While the focus of the exploding debate is mainly on the sell side right now, it does affect the buy side as well, and brands can hardly afford to sit on the sidelines, says Aliefya Vahanvaty
Envision a scenario where your electricity provider asks you to purchase a Premium Pack to use a home theatre system; buy a Necessity Pack to use your microwave; and pay for a Comfort Pack to use your iron.
And then adds, "But if you use XYZ brand of TV and speakers, we will give you a 50% discount. But there is no discount if you use other brands."
This is Airtel Zero in a nutshell. Or Facebook and Reliance’s internet.org.
The Internet today is not a lot different from electricity. Electricity companies are neutral and charge consumers based on the number of units of electricity consumed. We, as consumers, can use electricity the way we want to and we can buy products and favour brands that we love. It is entirely our choice.
Net neutrality is essentially the same thing, but here it is about the data that we consume on the Internet. Net neutrality states that internet service providers (ISPs) such as Airtel, Vodafone, etc., should not discriminate with regard to the way we choose to use the Internet or the brands we use when we surf the Internet. Airtel or Reliance’s new proposal would allow broadband providers to strike special deals with Internet companies for preferential treatment — sometimes called ‘paid prioritization’ — in the ‘last mile’ to consumers’ homes. Open Internet advocates have long considered such Internet ‘fast lanes’ to be anathema to net neutrality principles, because they would give deep-pocketed companies an advantage over start-ups.
Tech, Internet companies support a bias-free Net
But the debate is not really that simplistic. After all, electric companies do have different rates for residential and commercial use as well as for small and heavy users. The Indian Railways has the Rajdhanis, which serve selective stations and customers; certain flyovers and toll roads are closed to those on bicycles and motorbikes; our city roads do not allow trucks during busy periods and the list can go on. It all boils down to perspective.
The yin and yang of it all
There are many voices on net neutrality, both for and against. The debates are extensive and come with variations of what a future will look like with and without it. But how they affect brands, their ability to innovate and their connection with their consumers, is not as transparent.
The case against net neutrality rests with the providers of the infrastructure. Currently, ISPs receive monthly revenue from customers looking to access the Internet. The goal is for them to create new channels of revenue by charging brands for access to a larger piece of their bandwidth pie. This will create more revenue that can be used for improving network speeds and business models built on-top of a tiered service plan for those willing to pay to be further up the queue of access. For these companies, net neutrality is standing in the way of innovations in business.
There is also the case for net neutrality which focuses on total network value. The value perspective focuses on the fact that networks become more valuable as the amount of information shared (transferred) increases. By adding barriers to the transfer of information, the total value of the Internet suffers. For brands looking to create conversations with their customers, promote real interaction and ensure the data pipe is always open, deals like Airtel Zero pose a challenge.
“Our point is very clear - it has to be a level playing field. This is the growing media and India is just waking up to the revolution so it is very important that we have a level playing field for everyone,” says Gyan Gupta, COO of Dainik Bhaskar (Digital).
“A layered Internet will favour companies with money and the output will result in disadvantageous meritocracy. This will greatly arrest the natural growth of the companies in BFSI industry over the years and shouldn’t exist under any circumstances,” says Sanjay Tripathy, Senior Executive Vice President, Marketing, Product, Digital, and Direct Channels, HDFC Life.
Harsh Shah, Co-founder, Shopsense, says, "Any initiative which creates barriers for innovation is absolutely very bad for the country as a whole. Not only does it stifle existing companies trying to break through, but also highly discourages new entrepreneurs. Companies having the money to pay the ‘license’ for zero rating will benefit by protectionist policies, but overall there will be a decline in the ecosystem as a whole. It is as good as getting back to license raj."
This is also where, in the Telecom Regulatory Authority of India (TRAI) consultation paper on OTT apps and net neutrality, which triggered this public debate, there is an apprehension about the framing of the consultation itself, as it suggests a licensing of OTT apps. “This is a regressive idea. We don’t need a digital license raj,” says Shashi Shekhar, CEO of Niti Digital in a recent column in Business Standard newspaper on the issue. He instead urges start-ups to discard the mindset of protectionism and follow the example of Google which in the early 2000s disrupted giants like AOL without the need for any government enforced ‘net neutrality’.
Volunteer moderators who curate or manage Reddit India, the local arm of the entertainment, social networking and news website, who along with All India Bakchod (AIB) can be credited with bringing the issues to light, say, “As of this moment close to 7,00,000 emails have been sent to TRAI refuting their arguments in favour of regulating the OTT services. We have seen some wins in our campaign but it is far from over. We have noticed that when consumers (and voters) talk, everyone listens, even COAI or TRAI.”
Srini Gopalan, Director - Consumer Business, Bharti Airtel, on the other hand, asks, “Today, some mobile devices can store 50 or more apps, others can store five and some can't even store one. Will net neutrality imply that all devices must be standardized and offered at the same price to make the net neutral? There are multiple mobile technologies – 2G, 3G, 4G - to access the Internet. Should all speed and pricing be the same in the garb of net neutrality? Some customers pay cheaper data rates based on volume purchased. Does net neutrality imply that everyone must pay the same rate irrespective of usage?”
In the view of Kallol Borah, CEO & Founder, Lukup Media, “Telecom and Internet infrastructure requires huge investments and since that infrastructure is so poor and is not available to all, there is a case for a levy made equally on all Internet application providers by Internet service providers based on outgoing traffic that such Internet application providers consume. So, if a website sends out X GB of data another website sends out Y GB of data, they will pay an additional charge per GB to the Internet service provider."
Why brands need net neutrality
No matter whether your brand is an iconic and established one or the new start-up on the block, not having net neutrality will make things much harder for all. There's a fight taking place over the future of Internet access and marketers can't afford to sit on the sidelines.
If your brand is a smaller one, or a start-up, there is the prospect of being unable to meet the financial standard set by the giants in your field. A fledgling company in video communications, for example, would be on a far more uneven playing field should larger firms with deep pockets — Skype, for instance — pay for priority bandwidth. Since most of the Internet giants of today were originally tiny start-ups, it is easy to see how important innovation and an open Internet have already proved to be. “We are moving towards a world where communications and entertainment are converging with technology, and in this scenario, a democratic Internet is the lynchpin,” says Roopak Saluja, founder and CEO, the 120 Media Collective.
If you’re reading this and you represent a large brand, there are still issues to worry about. The addition of tolls on the transfer of data will have a serious impact on ROI and profitability. For an international brand, this could get a bit complicated as each ISP around the globe will have to be paid in order to ensure that customers always have access to the brand’s products, services and content at reasonable speeds at the regional level.
One of the key arguments in the debate presently is that in the absence of net neutrality, ISPs like Airtel, Vodafone, Docomo, Idea and others would be able to impose new taxes on online-content delivery, the web equivalent of express shipping charges on bandwidth-intensive services like YouTube, for instance. This would fundamentally hurt marketers that rely on the web to deliver rich content or commercial messages attached to video content. But that is a misconception according to Srini Gopalan. In a press statement, Gopalan says, “Today, when a consumer downloads a new app and uses it for a day, the total amount of data consumed is roughly about 20-30 MB. Assuming a price of Re 1 per MB of free data, this will translate to Rs 20 for the start-up. Compared to this, the average cost of marketing digitally through large media/Internet companies is about Rs 50 to 300 per download. So, this platform will actually make it cheaper for small companies to gain distribution as well as visibility.”
For Rajesh Magow, Co-founder and CEO-India, MakeMyTrip, it is important for India to accelerate the penetration of the Internet. “We urge all government departments to consider how Internet can be integrated in their respective areas, in order to provide value to the first-time Internet user, instead of treating the Internet as a separate vertical. We would also like to propose a democratic network-neutral platform, where companies can come together to build solutions for these first-time Internet users (in their native languages), to support the growth and penetration of Internet in India, without any commercial arrangement between the parties involved,” he says.
From a marketer’s perspective, what if there was no net neutrality?
1. Consumers would be forced to change brands: If not for net neutrality, a lot of consumers might switch to what is free rather than pay for the brands they currently pay for and use.
2. Companies would have to pay for each platform/service: Your customer may not be able to see your brand’s YouTube video, if they couldn’t afford to buy the 'Videos Pack' offered by the service provider.
3. It would discourage innovation and entrepreneurship: If another entrepreneur decided to start an e-commerce company to compete with the likes of Flipkart, it would never get off the ground simply because it did not have the funds to partner with telecom majors. And why would consumers download the app of an unknown e-commerce company when they can browse Flipkart for free?
4. Other companies would be forced to do the same: Being a prominent player in the market, Airtel would set an example which other players would also follow. So, there might be a situation where Snapdeal would partner with Vodafone, Amazon would partner with Docomo and the brands would only reach limited consumers.
But your brand could also be missing an opportunity
Today, online video has become a rapidly-growing area for businesses looking to raise their brand profile. Facebook and YouTube account for a substantial portion of the data being delivered to people over the Internet. And that is where marketers could step in. According to some proponents of the other side of the argument, just like the ultimate home-page takeover, brands could pay for consumers to access a site. Imagine Pizza Hut subsidizing access to YouTube on days "Game of Thrones" airs. That could lead non-ad-supported services like Vimeo, to embrace the option, opening up new inventory to media buyers.
So, a brand could end up with a higher proportion of all screen time available to advertisers and the ISPs could spend the incremental revenue and reinvest in providing bandwidth so that consumers have a great experience. That could be a decent value exchange.
Ultimately, for digital innovation to thrive in India, it may become necessary that ISPs and the app start-ups learn to co-exist with mutually beneficial business models. The Apple ecosystem is perhaps the best example of how innovative start-ups may thrive within a dominant platform that is anything but neutral.
So is there any net benefit to consider?
While brands like Cleartrip and news organizations like NDTV, Newshunt, Times Group (conditional withdrawal) pull out of the project in support of net neutrality, there are others who stand behind their decision to partner with Facebook on the project. Recently in a blog post on Huffington Post, Babajob.com’s CEOs explains why Babajob’s chose to work with Facebook's internet.org and create a partnership at odds with the principles of net neutrality. “By offering a portion of the Internet for free (which definitely goes against net neutrality), millions of people - too poor or previously unwilling to pay for the net – can now go online and search for better livelihoods,” he states. “We worked with internet.org because it represented a compelling new business model that did not depend on the government giving up lots of revenue, looked like it was quickly expanding Internet access in other countries and would help our ability to reach aspiring workers. It felt like an experiment worth trying and I sincerely hope that the Indian government keeps trying new models to get many more Indians online, even if they do go against the status quo and butt up against net neutrality.”
To give it some context, it’s important to remember here that a mere 15% of Indians use the internet at all, according to a new report by the Switzerland-based World Economic Forum. And only 33% of the population own mobile phones. As of October 2014, India had 278 million Internet users according to the Internet and Mobile Association of India. China, on the other hand, had more than 600 million Internet users. According to the WEF, there are only three mobile broadband subscriptions for every 100 Indians.
Shashi Shekhar too makes a strong case for universal access in Business Standard: “This vision (Digital India) requires bringing (Internet) access to hundreds of millions of Indians who have never touched a keyboard and will never own a desktop computer. To these hundreds of millions, the mobile phone has emerged as the single greatest means of empowerment. Our priority should be to ensure affordable access to data and information to these hundreds of millions.” He adds, “It would be a shame if a vocal minority among the cosmo-urban elite skews the public debate on “net neutrality” away from the priorities of the silent majority that will make up ‘Digital India’. From Facebook’s Internet.org to Airtel Zero, let market dynamics determine which business innovation will get these hundreds of millions the kind of access they can afford.”
And this is exactly the point Facebook’s Mark Zuckerberg made in his statement on the debate. “Arguments about net neutrality shouldn’t be used to prevent the most disadvantaged people in society from gaining access or to deprive people of opportunity. Eliminating programmes that bring more people online won’t increase social inclusion or close the digital divide. It will only deprive all of us of the ideas and contributions of the two-thirds of the world which is not connected.”
While this may make internet.org sound like a great initiative, there’s a catch, of course. If examined closely, what really is internet.org? It is a fight to get people to experience the Internet through Facebook first. It is also a fight to get them on to the platform and keep them there. So much so, that the association between the Internet and sites such as Facebook, changes to a point where these sites/services become the Internet themselves. And therein lies the true threat to net neutrality. Sadly, very few have caught on to this aspect of the equation.
(Inputs from Simran Sabherwal, Saloni Dutta and Henna Achhpal)
Feedback: aliefya@exchange4media.com
