When I first read about Flipkart’s deal with Airtel Zero, I was disappointed as I have always thought of Flipkart as a progressive new-age hep company, and this seemed to be a Net Neutrality violation 101.
[Link]
Airtel on Monday launched a service called Airtel Zero. On the face of it, this looks like just a regular value added service from a telecom operator. It is meant for app developers and web service providers. The plan, as Airtel explains, is to allow app developers or web service providers to pay money to Airtel so that these apps and services can be accessed by Airtel users for free.
This means if an app pays money to Airtel, consumers on Airtel network will be able to use it without paying any data charges. For example, consumers who have Flipkart installed — Flipkart is rumoured to be a company paying Airtel money to be part of the Zero plan — will be able to access the app without paying data charge
Net neutrality, for those of you who don’t know and I am assuming that’s none of you, is the principle by which internet service providers cannot discriminate on the basis of origin or type of traffic when it comes to delivery to end-users (i.e. to you and me who pay for internet access). In other words, a service provider like Airel cannot discriminate, in terms of price or speed, between traffic from website A and website B. By discriminating between traffic to Flipkart/any of the business entities that sign onto their Airtel Zero platform and those that do not, Airtel is most definitely violating the principle of net neutrality.
But is that really a horrible thing? As I thought about this, I was no longer as sure as I was when I first read the news.
Let’s first look at what’s definitely unethical about net-partiality—making customers pay twice for the same thing. For instance, service providers charging customers a further surcharge to use Whatsapp or Skype, because they have been losing revenue on voice-calls that people would make over their voice network which they can now make over their data, are engaging in douchebaggery of the highest order. Once I pay for 1 GB of data it is my to use it as I deem fit, and the service providers have no right to ask me to pay again for something I already own (namely the bandwidth). This is like my water utility company charging me a surcharge for water I use to clean my ass with, claiming hardship, or my electricity company charging me extra for using an unit to power for my electric-shaver, claiming hardship again.
A year ago, in the US, cable companies were trying to do something similar. Their logic was that streaming video providers like Hulu, Netflix, Youtube consume too much of their resources. Unlike Indian service providers, they were not brazen enough to directly charge their customers a surcharge. So what they did, and this was similar to Airtel Zero, was that they offered a service to video-streamers which came down to “If you pay x amount to us the cable company, the video packets you send will be delivered more efficiently to your customers, improving their experience”, which could reasonably be parsed as “Unless you pay us, we will put your video packets in such slow lanes that they will never reach your customers”. This was effectively a surcharge on the customers of the internet service providers because Netflix/Hulu would simply pass on the costs to their customers, and now you would be back to the same situation—paying again for something you already bought.
This is however where Airtel Zero is different, at least based on my understanding of what they are proposing.
I don’t see any double-charging.
Rather than you paying for the data packets from your bandwidth allocation, a business like Flipkart will pay for it, in principle, being no different from toll-free numbers, where the business absorbs the cost for client-initiated telephone calls. Now Flipkart may pass on the cost to you, but even then you still would not have paid double. In the particular case of Flipkart, which is not a service like Netflix that you pay a monthly subscription price for, the only way it can pass the cost to you is to increase the price of their products. Once it does, its competitors would gain an advantage. Of course, this is all zero-sum—as a customer, would you pay more for a Flipkart product and have your access to their site free or would you pay less for a competitor’s product and have your access charged?
In this context, I simply do not understand the logic of those in opposition to a platform like Airtel Zero. I hear this word “anti-competitive” a lot. How? Did toll-free numbers skew the industry in those days when long-distance phone calls cost an arm and a leg? I read someone saying “Oh but then how will competitors to Flipkart play in this domain? They can’t afford to sign up to Airtel One, and so consumers will all go to Flipkart, this is so unfair”. By that logic any shop offering a steep discount on their products is anti-competitive. If Flipkart is subsidizing your access charges and keeping their prices same (i.e. not passing on the cost to you for competitive reasons), then it is indeed giving you a further discount and I have no idea how discounts became unethical in the world of business.
If your think that B2B services like Airtel Zero would just increase the cost of doing business, because customers will expect their access to merchant sites to be free, then well C’est la vie, it’s the same for everyone. That Flipkart, being a behemoth, will be able to better absorb that than a small start-up, is true but then a “free market” does not mean that one will not leverage market or capital advantage. For instance a Microsoft or an Amazon strategically sells products at a loss for greater market share now so that they can cash out later and no one calls that anti-competitive. That’s capitalism.
So on the Net neutrality debate, we need to perhaps weaken the definition of Net neutrality to more precisely isolate what exactly we do not want, as consumers of the Net, to happen. We should *never* be forced to pay twice for the same thing. We should demand regulatory protection from predatory service providers who would create “slow” and “fast” lanes on the Net because we have already paid for a certain speed on those lanes. At the same time, we should not cling onto an absolutist notion of “net neutrality” just for the sake of it, without carefully considering the specifics and implications of business models that violate it.
The Greatbong Blog & Podcast 
APPLE WATCH 650 WALI
The other point that many net neutrality advocates stress is that such rules like Airtel Zero encourage cartelization. A large part of the narrative about the internet startup story (mind you, its the narrative – not always the reality) is that barrier to entry is very low, which fosters competition and innovation. This ultimately helps the economy.
Because spectrum is a finite source, and is always auctioned off – so there is very little competition to be the gatekeeper of the internet. Thus, companies like Airtel can charge outright extort appmakers for access – and this ultimately raises the barriers to entry for new disruptive entrants.
Congratulation on landing your first paid assignment. Just kidding of course.
On the topic – “double-charging” is only a part of the net neutrality violation, so it’s still a violation if there is no double charging. The reason people are against this kind of 0 rating is that it is creating unleveled playing field by a party which has vested interest.
It’s similar to IE vs Netscape all over again. IE comes default with Windows, so no one will use Netscape.
For example: For every whatsapp, Airtel has Hike which is included in Airtel Zero by default. whatsapp has to signup and pay Airtel to get included. Airtel can kick whatsapp out of Airtel Zero for ToS violation, while that can never happen with airtel’s own Hike.
I think the point some people want to make is –
Suppose A signs up for Airtel Zero and B doesnt.
Will Airtel provide the same bandwidth and speed while using apps A & B?
Which is when we get into double-charging. Airtel One as it stands does not double charge.
Then it shouldn’t matter at all. It is up to Flipkart and Airtel – what deal they want to sign.
I think people just want to do what they do best on Twitter – OUTRAGE!
Do you pay ISPs and cell phone operators around the world to be able to allow people like me to read your blog? Why should I log into your blog and read your stuff if someone else paid for the access to their blog to let me read theirs for free? Should I then pay to read your blog because the quality of your content is more awesome than the one which I can access for free? How will I know which blog is available for free and which one is paid? Will ISPs and cell phone operators then provide me a menu card of all free blogs?
No Arnab. It is not about charging. It is about discrimination of target based on whether they are part of Airtel Zero or not.
If customer has signed up for 3G access, is ready to pay from his data plan and if amazon.in network infrastructure is capable to support requests from my phone at 3G speed – Airtel being gate keeper should not throttle (decrease my speed) my connection to Amazon.in just because Amazon.in has not paid (bribed) Airtel and enrolled into Airtel Zero versus Flipkart is.
The way Comcast behaved with Netflix reminds me of peon/security guard at entrance of cabin of government servant (official). You (citizen) have to pay him to get access to the government servant, else your visit will be delayed or you could be misled that he is unavailable. People are anxious that Indian TSP’s (for e.g. Airtel, Idea, Vodafone who are already in 3G sharing agreement/cartel) would repeat it in India for website/app providers.
This page discusses the legal aspects of the issue well: http://www.moneylife.in/article/the-net-neutrality-debate/41198.html
Double-charging is a part of it. With Flipkart being free on Airtel Zero connections it is more easily accessible than Amazon or Snapdeal or any other smaller e-commerce site that may surface. Basically if I want to go Amazon I will need a separate data-pack while Flipkart is free to access. Now because it is purchasing an item I will be willing to pay for extra data pack and access Amazon but what if, let’s say, Whatsapp pays Airtel to get on Airtel Zero. A new start-up messaging service will never be able to pay that amount of money what, with no huge investments in their portfolio. Now this is right because there would be no incentive to innovate in messaging service because the mass is already using Whatsapp. Whatsapp can easily kill this new start-up by absorbing the apps USP to its own app.
Presently I have an equal incentive to install Whatsapp and this new service. And judge for myself which is better for me. With Airtel Zero, because I have to pay nothing, I will keep on using Whatsapp no matter what practices they might adapt in the future or what hole they have in their service. Its about maintaining a level-playing field for all apps big and small. Because competition exists Whatsapp needs to constantly keep bettering its service. When competition only exists if a user has to buy a data-pack to access it, Whatsapp gets the market monopoly and do as it pleases after that point.
For instance lets say you buy a phone and Evernote comes pre-installed, most average users will never bother to check out Google Keep. Lets say in the apartment you live they give you free Airtel TV connection to use. Because by default everyone has Airtel, its customer service doesn’t need to give any fucks about issues arising. If you want to shift to Tata Sky you need to pay for it while Airtel TV is free. On the other hand if there were no free services available Tata Sky, Airtel TV, Videocon DTH etc., will have to be equally vigilant and innovative.
Nicely put.
Things, as they stand right now, are fair.
I think people are worried because of the reputation both Airtel and Flipkart have built so far.
The point you’ve focused on, is one part of the overall debate. Plz do not forget that Airtel and other operators have been asking for regulatory intervention for OTT apps like Whatsapp and Skype as their revenues from calls/SMSs have been dropping. After the backlash around the turn of this year, this is a different proposal in new and improved packaging. Do you think that if Airtel Zero gets through, that’ll be the end of it? Nope. It has started with Flipkart and will move on to Skype and Whatsapp and others. This drama will evolve, and there’s going to be twists and turns galore! There’s a pot of gold hidden somewhere here, and that money’s gonna be made off our collective backs.
Well said.
I am not sure how this will skew matters either way – if anything the proverbial common man will benefit. Flipkart is making it easier for its customers to access its website and this can only be good – it is not charging its customers for it and as far as I can see there is no specified quid pro quo e.g you need to buy to get benefit of free data usage. Airtel has a product for which it charges users – in this case Flipkart will pay the charges in lieu of the person accessing it.
Re Netflix – it has just launched in Australia and couple of ISPs have tied up so that data used for watching netflix does not count towards monthly quota. The ISP will not give anyone preferred access.
Isn’t there a moral/ ethical dilemma in conferring such discretionary powers to ISPs
Also someone who signs up for Airtel Zero, may easily tend to neglect others Apps which are not supported by the platform. This makes the argument of free and fair Competion a bit tenuous.
Hi, it’s Airtel Zero, not Airtel One. I’ve taken a broader point of view on this, not looking at the short term benefit of a few free services, instead, looked at how it impacts the overall ecosystem. Let me know if what I’ve written doesn’t make sense. thanks.
http://www.medianama.com/2015/04/223-airtel-zero-india/
Hi Nikhil, I think you have raised valid concerns of the outcome that may result from Airtel Zero. But if the outcome is the main worry, then net neutrality has nothing to do with it. I say this because even OTTs (apps) can also create a service which could potentially offer a service similar to Airtel Zero and lead to an outcome that you have predicted-splitting of internet!
I have highlighted in my article how apps like mCent, Laddoo, Cashboss etc are close to offering a service like Airtel Zero. Do let me know if I am missing something.
http://www.nextbigwhat.com/airtel-zero-net-neutrality-297/
Very basic question. Please oblige. Are you referring to AirTel Zero as Airtel One? Can’t find anything if I google Airtel One.
People do not use Toll Free Nos for browsing ecommerce company’s catalogue. It was mostly used for clarification on production and after sales services. Also do you think that airtel zero is going to cost same as toll free numbers? A smaller business may afford a toll free number but WILL NEVER be able to afford airtel zero.
If today flipkart deices to give airtel zero to its customers tomorrow snapdeal will have to just to stay in business. So eventually only big internet based companies will be able to survive. Also forget about doing a start up in that space because the barrier to entry will be insanely high.
it’s about market access..the double charging game was wrong because it reduced access to consumers, Airtel zero is the flip side where other e-commerce players will lose access to customers and that is plain wrong.
The toll-free argument does not hold – because anyone can get a toll free number. Airtel tomorrow may choose to not have Snapdeal/ XYZ ecom player in it’s service because well Flipkart is it’s biggest customer or flipkart gets better access etc.
The argument is against cartelization and the need for regulation to ensure free market access.
So Sorry Completely Disagree , that this is just a matter of subsidies.
1)Indian ecommerce is in nascent stage.
2) Flipkart is funded by Dollars. They are already selling products at loss/no profit to destroy the local market.
3) Innovations at smaller level would have lesser chance of success.
4) Worst offenders would be giants like Reliance & Tata who have multiple businesses.
The problem is discovery, two sections in a mall, for section A entry is free and for section B entry is charged. If flipkart, amazon and snapdeal are in section A, a customer would buy a mobile from the cheapest of the three and would not explore or discover a mobilewala in section B.
This is a big problem as all three were in section B and became big because of combination of good service and cheap price and now they don’t want to give equal platform to mobilewala in section B.
If this is allowed to happen, then in any vertical after emergence of 2-3 big players there would be huge entry to barrier for any new innovator.
what happens if I access flipkart without airtel zero ?
will they reduce the speed forcing me to sign up for airtel zero ?
Two basic flaws in the article (which seem to be the core of the reasoning)
Why consumers will still end up double paying?: Most services that sign up for Airtel Zero will in some way pass on the cost to the end consumer. So the fundamental assumption that paying twice does not happen can be completely flawed. This can be done on two levels: 1) The App/ business can pass costs to the consumer. May-not be as evident in the Flipkart example (as it is an online retailer) but may not be true of all service/ product apps (2) Given adoption rates of Airtel Zero – and given the range of apps and businesses that tie up with it, eventually, they can either phase this into a premium service package or could have could have a premium and a not-so-premium platform running (both with different service levels and apps of course)
Why this should be seen as anti-competitive?: Business in the offline world – current focus of which is primarily driving up profits and maintaining margins work on the paradigm of competitive strategy as described in the article. The fundamentals of online/ mobile based business is to get traffic and to ensure best UI and UX for the consumer. A new player will face huge entry barriers if his UI/ UX goes for a “toss” thanks to differential speeds being offered to a preferred partner. Please note: This is completely different from cutting prices or even offering exceptional service levels. This is creating entry barriers to new players that can be potentially harmful for the consumers in the long run. BTW, This also decreases product innovation need for the existing players, as they can already see themselves riding on the high speed channels.
I addressed that in my post. Even if it passes to customer it is single paying as the customer did not pay for access the first time round
Consider this common scenario.
Let’s say I paid for 1GB of data to cover for my regular usage of about 800MB. This is the scenario for most users.
Using Flipkart quite a lot to browse products would add another 100MB, but I’m still not paying anything extra.
In Airtel zero scenario, I’ll still have to pay for 1GB plus any cost Flipkart decide to pass on to me.
Wow..are you really that thick?
The customer is being forced to choose Flipkart over others because it is easier to access it. The internet is a place where people compete over content, not data charges!
@Arnab: I don’t know why people start reacting immediately to something that they are not even sure of what it means. If people don’t want end up paying additional charges to data service provider or players like Flipkart then why don’t they kindly lift their lazy a*** and burn few calories along with some of their or state sponsored diesel/petrol and go to market place to purchase that damn thing. But no we want everything at our doorstep and that too at a lightning speed and yes we won’t pay any single penny extra for that.
I found the analogy of toll-free numbers with Airtel zero quite apt to quote from Airtel’s end. The physical world is abound with examples like these. A larger retailer who can afford a ground floor shop at a preferential location in a mall is likely to do more business than one who is on the higher floors or one that can’t even afford to lease space in the mall or one that can’t afford to have an A/C inside the shop. The internet however has been different and quite “neutral” in that respect. Of course, larger players can buy more traffic to their sites through marketing but a smaller player had a good chance too if it could come up with a good product offering. That is something that gets impacted with offerings like Airtel Zero.
However, I am still two minded on how bad it is from the existing setup, since a larger business could anyways generate significantly larger amounts of traffic through other ways as well.
If I run a supermarket and want to have a larger store with things well spaced out and customers not crammed for room, by leasing more area vs. another one who can’t afford to do it, am I still being anti-competitive.
Still to make up my mind on how bad this really is.
A mall is private space, but spectrum is public.
Airtel paid for a part of spectrum and now it is no longer public.
Very well put from the consumer angle. But I thinks it’s easy to justify something this way when you look at it from one customer ISP perspective. The ecosystem will be bombarded with so many such tie ups that it will be impossible to differentiate who and what you are being charged for.
That flipkart may or may not pass the cost on to the consumer is the bases for double charging – what if they charge double to the consumer? In the light of competition it may sound illogical, but then in the age of exlcusive offers isn’t that a probablilty? Also who is going to be monitoring this -TRAI isn’t really on top now are they? Imagine a scenario where Amazon, flipkart and snap deal all join Airtel zero and hence the consumer pays nothing to access them (the amount would be ridiculously low) but command higher prices for products. And those not on Airtel zero – the consumer pays more to access them and is henced discouraged to even visit the site. It’s not an ideal world and the fact of the matter is that these are all businesses out to make the most, and they’re going to milk every paise they spend.
Do you think Airtel will not hike up its 3G prices to compensate the loss from consumers accessing apps for free? Oh yes they will because what they’re getting from Airtel zero is “additional business” revenue and not compensation. They’re in the business of growth, and any money they lose on existing usage has to be covered.
There are a lot of things at play here. It’s not so simple as they’d want you to believe.
If its an exclusive offer, flipkart can charge whatever it wants. The number of products sold will be impacted by whether flipkart takes in a 10% margin or a 50% margin. Whether airtel zero exists or not makes no difference in exclusive products.
If Amazon, flipkart, and snapdeal join airtel zero and have to increase prices because of it – a, they are joining because they believe that they can improve revenue, margins etc. A new startup will not join airtel zero and thus will be able to offer products cheaper outside of airtel zero.
Airtel hiking up prices – What will you do if airtel hikes prices now? most probably grunt and bear it or move to a different provided. Same thing you will do after airtel zero.
You are wrong Arnab. First, it is naive to think that a business will absorb the additional cost, the cost will be passed on to the users, INCLUDING NON-AIRTEL USERS, and that’s wrong.
Second, it is very likely that Airtel will charge Flipkart MORE than the average bandwidth cost of accessing its website/app, and that cost will be eventually passed on to the users, so indirectly users will have to pay more than the average bandwidth cost for accessing Flipkart.
Non Airtel users paying for Airtel zero – I do not read ToI but flipkart advertises on ToI and that cost is passed on to me. So wrong (Sarcasm)!! Its for the company/flipkart to decide if the cost of airtel zero is worth additional revenue it gets.
How come no one thinks that it is a great way for flipkart to reach out to customers who are currently unwilling to shell 100 – 200/- a month to get net access but want to shop through flipkart, for whom the expense of a net connection on a phone is not worth the savings on flipkart.
is airtel-zero a completely different internet pack or it’s just the same and every customer using airtel will have airtel-zero services…??? i mean is airtel-zero a different data pack than a regular data pack… if it is not and every airtel user receives airtel-zero services for a fixed amout though the amount changes for the different data, then its mostly okay… But if airtel-zero data plan co exists along with its regular data plans and anyways the airtel-zero plan will be higher than the regular data plan, then i dont think i would be upgrading my net services just so i can browse products on flipkart, i mean its not worth it… if it would any video streaming site other than a online shopping site it would be great… coz u know its still not worth it… and there is the double charges that airtel charges its cutomers… reallly extra payment just to browse one app or maybe in the future 10… its not about how many apps/sites we get to browse for free its about what app/site we are browsing and an online shopping site is not one you browse 24/7…
The following is not rhetorical, but only intended as a thought experiment to hopefully clarify where one stands. (And to understand what others think.)
1. What would your thoughts be if your electricity company came out with a plan in which electricity used for, say, LG products was cheaper/free (because LG paid them money)?
2. What would your thoughts be if your water utility had a plan in which water used in Whirlpool washing machines (say) was not charged to you?
(Does everyone agree that these hypothetical situations *are* analogous to this Airtel Zero instance?)
Yes, it is analogous to airtel-zero instance.
In both cases I see nothing wrong with that electricity-company-LG/water-company-whirlpool is doing.
IMHO, there is a lot of focus creep and the term is taking new meanings everyday. To me it looks like it should boil down to:
1. Net Neutrality begins when the packet leaves the host and enters public Internet. And ends when it is pulled from public internet and onto a destination host. Small i or capital I for Internet.
2. Once on the public internet, the packet must be treated according to the DiffServ/ToS/QoS specified on that particular packet, without doing deep inspection or based on source and destination IP( except for routing purposes).
Everything else sounds like noise and not signal. Airtel Zero, CDNs etc etc are unnecessarily brought into the discussions to muddy the waters.
Wondering how hard it would be for amazon throw more money and come up with an exclusive deal and throw flipkart out?
And to add, if Airtel Zero and other concepts violate these two rules, it is not Net Neutrality. But again there are other concepts like IP addresses mapped to a country which in turn results in region based access, which is also wrong.
Ar-nab..
It is not about charging but about controlling access to free Internet.
ISPs should do what they are supposed and entrusted to do..facilitating access not deciding for us what to see and what not. Airtel Zero is beginning of controlled Internet in our country.
Agree – Also one of the key points net neutrality propagandists forget is that competition decides prices not regulations
This is just looking at one side of the picture.
The point of net neutrality is that data is data. It should not be compartmentalised. In the case of Airtel Zero and Flipkart, what happens to a Vodafone / BSNL / Idea customer? The toll free number analogy is flawed in the sense that the toll free numbers did not care which network you called them from. Free wa still free (except for a new that said toll free from a BSNL landline, etc, but these were few and far between).
The other issue being once you give such an option to a telecom provider, what’s to stop them from throttling the access speeds to your competitors? We might soon reach a situation where Snapdeal opens faster on Vodafone and Flipkart opens faster on Airtel.
I don’t understand why the writer can’t see the extortion behind Airtel zero…you give me the money or I’ll charge your customers for something they have already paid for and thus discouraging them to come to you…how’s that different from the street goon asking hafta to keep the doors of your business open. Is it not like a restaurant chain buys license of LPG supply and then is saying you can only eat home-made dal, if you cook biryani, that would be a loss to my restaurant business and that’s why you have to pay for that loss.
@Ashish.
What has the broadband customer really paid for? Broadband customer pays for
1. 30 days of availability and
2. a certain guaranteed minimum speed (say 512MB/sec)
If airtel is able to provide free/faster access to flipkart, without compromising the minimum guaranteed speed, there is NO extortion of the customer.
Disagree. A simpler/basic analogy is that tomorrow if the electricity company starts charging customers differently based on how much they use the internet or how much they use their TV, that is ridiculous enough to create the outrage. Same thing applies here. At each level companies are making enough money via their specialized services. This is just an attempt to piggyback on trying to eat the lunch of somebody without any real work on your part(in this case telcos trying to make some money off other services without having any contribution in their development)
People need to realize how markets work before giving long spiel on things being unethical/illegal. If I read what most of the people opposed to this are saying then anything that gives you advantage over your competitors should be banned. If Airtel Zero is not acceptable, then why is advertising acceptable, isn’t that clouding buyers decisions and making them buy products while there might be better options available. Two things that should be noted very clearly –
1. At this point there is no indication that Airtel will throttle/disrupt the quality of access to any other site while using their data package plans. If they do that, then surely it is not acceptable.
2. With the revenues from voice calls going down, the telco players will have to look for alternate sources of income. As long as they do not make me pay for that, why should it matter. If they do not make money, the quality of their service will go down and ultimately it will be the customer like us who will suffer. Who in their senses would want to go back to the days when you had to stand in a corner of your house hanging out of the window to get the signal.
I am seeing an uncanny similarity to the situation described in Atlas-Shrugged.
I agree with the line of thought that Arnab described in this post. However my comment here is regarding how Times-Of-India behaved today.
ToI is clearly against the flipkart-airtelzero plan. Hence they have splashed multiple pages with their view point. The only point shown against the net-neutrality-brigade is a puny quote from flipkart-founder. There are multiple blogs like this which is toeing a different line but ToI would have none of it.
Of course it is ToI’s prerogative. It is their newspaper and they should have the freedom to publish.
I am reminded of ‘Daily Prophet’ and ‘New York Banner’. Newspapers are the same since ages.
Wow..really?
‘Microsoft or an Amazon strategically sells products at a loss for greater market share now so that they can cash out later and no one calls that anti-competitive. ‘
Actually Microsoft bundled IE with windows, which is Selling for a loss and that WAS anti-competitive. Welcome to the 90s.
‘ By that logic any shop offering a steep discount on their products is anti-competitive’
This is a false analogy. Here’s a better one, Shop A needs to ship you products and the Shipping company is providing free shipping because Shop A is paying them , but charging for shipping from other shops.
Basically any service provider colluding with a vendor is bad (if not immediate but always in long term).
Probably add another disclaimer.. The author of this piece is not knowledgeable about anti-competitive behaviour.
Fred: “Hey have you seen this great new app?”
Jim: “Is it in Airtel Zero?”
Fred: “No.”
Jim: “This sucks. If I used sites where I pay for the bandwidth I’d be broke by Tuesday.”
Fred: “Who knew that they’d all raise the bandwidth costs sky high and then hold the free bandwidth hostage?”
Jim: “Yeah you’d almost think that they planned to get around the net neutrality regulations that way.”
After reading through many comments, i am only reminded of a popular idiom – one can take a donkey to a pond, but cannot force him to drink water.
For me, telcos demanding money from app makers is like the passport officer demanding money to get your passport done, which was his job anyway.
Thanks for genuine insights! It was totally confusing to understand how Airtel was double charging where as it was proving free service to the customer with flipcart paying for my bandwidth.
Here’s the thing though. I don’t think Flipkart will increase cost of their products. There are people like me who shop only when using Wifi at home. Such customers will easily drift away from Flipkart if they think about increasing prices. I feel they were focusing only on increasing their market share.
It’s quite difficult to get genuine opinions on net neutrality. Thanks for an in depth analysis!
Airtel zero no such type of things are entertained and it wont work.This was really shame.
Arnab,
A little surprised to see your “simplistic” argument of “free-market” open competition etc. There is a reason FTC exist and anti-monopoly, anti-bundling laws exist. Brazen open competition with letting “for profit” companies do whatever they want ultimately hurt customers. Because after the large companies will scorch the earth, they will charge inordinately for their services. And I think of myself as a fan of open markets but that economic model is not a panacea. It is surely the least evil model if managed properly.
The role of government and policy bodies is to ensure that there is a fertile ground for innovation as it helps consumers in the long run. Large “for profit” companies try to fight out anything in their way using their assets in whatever way possible. They declare that intention when they call them “for profit”. And that’s why one can’t give the keys to the kingdom of basic things like air, water and now bandwidth.
Take an extreme case, will you allow a large corporation buy all the water in the world (if they can pay the current prices) and hoard it to sell to individuals when they can. It might look absurd now but i am pretty sure there are companies that are planning things like that.
In a just and sane society, government have a responsibility to protect the future of its civilians and world at large. Net Neutrality is as basic as access to basic components of life. If it goes away, really scary scenarios pop up.
I think the comparison with toll free numbers is not correct. The Telephone company owns the telephone network and hence can make some numbers free by charging the company instead of end customer. Airtel does not own the Internet. They simply provide a service which allows a customer to access the Internet. They are like a middleman for accessing the internet. Once they charge the customer for accessing the internet they should allow equal access for all customers. They cannot accept money from a third party and give preferential treatment to certain customers.
It is very likely that the Indian state will end up legislating in favour of net neutrality citing reasons like “fairness” and “right to access.” That is only to be expected – legislation in recent times in India seems geared towards public opinion. The more outrage can be generated, the better.
However, net neutrality is primarily an economic issue as it concerns a limited resource, bandwidth. Or at least, the economic aspects of net neutrality cannot be ignored. Among economists, there isn’t much support for net neutrality. A useful survey of the economics of net neutrality is available here. Even within India, people like Rajat Kathuria have opposed a blanket net neutrality.
It is worth noting that the welfare consequences of net neutrality are unclear. In particular, are consumers better-off if ISPs are obligated to treat all traffic in the same way? What happens if a particular type of traffic (say, music or movie download) clogs the bandwidth making buying/selling on the internet infeasible, or difficult? Are we better off? How about spam? Does it come under net neutrality? The vast majority in our country have no access to the internet – is the objective of universal access furthered or diminished by net neutrality? All these issues and more need to be considered carefully.
But I don’t think that will happen: not if RaGa’s comments and those of other politicians are anything to go by.
I don’t think the question should be whether you pay once or twice for the service. The question is you should be able to decide what you want to pay for. Now you could argue that since the service is free in the first place, you are paying for what you want to use. But, in retrospection, you didn’t sign up for that service. It was offered to you. Let me extend the analogy you made:
You have a rented house and water is included in the rent price. You decided to use the water to wash your ass and you were charged separately for that usage of water which is inadvertently wrong. By doing that, you do one of two things – You either pay for that extra water or you get alternatives to wash your ass with. Both of which should entirely depend on you but now that decision has been made by someone else for you, arguably indirectly but still by someone else.
This, in principle, is a violation of neutrality. The core underlying concept of neutrality is you should be in control of what you choose. No one should decide for you, directly or indirectly, what you would do. And this is what bothers me the most, not the payouts, be it once or twice. Pretty soon, you would have to make a choice for each type of service that you use over the net. A choice which you need not have made in the first place.
Dude, first show me a usable mobile network and then I will worry about network neuterity. Hong Kong is near rank 1 in mobile internet access. US is like 50. India is beyond 150.