Extreme Infocom Pvt. Ltd. and National Internet Exchange of India (NIXI)

Case No. 10 of 2023 Page 1 of 20 COMPETITION COMMISSION OF INDIA Case No. 10 of 2023 In Re: Extreme Infocom Pvt. Ltd. Informant 2nd Floor, B 5, KLJ Tower North, District Centre, NSP, Wazirpur, New Delhi 110034 And National Internet Exchange of India (NIXI) Opposite Party 9th Floor, B-Wing, Statesman House, 148, Barakhamba Road New Delhi 110001 CORAM Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Present (during preliminary conference): For Informant Mr. A.N. Haksar, Sr. Advocate Mr. Saurabh S. Sinha, Advocate Mr. Chitra Y. Parande, Advocate Mr. Raunaq Maheshwari, Executive Director For Opposite Party Mr. Vaibhav Gaggar, Advocate Mr. Ashok Kumar, Advocate Ms. Kokila Kumar, Advocate Ms. Chhavi Arora, Advocate Ms. Shefali Munde, Advocate Mr. Shubham Sharan, General Manager Ms. C. Jayakiran, Law Officer Mr. Soumen Bhowmik, Manager Case No. 10 of 2023 Page 2 of 20 Order under Section 26(2) of the Competition Act, 2002 1. The present Information has been filed by Extreme Infocom Pvt Ltd. (‘Informant’) under Section 19(1)(a) of the Competition Act, 2002 (‘Act’), alleging contravention of the provisions of Section 4(2)(a)(ii) and 4(2)(c) of the Act by National Internet Exchange of India (‘NIXI/OP’). Facts and allegations, as stated in the Information 2. 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). 4. The Informant has averred that it is currently providing IXP services in Mumbai, Delhi- NCR, Chennai, Hyderabad, Kolkata and Bengaluru. It is stated that in addition to the Informant and the OP, there are several other IXPs operating in India. Some of the prominent ones are Amsterdam Internet Exchange India (AMS-IX), DE-CIX. 5. It is stated that the OP, registered in 2003, is a not-for-profit organization under Section 8 of the Companies Act, 2013. It was set up for peering of ISPs among themselves to route the domestic traffic within the country, thereby resulting in better quality of service (reduced latency) and reduced bandwidth charges for ISPs by saving on international Case No. 10 of 2023 Page 3 of 20 bandwidth. It earns its revenue through internet exchange and .IN registry operations. It is stated that in addition to major data centres like Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bengaluru, the OP is presently operating in 35 more cities/ towns in India. The Informant has averred that irrespective of its “not for profit” nature, the OP is an 'enterprise' under the Act as it is engaged in the business of providing IXP services of commercial nature. 6. It is stated that there are ISPs who need to connect to such CDNs, but it is not necessary that these ISPs be located in the same city. To connect to these CDNs/ content providers, either the ISP has to physically connect to Internet exchanges in those cities where CDNs have their data centers or to Internet exchanges in the location of the ISP which then connect to the CDNs. Either way, there is a cost of transportation involved for the ISP - directly in the first case and indirectly in the second. This cost is stated to be known by various names such as Transport cost, National long-distance cost, National Private Link cost, Point-to- Point cost or National Ethernet Link cost. Further CDNs / content providers have their data centres located only in certain locations viz. Mumbai, Chennai, Delhi etc. 7. The Informant has delineated relevant market as the ‘market 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’ and has stated that services provided by both the Informant and the OP are interchangeable. 8. It is stated that the OP enjoys a dominant position in the relevant market 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 Case No. 10 of 2023 Page 4 of 20 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 such towns/ cities. It is alleged that the OP is not passing the costs to its customers and providing its services below their cost or discounting all the charges thereby bearing the costs. It is stated that the OP is able to absorb the costs owing to its financial capability. According to the Informant, in the case of Hyderabad, none of these costs are being recovered from the customers (ISPs) by the OP. 10. The Informant has relied upon certain email exchanges in the context of Hyderabad, to substantiate its allegations. It is alleged that the OP had sent an e- mail dated 29.07.2021 to Hyderabad-based ISPs wherein it was stated that it would be providing Mumbai traffic at its Hyderabad port, for which it would not charge any port fee. It is stated that the Informant was pursuing a prospective customer, Aeronet Online Services Pvt. Ltd (‘Aeronet’), a Hyderabad-based ISP. Before finalisation of the Informant's contract, Aeronet decided to avail IXP services from the OP as it was offering the services free-of-cost, at least for a few months to begin with. The same was communicated by Aeronet to the Informant vide email dated 07.10.2022. The Informant has also cited another instance where it lost a prospective consumer in the name of Netrun Technologies Pvt. Ltd. (‘Netrun’), based in Hyderabad owing to the free provision of IXP services by the OP. Netrun apprised the Informant of its decision vide email dated 07.10.2022. This has resulted in denial of market access to the OP’s competitors such as the Informant. It is alleged that the Informant has lost customers to the OP because it is not charging transportation cost at least in as many as 17 sectors such as Bangalore and Mumbai, Guwahati and Mumbai, Agra and Delhi, Srinagar and Delhi, Lucknow and Delhi, to name a few. The provision of free services has caused revenue loss to the Informant and other players in the industry. 11. The Informant has averred that the OP has a routing and tariff policy which provides for the terms of availing internet exchange services from it. The said policy prescribes connectivity charges payable with effect from 01.01.2021. The OP after the prescription of charges, issued several tenders to establish internet exchanges/ ports across the country. These activities include point-to-point connectivity of upcoming internet exchanges and acquiring space at data centres for upcoming internet exchanges. Thus, the Informant has