Free basics is not Net Neutral, but India needs many such initiatives!

Unless you have taken some sort of Digital detoxification over the last month you must have come across the terms — “Free Basics” and “Net Neutrality”. In case you haven’t, you should read both the “For” and “Against” arguments about it.

I would just like to analyze both the sides very objectively to find what India really needs now.

Is free basics Net Neutral? No, absolutely not. It might just connect some basic internet services (news, info, booking, jobs), that too of few selected partners. Facebook owns the platform, so it can do anything with it like throttle speed, throw ads, capture data, etc.

Facebook has reportedly spent over INR 100 cr to spread awareness about their Free Basics initiative. Of course, it is disguised as a social NGO-esque initiative starting with its dot org domain. Will it always be not for profit? No, never, FB is a private limited company and will always have vested interests. But, if their interests are aligned with those of the people, what’s wrong?

Last time I checked the population of India, it was 1.3 B, and as per Naukri’s annual report, about 250 million are connected to internet. As per the 2010 Deutsche Bank report, India’s middle class population is about ~300 million. Now, assuming that these people can afford an internet connection, the digital connected population saturates at 300–350m. The rest 1 billion people are still not connected to internet. Let’s try to imagine an utopian world where everyone gets connected to the net. Assume 20% of the population are too young or old for internet. The cost of connection and data assuming they consume 200mb of data will be 800 million*200*25 (Rs 25 for airtel 200 mb plan) = Rs 4000 billion or ~$66 billion annually. Let’s also assume market gets competitive, so considering they have 30% profit margin now, with 0% margins the cost will still be $44 billion annually. Who will invest to connect these 1 billion people? There are 3 possible organizations:-

1. Government — Governments should never get into the business of running businesses. Best, they could give contracts to private parties. But still this would involve expenditures up to $50 billion. In the current union budget, government had allocated $15 billion for education, $40 billion for defense and $5 billion for healthcare. And these sectors should always be on a higher priority.

2. Facebook, Google, X where X is a US giant — Facebook has 132 million users in India and earns $ 0.15 per user every quarter, which amounts to $20 million. That’s $80 million annually. Google makes $ 350 million per quarter or $1.4 billion annually. They would definitely like to re-invest some money into increasing their user-base in India, of course, for future profits in a very long term. Still they won’t be investing more than $1 or $2 billion annually.

3. Indian companies — Big Indian conglomerates, yup if they can think very long term.

Is this the perfect solution? If the perfect solution is waiting for the 1 billion people to raise their standard of living to a level such that they can afford internet services, then no. But it is a step towards acceleration, and with proper regulations and multiple such steps we can reach to a point where everyone can afford open internet. I don’t intend to take any sides as I find both of them quiet extremes. Like how it works in India, there must be a middle path which combines the best of the both worlds.