On airtel and Net Neutrality

First of all a disclaimer - I currently work at airtel, specifically airtel Business which is the B2B enterprise division. While I may justifiably be accused of having a bias, it also gives me an opportunity to have some idea on what I am talking about. Further I am writing this in a purely personal capacity, on MY  personal blog. This is in no way an official statement.

There seems to be a debate raging on how airtel has "dealt a blow to net neutrality" by its alleged tie-up with Flipkart, so much so that the company has also felt the need to clear the air. Apparently the defence put up by Flipkart has been "debunked". Refer to this. I am all for net neutrality, but thought I would share my perspective also.

Now before I clear a few things up let me share some background information. Today we consume broadly two kinds of services via mobile phones - voice and data. Though the backbones to carry both would be the same, the ways they are treated in are different due many reasons - technological, historical and especially important in the Indian context, regulatory. At the risk of oversimplifying, voice includes SMS and (normal) calls. Data covers everything provided via 2G/3G/4G - Internet on mobile phones.

Further India is one of the most competitive markets in the world where we have had many players per circle, more than in (especially) western markets. This led to all the operators bleeding badly a few years back. In the past few quarters telcos have been doing away with freebies and now it is being said that there may be an actual increase in rates also. Why is this? Telecom is a highly capital-intensive sector and returns accrue over years if not a decade. Telcos spend thousands of crores on acquiring spectrum. Especially after the so-called 2G scam this is more and more being treated as a natural resource which can only be auctioned and not allocated. Further there is a revenue-sharing concept where the telcos have to pay a portion of their revenues to the government.

Given this background services like Whatsapp and Viber started eating into SMS revenues and then voice revenues also. Due to hyper-competition rates had fallen and as I said earlier there is now a correction underway. This is the background in which airtel decided to launch specific packs for the so-called over-the-top (OTT) players like Whatsapp. Simply put OTT players provide services that are directly consumed by you and me without an intermediary like a cable operator. It can be argued that this is against the concept of net neutrality. However I would like to give some context here. Facebook has an initiative called internet.org which is about providing "affordable" Internet access to consumers. The problem is that Facebook is not making any sacrifices here. The people making the sacrifice are the telcos who provide the access. Facebook is free for users. It does not charge entry fees. It makes money via ads. So there is clearly a selfish motive behind this "affordable Internet". This has been criticized by telcos as this is charity with someone else's money.

Further there is a regulatory point to be made here. Whatever is done by the telcos In India the government wants something called lawful interception (LI) to be available. Whether this is desirable or not is a separate point and is not in the scope of this post. Under LI the government should be able intercept and decipher all communication. Telcos have to provide such facilities to the government. Monitoring OTT players is not that easy as the servers are not hosted in India. Similarly cloud is a concept that is rapidly catching companies' attention today. However PSUs/government does not have so much. Rightly or wrongly there is an impression that a cloud service is less secure. This is probably a major reason why Microsoft is now planning to set up data centres in India. However I am digressing.

Now coming back to the idea behind this post, in voice services there is a concept of toll-free number. Basically the caller does not get billed. The company taking this service gets billed on behalf of its customers. This is mostly used for customer care and for sales enquiries. All the 1800- numbers we see are Indian toll-free numbers. What airtel is launching now is a similar concept, but for data services. This is called toll-free data (TFD). There are a couple of points to be noted here.

1. There is no preferential access given to say a company which has signed up for this over any other. Thus if Flipkart signs up and Snapdeal does not, all Flipkart and Snapdeal customers visiting the respective mobile websites will be able to access them at the same speed. However only airtel users visiting the mobile website of Flipkart will not be charged. These charges will be borne by Flipkart. However as pointed in the "debunking" article above it is true that in this case even after the data pack (1GB, 2 GB etc.) is exhausted speed of access to Flipkart may not decrease (like it would for a non-Flipkart site). I will return to this point shortly.
2. With toll-free voice we do not hear accusations that the telco is supporting company X over Y by providing it a toll-free number. The company X chose to provide a toll-free service. A customer of X chose to use it. Similar logic can be applied in the case of toll-free data also. There is no form of coercion anywhere.
3. The earlier article takes a reference of Norwegian interpretation of net neutrality and wants to use it in an Indian context. Going by this logic we should wonder whether the author(s) of the article is(are) prepared to pay rates proportionate to those in foreign markets, rather than what we have in India today.
4. We live in a world of disruptive innovation. Things can change in a very short period for established market players. Those ranting against the toll-free data service may need to think about this.
5. Coming back to the last part of point 1. I believe the customer is intelligent enough to make a distinction between good service and bad service. The critics of TFD have to realize that if I am not happy with X, whatever they may do I will want to shift to a different provider. And if I truly like Y for their services, I would want to bring pressure on them to provide me a free service like X!
6. Facebook Zero and Wikipedia Zero are similar concepts. We do not hear about them because these have not been hyped up. I for one have not seen posts criticizing Facebook or Wikipedia for driving traffic away from other websites! There is an article here, as pointed out by my former engineering batchmate, Abhishek Nalin.

So I believe there is over-reaction and media-hype over a non-issue, the proverbial making of a mountain out of a molehill. My basic points are simple.

1. Let us understand before we comment
2. Let us analyze with logic rather than emotion
3. Innovation will continue. Let us debate as much as required and then proceed. There always will and should be differing view points.