New Delhi, January 28, 2026: The introduction of a Network Usage Fee (NUF) on content and application service providers could significantly harm consumer welfare, weaken competition, deter innovation, and undermine net neutrality in India, according to a new empirical study by the Esya Centre.
The report, “The Impact of a Network Usage Fee on Consumers and the Digital Economy: An Empirical Evaluation,” presents a comprehensive assessment of the potential consequences of imposing traffic-based charges on digital services. Drawing on a mixed-methods approach, the study combines insights from 38 experts across public policy, academia, civil society and industry, along with a national survey of over 2,000 consumers across Tier I, II and III cities.
Consumers Likely to Face Higher Prices and Reduced Choice
A central finding of the report is that a network usage fee would ultimately be borne by consumers.
- 68 percent of experts surveyed believe that an NUF would reduce overall consumer welfare.
- 82 percent expect prices of content and application services to increase if such a fee is introduced.
- A majority of consumers indicated dissatisfaction with any policy that raises the cost of online services, even when accompanied by claims of faster internet speeds.
The study finds little evidence that any financial gains accruing to telecom service providers would be passed on to consumers in the form of lower prices or improved quality of service.
Competition and Start-ups at Risk
The report raises serious concerns about the impact of an NUF on competition, particularly within India’s fast-growing digital start-up ecosystem.
- 84 percent of experts believe that a network usage fee would create entry barriers for content and application providers.
- 82 percent anticipate a moderate to extreme decline in revenues for start-ups, limiting their ability to scale, invest in content, and compete effectively.
The study also flags the risk of market distortion in a sector where several telecom operators have downstream interests in content platforms, potentially creating unequal competitive conditions.
Investment, Innovation and Content Diversity Likely to Decline
Contrary to claims that an NUF would incentivise network investment, the report finds strong evidence of negative spillovers across the digital ecosystem.
- 82 percent of experts expect reduced domestic and foreign investment in content and application services.
- 86 percent foresee a decline in innovation in the sector.
- 79 percent predict a negative impact on the diversity of online content available to Indian users.
The report notes that content providers already invest heavily in complementary infrastructure such as data centres, content delivery networks and caching, which reduce network congestion and lower costs for telecom operators.
No Evidence of Meaningful Efficiency Gains
The study finds limited support for the argument that a network usage fee would improve efficiency in telecom networks.
- 63 percent of experts expect no significant efficiency gains in telecom or internet access services.
- A substantial majority expect efficiency losses in the content and application services industry, driven by increased costs and contractual complexity.
Net Neutrality and Freedom of Speech and Expression Under Threat
The report underscores that an NUF could undermine India’s net neutrality framework by creating financial incentives for discriminatory treatment of internet traffic.
- 76 percent of experts express concern that such a fee would weaken net neutrality protections.
- 75 percent of consumers surveyed stated that net neutrality is important to them, citing its role in preserving choice, access, and diversity of content.
The study also highlights implications for freedom of speech and expression, noting that reduced content diversity and higher entry barriers could limit both creators’ ability to distribute content and users’ ability to access pluralistic viewpoints.
A Complementary Digital Ecosystem
The findings reinforce the interdependence between telecom service providers and content platforms.
- 86 percent of experts believe telecom operators derive high or extremely high benefits from content services that drive data consumption.
- Three-quarters of consumers value bundled content subscriptions, and nearly 70 percent would consider switching providers for better access to digital services.
“This study demonstrates that a network usage fee would impose real costs on consumers and the digital economy, without delivering commensurate benefits. India’s digital success has been built on open access, competition and complementarity between networks and content. Any policy intervention must preserve these foundations rather than risk higher prices, reduced innovation, and weakened net neutrality,” said Meghna Bal, Director, Esya Centre.
Based on the evidence, the Esya Centre recommends that India refrain from introducing a network usage fee, noting that telecom providers already benefit significantly from the growth of content and application services. The report emphasises that data traffic is driven by consumer demand in a pull-based digital economy, creating a virtuous cycle that supports both network expansion and digital innovation.
