant is present (i.e. Mumbai, Delhi-NCR, Chennai, Hyderabad, Kolkata and Bengaluru). 59. The Commission also takes note of the email dated 18.06.2022 sent to Railtel by the Informant stating that it has been operating internet exchange for the last 6 years which is the biggest IX of India (600+ AS networks and 1.8 Tbps of traffic between its 35 DCs/8 cities). 60. Based on the data provided by the OP, it appears that in terms of volume of traffic and number o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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