Friday, May 15, 2015

Why Net Neutrality is good propaganda...

...and that's about it.

Before I start...

I am a big proponent of Net Neutrality. The reasons are numerous. My favourite is the example of Telecom companies destroyed the mobile VAS business. The case for it has been made many times over and is summarised by Ankur's piece in the Business Standard.

What is of course amusing is that one set of people who essentially profess to be capitalists are taking up what is essentially a socialist cause.

That said, Samir Jain (of BCCL fame) once introduced me to the concept of "अनेकान्तवाद", ie no single view is the complete truth and from there the ability to hold multiple conflicting points of view in one's head. Also, a person of intellect, like a lawyer, should be able to argue both sides of a case.

The above, put together with the pitiable state of defence of their case by Telcos, inspired me to put a cogent alternate point of  view.

With the preamble out of the way, here's my argument:

Net Neutrality is good propaganda... and that's it. It's not a good thing or a bad thing. Just good propaganda.

Before we get into the thick of it, a quick look at the actors.
  • In one corner: The big bad Goliath like Telecom companies which are fleecing us (They are. But that's a topic for another post)
  • In opposite corner: The innocent David like publishing/app companies who can do no wrong and are battling for Us. (The ones  currently winning the propaganda war)
  • In yet another corner: The indifferent regulator (Who is 'allegedly' in the Telcos pocket)
  • In the final corner: Us, the innocent consumer (Who doesn't know what's happening) 
(there are more corners, but lets keep this simple)

I don't want to get into what is Net Neutrality. Briefly, it is the principle that Internet service providers and governments should treat all data on the Internet equally.

You can read the rather comprehensive article on Wikipedia to get a low down.

Broadly the arguments that have been made thus far by the different actors:

The Investment argument (against net neutrality)

The Telcos say that they are investing in licenses, infrastructure, adhering to complex regulation (read snooping access to govt) etc. Why is someone else allowed to ride on that infrastructure.

This is exactly the wrong argument to make. Telcos have been the stars of the Indian economy over the past decade or so, where the best run companies have ROCE in the top tier bracket.

So clearly no one is going to have sympathy when a service provider, that has traditionally overpriced broad band, with scads of profit, whines about investment.

The nobility of publishers argument (for net neutrality)

Publishers would like you to believe that Telcos need to be a dumb pipe, so that they can deliver superior content/experience etc to you.

Whereas, the fact is, to the publisher, you are a product (ie an audience) that needs to be sold to an advertiser.

Publishers, who want to make money, often give us free content, so that we can be packaged and sold as an audience. Some publishers even say, that if you pay for content, there will be no ads.

I don't hear anyone making the argument, that all readers should be given similar treatment. Either all paid or all free.

There is nothing noble in this.

Dumb sheep argument 

Customers are dumb and can't discriminate between what they are getting for free and what they have to pay for.

Other Neutrality driven businesses

Do read through some business where neutrality arguments could be made.

Taxi space
Ola/Uber subsidising drivers so that the cab is cheap for you the user is a case of cab-neutrality. No one makes the argument that Ola/Uber should price their cars at the same price as radio cabs. The fact that unlicensed cabs (initially) gave huge subsidies to attract users to their service could be termed as a case of violation of cab-neutrality. Hey, it is a utility. Right?

Mall as a dumb pipe
Mall is a public space that attracts audiences for shopping. No shopkeeper demands equal access to all the shoppers. Fact is Mall real estate pricing reflects the unequal access that a shop would get.

Parking for a Self Drive
The self drive car rental business (An industry that I am currently part of) heavily relies on access to parking from other commercial entities. I can't make the case to anyone, that access and pricing to the service be the same. What I get is a function of my luck and negotiating skills.

The Net Neutrality argument hinges on the following:
Telcos are a utility and a dumb pipe and have no pricing flexibility. Only companies monetising audiences have a right to price their services differently.
All this changes the moment you say the following:
The telco is a media entity. Telcos have a right to monetise the audiences
Tiered access as a solution

Most Net Neutrality champions are comfortable with the thought that advertising is a subsidy. Why should you have to treat Internet access differently, as long as the choice of higher priced 'open' internet remains available to customers.

So, think about it. A telco can declare itself to be an media company and sell access to its subscriber base. The subscriber can be given an option to opt for cheaper internet in lieu of  the privilege of some websites being zero rated (ie free of bandwidth caps) and the rest of the websites fall under the metered cap.

The idea above is neither radical, nor new. The Media industry/ app universe already uses it routinely and what's more the Telco business uses it routinely when it creates off network and on network pricing  or Friends and Family calling packs. Only in this proposed scenario someone else pays (app/media company etc) for it.

Or even better, create a data only MVNO called Free Internet. Get popular websites to jump on to it (for a fee), through in some public service websites like Wikipedia and (oops, is that still banned by GOI?) and you are done. 

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