‘Where will the next 200 million users that will come online in India prefer to go? Will they buy a data pack, or will they use the free Internet?’
‘What will happen when most of the Internet in India is inside a walled garden?’
Imagine what kind of Internet you would have in India three years from now, once the Airtel Zero idea, of creating a free Internet by allowing Internet companies to buy data, becomes the norm across telecom operators.
The top four telecom operators are adding around nine million mobile Internet users a quarter. India is adding around 14-15 million a quarter, and that’s around 60 million a year, probably more, with free Internet.
Where will the next 200 million users that will come online in India prefer to go? Will they buy a data pack, or will they use the free Internet?
How Airtel Zero splits the Internet in India
Airtel Zero is a platform that allows Internet companies to pay money to Airtel, to allow users to get free Internet. On the face of it, for a user, this seems great. A few things to consider on how it splits the Internet:
Free and paid: What will they use? Facebook’s free Internet.org. Free Cricinfo. Maybe the free Financial Express (which calls ‘Net Neutrality’ nonsense, (external link), but do read the comments below that article) instead of The Hindu or The Times of India?
Maybe YouTube will be free while Vimeo and Dailymotion will not be. Shopping from Flipkart at no data charges? Google, a part of the telecom lobby COAI and a serial violator of Net Neutrality in India will be free (external link).
With all the popular, favourite sites free, they’ll choose free. They’ll have to think before buying a data pack to access the freedom of the open web.
So, two Internets. Free and paid.
What will they see, when users who are on free try and go to a paid site? This:
This is what happened to me when one tried to access the open web on an ‘Airtel Live’ (not Mobile Internet) connection back in 2008.
Indian and global: When a new app launches globally, will they line up outside an Indian telecom operator’s office, so that they can reach that 200-300 million users in India?
Imagine if YouTube had launched now as a startup, and it wasn’t owned by net-neutrality-violating Google. Do you think they would have cared about being made available in India?
Twitter — which has also violated net neutrality in India — recently launched a video streaming service Periscope. What if it isn’t available to those users on the free plan? All the small little tools that can launch globally now will not be available to that user base, because they won’t be able to roam the Internet freely.
So, two Internets: Indian and global.
What will they see, when users who are on the free Indian Internet, try to go to a global site that hasn’t signed up with a telecom operator? This:
Between big and small Internet companies: Indian Internet companies will need to raise higher funding, for their sites to be made available to free users who don’t have a data plan.
So, Flipkart, with $1.9 billion raised last year, will be free, but, maybe DailyObjects with lesser funding, will not. So the users on the free plans will never find out that DailyObjects exists, unless DailyObjects raises more funding and also signs up.
What will student startups do? MediaNama was started with Rs 500 for a domain name, Rs 500 per month for hosting and our biggest expense was registration for a private limited entity.
What will happen when most of the Internet in India is inside a walled garden? Will not market forces ensure that this so called ‘marketing expense’ isn’t optional? If Flipkart has signed up, do Snapdeal or Amazon have a choice? How long will they hold out?
Between telecom operators:
Now take this situation with Airtel, and replicate it across telecom operators. Different services free on different operators. Telecom operators could do exclusive deals with some sites (even though Airtel has said that it isn’t doing that now, it could, or others could), so some sites will be free only on one telecom operator, or available to those 200 million odd users from one telecom operator.
So, how many Internets? 26: Two Internets per telecom operator, and 13 telecom operators (including Jio). If ISPs also go down this path (BSNL, Airtel and MTNL are the largest), and there are over hundred ISPs, then we would have hundreds of different Internets in India. Oh, just to clarify, that isn’t a good thing.
What will they see, when users who are on the free Indian Internet, try to go to a site that hasn’t signed up with their telecom operator?
This is the worst case scenario. It might not be all that bad. All the telecom operators and ISPs in India could collaborate and create a free ‘India Internet’, allow all apps and sites to make their product available free across all telecom operators, maybe at a discounted rate.
That still splits the Internet into two parts: Free and paid. And there could be a single ‘supply chain manager’ (a role that exists in the mobile VAS industry) which Internet companies, Indian or otherwise, have to negotiate with to make their app available, or negotiate with every year for the renewal as a vendor with telecom operators.
Is that better? We will gradually find out. Telecom operators could also charge on a pay per use basis for sites outside the free Internet, and not block access, keep in mind two things: Firstly, once that distinction is created in a user’s mind between paid and free — they will lean towards free. Secondly, Indian telecom operators have a history of manipulation of their platform. In Mobile VAS, there is a ‘Supply Chain Manager’ who renegotiates deals, telling ‘vendors’ that they are making too much money, and more share needs to go the operator.
Where have we heard that before? Well, in the TRAI paper, the telcos argue that Internet services are ‘free riding’ on their networks, and that have very high valuations. That $19 billion WhatsApp deal, which valued the company higher than Airtel, probably really made them angry about this ‘free riding.’
Calling bull**** on Airtel’s ‘marketing spends’ spin
Technically, Airtel Zero isn’t a marketing or promotional platform. It’s a platform that allows Internet companies to buy data so their consumers have to pay for it later. It is essentially subsidising Internet access. We can buy an iPhone and decide that it is available for free for anyone to take. If we don’t tell anyone about it, how will they know?
The promotional aspect is separate: Either the Internet company or Airtel will have to promote the services and the platform. Allowing companies to buy free access for consumers is not promotion.
Also, Airtel, in the interview with MediaNama, didn’t disclose rates, the list of companies that signed up, how this price was decided — or how different it is from what regular users pay. Srini Gopalan, Director, Consumer Business, Bharti Airtel, said, “The way our pricing structure works, the pricing is transparent, but I can’t talk to you about the details right now.”
Why has Google joins Indian telecom operator association COAI?
Google India has joined the Cellular Operators Association of India (COAI), a telecom industry body currently lobbying strongly against Net Neutrality. Google has confirmed to MediaNama that it has joined COAI, but it’s Country Head for Policy, Chetan Krishnaswamy, was not been available for an interview. Google has also not responded to queries mailed last week regarding its reasons for joining COAI, and its stand on Net Neutrality.
Question 1. Why has Google joined COAI? At a global level, Google isn’t a member of the GSMA, so why has it joined a telecom industry association in India? This is in context of Facebook being a member of both GSMA and COAI.
Question 2. What benefits does Google get by joining an industry association where its core membership is only available to telecom licensees?
Both Facebook and Google are now members of the COAI. In August 2014, Ankhi Das, Head of Public Policy for Facebook India, had spoken with MediaNama about the company’s reasons for joining the COAI, but took a stand against violation of Net Neutrality. Since then, Facebook has announced Internet.org for India, which, with Zero Rating, would violate Net Neutrality. Facebook has also declined to comment on our questions regarding whether it knew of COAI’s letter against Whatsapp (a company that Facebook owns) to the telecom regulator TRAI.
Note that Facebook is also a member of the GSM Association, and this somewhat explains their decision to join COAI. However, Google has chosen not to join the GSMA, but has now joined the COAI.
Question 3. As a member of the COAI, what are Google’s views on the COAI’s lobbying efforts for establishing a regulatory arrangement via the TRAI for interconnection charges / revenue share arrangement between telecom operators and Internet companies like Google? Do you support such an arrangement. Why or why not?
Question 4. In 2010, Google had tied up with Airtel, for offering higher speeds for access to YouTube for the Indian Premier League. All users accessing YouTube for the IPL were upgraded to a 2 mbps connection. Does Google support increasing or reducing bandwidth speeds for users for specific sites?
Google has previously tied up with telecom operators like Airtel for providing free data for app downloads along with the purchase of Android One phones. This reduction in price for Apps is, in principle, similar to Airtel increasing prices for VoIP, which the TRAI Chairman Rahul Khullar indicated is a violation of Net Neutrality. At the same time, App developers would benefit from data bundling.
Three related questions:
1. What are Google’s views on Net Neutrality in India, and does it support or oppose Airtel’s now-retracted plan to charge separately for VoIP in India?
2. Does Google intend to continue tying up with telecom operators for free data for Google services?
3. Does Google have any plans (whether in India or globally) to offer application developers the ability to bundle data purchased from telecom operators free with their app?
Telecom operators CEO’s and the COAI have lobbied hard over the last year (or more), to force the TRAI to first host a seminar to explore possible revenue share arrangements between telecom operators and Internet companies. The midst of all of this, Google, Facebook and (Facebook owned) Whatsapp have worked with telecom operators to make their own services available free, or for data bundling. As we had explained earlier, these kind of arrangements essentially allow the bigger companies, which can afford such relationships between telecom operators, to make their services cheaper than competition, and forces startups to seek similar arrangements with telecom operators.
Quite simply, if MakeMyTrip has such an arrangement with Airtel, would a Cleartrip be able to compete purely on product? If Times of India were available for free, would, say, Mint be able to compete? If YouTube is faster at 2mbps, would Ogle (which, allegedly, was throttled by Airtel), be able to compete?
Three rules of Net Neutrality
Rule 1: All sites must be equally accessible: ISPs and telecom operators shouldn’t block certain sites or apps just because they don’t pay them. No gateways should be created, in order to give preferential discovery to one site over another.
Rule 2: All sites must be accessible at the same speed (at an ISP/telco level): This means no speeding up of certain sites because of business deals. More importantly, it means no slowing down (throttling) of some sites.
Rule 3: The cost of access must be the same for all sites (per Kb/Mb or as per data plan): This means no “Zero Rating”. In countries like India, Net Neutrality is more about cost of access than speed of access: all lanes are slow.
Counter Point – Net neutrality nonsense
If Google has a Project Loon and Facebook an internet.org it is because they realise telecom infra needs to be paid for and they can’t just clog it up
Given the pasting Bharti Airtel got over its decision to charge a higher data rate for voice-over-internet services like Viber, it is not surprising it chose to beat a hasty retreat. But Bharti Airtel’s strategic retreat should not be seen as a victory for the sloganeering over what is called ‘net neutrality’, jargon for treating all data traffic in a similar manner. The ‘net neutrality’ argument being made sounds logical, but it is inappropriate for India for a variety of reasons, and all of these will be examined by the Trai before it comes to conclusion on how to treat such services.
Even before we begin to examine the ‘net neutrality’ argument, it is important to keep in mind there is no common view on how such neutrality is to be achieved globally; much of what is being discussed in OECD countries are just various options. In even the US and Europe where data penetration levels are upwards of 70% (voice penetration is at 100%) – this means the telecom networks have all been rolled out – telcos have said they will reconsider future investments if the cream is going to be taken away by the Googles of the world, and this is when data packages are far more expensive in the US and Europe as compared to what they are in India. That’s why Google is working on creating its own internet network through Loon ballons, and that’s why Facebook – another big guzzler of telecom data networks – is working on internet.org which seeks to compact data so as to reduce the clogging up of data networks built by telcos at their own expense.
If this is what is happening in developed markets, the situation is a lot more adverse in India. For one, around 40% of Indians still don’t have voice networks, and data penetration is just a little over 12%. If a network has to be rolled out to meet these needs – EY estimates Indian telcos need to invest Rs 2.5 lakh crore over the next 7 years – someone has to pay for it. If, on the other hand, data-guzzlers like Viber and Skype are to clog up all the networks, what incentive do telcos have to roll out the networks considering just a tenth or so of their revenues come from data services?
The profits from data services, the maths makes it obvious, are not enough though proponents of ‘net neutrality’ will argue the Bharti Airtels and Vodafones make enough money from bandwidth charges and should be happy with that – this is the same argument which says a restaurant owner does not pay for making the road that services the outlet.
An additional point that needs to be kept in mind is that, even today, telcos contribute 5% of their revenues to what is similar to ‘net neutrality’ – 5% of revenues are paid out each year for the Universal Service Obligation which is used for funding rural broadband. If this same revenue was to be used to fund the telcos’ own networks, they wouldn’t be as averse to voice-over-internet clogging up their networks. Short point: if net neutrality is the public good it is being made out to be in the new Digital India, like an LPG subsidy for instance, let the government cut cheques to pay for it – roads, to use the restaurant-road analogy, are paid for by the government, not private firms. Unlike in the OECD countries, India dramatically over-charges for spectrum, so much so that most of the capex of telcos comprises spectrum fees. On top of this, telcos pay around 28% of their annual revenues by way of licence fees, spectrum and microwave charges and service tax.
Let’s also get it clear that while ‘net neutrality’ is a compelling idea, too much is being made of it. If you move away from telecom, while there is ‘net neutrality’ in other sectors as well, it is not absolute. In the electricity sector, all consumers using under 300 units of electricity in India pay a lower flat rate, but this uneconomic pricing is made possible by charging those using over 1,000 units a month a higher price – so there is ‘neutrality’ in rates, but only within each block of usage. Airlines are ‘neutral’ in that they give equal access to customers, but charge different rates for different seats within the same aeroplane, and charge people different rates for the same seat depending upon when they book. And in the good old days – or bad old days, depending on how you view private telcos – when government-owned PSUs ruled the roast, local calls were subsidized by charging customers a hand and a leg for domestic and international long distance calls; charging them a flat rate – which is what the ‘net neutrality’ debate boils down to – would have killed telephony in India even before it took off.
If Bharti Airtel is guilty of anything in the VOIP debate, it is of getting its strategy wrong, of not being able to convince people differential pricing lies at the heart of every business, and that it is the better-heeled customers who can afford smartphones who are benefitting from cheaper VOIP calls at the expense of the less fortunate who are paying many multiples more for their plain vanilla phone calls. The fact that other telcos chose not to follow Bharti Airtel’s example and jack up rates for VOIP services – Bharti Airtel backed down only because it realized it would lose customers to its rivals – also proves Indian telecom isn’t anywhere near the oligopoly it is made out to be.
Compiled from Medianama.com and Financial Express
