When Mark Zuckerberg gets into the net neutrality debate, we know there is more to the story. He writes, “To give more people access to the internet, it is useful to offer some service for free. If someone can’t afford to pay for connectivity, it is always better to have some access than none at all.”
This is also inherent in market leader Airtel’s reason to justify opening their platform for app developers to offer mobile solutions on the so-called zero rate plan.
To understand better, one needs to go deeper into what happens when people use “free” FB on their mobile phones.The free ride
First, any mobile telephony pricing plan is essentially a dynamic plan, which means the variable zero could be changed to any number at any time citing reasons of market forces or regulatory changes. The only change from zero in a pricing plan is a positive number, whatever that may be. Hence Airtel calls it zero rated plan for developers, and not free access to a mobile platform.
Second, mobile pricing is fundamentally based on transactions, meaning any time a customer makes a connection through their network, their billing engine recognises it, and can charge them for it. The pricing plans are extremely complex as operators use a number of variables such as time of day, one-time connection charge, intra and inner circle locations, and data volume to make sure they get the customer money at some touch point of the transaction, if not in the form of subsidy payment from major application companies such as FB and Flipkart (FK)
Third, there is no free lunch in this game. FB or FK pay mobile operators for customers who use their apps, and could recover it from two sources by positioning themselves as toll gate operators. How does this work? Mobile operators can configure their network and pricing plans such that customers can click on the free FB, but be charged for going through it to access an online startup, like a dhaba, selling tandoori roti and sabji . FB could charge the dhaba for allowing the ‘potential customer’, and the mobile carrier could charge the customer for accessing dhaba . FB has the potential customer’s entire profile. So FB and mobile operators could become toll gate operators and sellers of customer profiles to the online dhaba.
A second source of income is revenues from the dhaba’s competitors wanting to do target advertising on FB.
Until around 10 years ago, Bill Gates tried to monopolise access to the internet through Microsoft Internet Explorer by dragging to court every other entity who tried to develop an alternative lower cost application. After years of legal battles, we now have Firefox and Google Chrome. Similarly, Apple has been ‘ring-fencing’ customers on its IOS platform by locking them into using only Apple devices to communicate in a wireless interconnected world as their core strategy!Muscle flexing
Zuckerberg’s prescription for net neutrality in India and support for Airtel-type pricing plans are at best a flexing of financial and brand muscle power to monopolise and control all applications on the mobile internet in India; at worst it is a blatant expression of greed. Already, FB makes money from small application developers and entrepreneurs. It is by far the largest toll gate for innovators and small-time application developers to get customers to access their applications. Six out of every 10 sites will ask customers to register with an e-mail ID or prompt them to sign in using FB or Google ID. It is estimated that up to 80 per cent of those trying to access any portal will be required to register before getting access. Most of them opt to sign in using FB or Google, naively thinking they save time on filling up yet another form. However, what they don’t realise is that they have made Zuckerberg richer by allowing FB to sell their profile, including the mail IDs and profiles of their connections.
Zuckerberg wants you to believe that other smaller social media platforms can co-exist with FB, and he is all for competition, and we would switch our social media connections easily. But how many of us want to change our mobile phone number and tell all our connections “I changed my phone number so call me on this new number”? Changing human interconnectivity on the social, personal and technical levels is stressful; most people would resist that. However, once you have a free FB account, you are connected through the FB social media network for life!
Is it any wonder then that Zuckerberg supports the Indian mobile operator’s version of so-called net neutrality? It is a trap for both mobile customers as well as application developers who want mobile internet access without having to go through the FB toll gate. Solution development through web-based applications is India's core strengths. Internet access in India for ordinary people is through the mobile network, for which the country’s natural resource called spectrum is used to provide wireless connectivity.Quite simple
At its core, the issue of mobile internet neutrality is simple. Mobile operators and a select group of big application companies would like to control Indian’s access to internet through the mobile network gateway by collecting toll charges from all of us. Whether FB pays operators and collects from small app developers, or operators zero rate big apps and configure the network and pricing plans in such a way that customers will only go through the so-called free app toll gate, ultimately it is the customer who will pay for it.
Cricket is a game that requires thinking on your feet, continuous innovation and reading the ball correctly.
The Airtel zero rate plan is a short-pitched throat ball. While it is bowling to millions of Indian mobile customer batsmen and women, Facebook is acting as the wicket keeper; and Flipkart and Cleartrip were at slip and short mid-wicket. But being India-born companies that went through the startup phase in recent times, they understood that Indian batters have read the ball correctly and quickly. So they walked off the field — reluctantly. The umpires, the telecom ministry and Competition Commission of India have gone upstairs to seek a verdict from the third umpire, Trai. What a game this is!
Sunu is vice-president of Tata Projects (on a sabbatical) and Samu is an assistant professor at the Indian School of Business