AIRTEL, FACEBOOK AND FREEBASICS: THE IMPERATIVE FOR NET NEUTRALITY AND PREVENTION OF ANTI-COMPETITIVE PRACTICES.
Few days ago Airtel and Facebook announced the launch of Freebasic in Nigeria. For anyone who is wondering, Freebasic is a product and project of facebook that seeks to provide access t essential internet services at a free cost. See more information here
The proposition is centered around the fact that many people on the planet; earth, are cut off from the benefits of the internet. This is surely the delight of an average internet user in Nigeria as social media products; facebook, twitter, Jobberman will come at almost no cost.
While the efforts of the stakeholder; Airtel and Facebook is laudable, it’s important to state the implications it has for stifling new innovation, conferring undue competitive advantage to both Facebook and Airtel.
Freebasics violates the principle of net neutrality which is “ a principle that internet service provider should enable access to all content and applications regardless of the source, and without favoring or blocking particular products or websites”
Freebasics clearly violates this principle. Does it accommodate all products? No.
The internet has grown from 1.3% of the world’s population in 1996 to 40% which is 3.2billion out of 7billion total population today. Much of this growth is attribute to freedoms of Web 2.0 , Open Source movements like Linux, Mozilla etc. Then we had democratization of the WorldWideWeb by people like Tim Berners Lee who refused to earn money on his intellectual property. Imagine if Sir Tim had decided to collect $1 per domain name. He will be one of the richest today.
This assertion won’t be clear if the meaning and implications of violation is not stated with evident examples. See some points below;
1) In 2013, Comcast ISP services created a situation for Netflix users where they couldn’t enjoy the Netflix experience because it had decided to muscle Netflix to make certain package agreements with it. If you consider the market size of Comcast, Netflix had to play ball. But the question is, why am I so special that I have to design a special package for my subscribers, thereby paying more in the process to the ISP. Netflix was an indirect competitor to Comcast who owns some media properties NBC, Telemundo, Universal cable with content delivery services which includes entertainment formats which includes videos of course.
This act went unchecked till American courts ruled in favour of Net Neutrality that all companies must be treated equally on the internet.
2) Freebasics is a form of protectionism. If not ask why only Airtel is running with it here and why facebook is one of the prominent services on it. Let’s note that when carriers such as Airtel with a market share of 21% and 30 million subscribers to offer this kind of service, they will make it switching cost difficult for subscribers, thereby making competition difficult for other small ISP players who hope to break into the data economy of social media. Operators have been bothered about Over the top services such as facebook, Twitter and WhatsApp who have eaten into their voice and sms revenues over time. They have considered billing individually for these services before now, but for some regulatory resistance and fear of backlash from customers.
The Freebasic solution solves the perception problem, but the problem in itself is still there. Your switching cost will be high and the network and facebook get an unfair advantage over their competitors in the manner in which this will be executed. Imagine if Myspace was protected the way Facebook will be protected with Freebasics, will facebook have grown to what it is today.
3) Google was not the first search company; you had the likes of AltaVista who Google disrupted. Imagine if AltaVista had the upper hand by being endeared in the fashion facebook is coming. I bet Google will not have scaled, because having preferential treatment for one app or groups of apps makes new ones have a very uncertain likelihood of breaking into the market. It will take more than Agile and Lean Startup methodologies to get into the market and garner some share where regulators have given silent consent to subtle monopoly activities like Freebasics.
If Amazon and EBay got were stifled through bigger and legacy businesses like Wal-Mart through procurement of free internet (traffic) to their platform, how will they have succeeded?
4) The Telecoms Regulatory Agency of India (TRAI) just banned freebasics in line with the net neutrality principle. See here. The argument was that a country of 1.25billion people had 137million connected which is just 10%, what they need is not bundling of existing internet consumers, but connection of those that are not connected.
Because in actual fact, you need to already have a data plan to access Freebasics. Facebook is already doing a few things with Airtel which I see on my own device. Infact Airtel has taken over my facebook app without any authorization. This didn’t happen with Twitter, Instagram, and Google who’s OS (Android) I am using. See pictures below to get a hang of what I am talking about.
5) Google has done better than Facebook in those regard by offering to connect another 10million through provision of Wi-Fi Hotspots at 100 of the busiest train stations in India. This was confirmed at a meeting of the Indian Prime Minister; Narendra Modi and Google CEO; Sundar Pichai. This is the real good.
The objective should be to connect people, not use an Over the Top strategy to confer special privileges for your business and partner. In this case Facebook and Airtel.
If you want to do Good, Don’t be evil, like Google and Googlers say. It’s not evil in the literal sense, but don’t do good to confer a guerrilla advantage for your business.
At a 46.1% internet penetration and a conservative population of 160million, Nigeria has 73.8million people connected to the internet. Let’s not forget some people have 4 internet connections. That leaves room for more connectivity. So Mark, What will you do about that? Google brought the Android one at a very cheap price, and it has good quality. I use one. It helps our knowledge economy, Freebasics won’t. It won’t because it’s basic. Intervention products like Android one support Google’s business model, but they are not basic.
Lastly, when I am talking connectivity, I don’t mean the basic type of connectivity just to get on the internet that will be a backward paradigm for us. I’ll rather we upgrade to more quality connectivity speeds that we can use pictures, videos and other formats at reduced costs. This is important to reduce knowledge gaps.
I hope we get this net neutrality thing right so that the next wave of innovators won’t be constrained because of some cheap and substandard internet services has locked people in. Considering the psychographics of Nigerians for cost, that will be bad for embrace of new and higher quality services.
