Understanding Network Neutrality

Telcos should be free to charge their customers more for using the Internet. Flipkart/FB/Google should be able to use their money to get users/traffic. They can even pay the users directly for all we care.

What should NOT happen is — Flipkart/Facebook/Google paying the telcos so that telcos, and not the users, decide who wins in the market. It will distort the competition and thwart innovation. Network, like roads or pipes, is a huge leverage and therefore it must remain neutral.

The big tech (Facebook/Google/Flipkart) companies are being hypocritical. If the network was not neutral, they would still be struggling in the market against an AirtelKart, VodaMail and IdeaTube (you can already feel how awful these portals would’ve been, isn’t it?). They benefited from a fair playing field, and now that they are market leaders, they want to stop all future startups from doing the same — competing on a fair playing field.

Now, to be fair to the telcos, they were charged huge license fees for the spectrum by the government. So, a part of the blame ought to be on the government. If network neutrality was included as part of the terms and conditions of the license, perhaps they wouldn’t have had to pay so much. (In any other industry, I would feel sorry for what the telcos are going through. But as it is, people don’t like them for all the scams they pulled over the years.). Part of the problem is an entirely broken wired/wi-fi broadband market in India.

Content, Networks and Devices — all 3 industries flourish only when they remain independent. Sometimes, regulation actually helps the market.

Now, this is different from other cases of product bundling because of the network effect that is available to the telcos to use as leverage. Google does both content and devices (Android) and so does Apple. And that too is a problem. But their market power pales in comparison with the kind of leverage network operators have.

Really, it all boils down to the network effect: http://en.wikipedia.org/wiki/Network_effect