Saturday, January 2, 2016

Why opposition to Free Basics is flawed


If purists are so offended by a limited offering, just don’t call ‘Free Basics’ the Internet
 A lot has been said about Free Basics, the free limited internet program by Facebook and its telecom partners. Mostly by people opposing it. Facebook is spending (reportedly) Rs 100 crore and using its own properties to make it a success.
It is ironical that people who claim to be avowedly pro-market are the loudest opponents of Free Basics. So much so, there is hardly a major voice that stands for it. Supporting it, is almost like supporting bigotry, and invites accusations of shilling for Facebook.  In the spirit of Laissez-faire, it is my contention that Free Basics should continue. Whether it succeeds or fails is something that the market should decide.
Let us analyse the main arguments that we have heard against Free Basics and why we should have a different view on them.
Who pays for it?
Since FB doesn’t pay Telcos for bandwidth. Telcos make too much money from us and are giving away bandwidth.
From the Telcos perspective, this is a marketing expense to acquire new customers. Unless the argument is that marketing itself are causing higher prices. In which case you should be complaining about the hundreds of crores being spent on marketing and customer service points.
The Telco has its own shareholders to answer to. If the costs of the program are not commensurate with returns (new paid signups), they will exit the program.
May have ads
FB says it will not have ads, but does not say it will never have ads.
This is irrelevant for three reasons.
First, making money is not a crime; Quoting Adam Smith:
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
Second, most content on the “open” Internet is subsidised by advertising. In that sense you are today a free customer, you just pay for access. Free Basics just takes that subsidy forward. Today that cost is borne by Telcos, tomorrow it could be by advertisers. It remains the end user’s choice, whether s/he wants heavily subsidised access to a few websites (aka Free Basics) or lightly subsidised (aka open Internet) or even, not subsidised (paywalled) Internet.
Third, when ads start appearing, Telcos will ask for a piece of that pie, thereby negating the first concern.
Privacy and FB access to usage data
This argument would be valid, if we ourselves stopped using Facebook and ALL sites that used Facebook integration. If we are not willing to let go of these services, who are we to set a higher standard for the target audience of this program?
FB does not have legitimate support.
FB may claim 3.2 million in support, but how many of those mails are legitimate?
The same statement could be made of the campaign against Free Basics. Have all those people who have signed up to oppose, fully understood the argument?
It’s keeping only FB and partners free
Yes it is. The market will produce its own challengers with wider offerings. Nothing stops Airtel and Google to create a similar offering of their own.
It’s not an open platform
FB sets the rules and can change those anytime.
This is correct. The answer to this is to codify the rules via regulation. Not a ban. Again competitors can come in with their own versions.
It will hamper innovation
It will become more expensive for startups to create products and services
People (including the poor) do pay for better service. Govt run schools and hospitals vs private schools and hospitals. If you have a great product, people will find their way to it. 
What are the alternatives?
Government subsidies
The government could subsidise ‘open’ Internet. And we will pay for it though taxes. Taxes that could be used in areas where private enterprise cannot function profitably, at scale.
Other models that are ad subsidised, user funded
There may be other models we like. And Free Basics is yet another such model. Two classes of market participants have come together to innovate on how to get millions of Indians online. Without the use of public funds.
The entire argument against Free Basics assumes, that the target customer and the telco are irrational actors, unintelligent to the ways of the world. 
There is a video by AIB that (correctly) mocked the fact that FB opened it’s voting on Free Basics to US audiences. Similarly it is laughable that active digital Indians get the right to decide how other Indians get on to the internet.
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? The idea is neither radical, nor new.
Telcos, Facebook and participating sites are businesses operating in an open market. When you choose to champion an anti-Free Basics campaign, you are essentially moving away from a pro-markets stance. 
If purists are so offended by a limited offering, just don’t call it the Internet.
Chirag is a technology executive turned entrepreneur bringing offline businesses and online user experiences closer together. He tweets as @chirag and blogs at www.marlinspike.in 
This article originally appeared on Business Standard.

No comments: