My thought on Net Neutrality

Over the last couple of days, I have come across a intense debate as to both the validity and the morality of Airtel to charge for calls made using 2G / 3G Networks (using apps like Skype, Viber and the like).

I would suggest you go through the following links first

Medianama

Niti Central

Personally, me & my family has been using VOIP a lot over the years though we use it using a DSL connection (Airtel) rather than a 3G (you cannot get streaming video on 2G, forget about using Skype). I pay Airtel money for providing me with a certain speed. While I would have loved not to have a FUP limit, I have been required to live with it since no Internet provider seems to provide genuine unlimited downloads (at the speed I am hooked for).

Tomorrow if Airtel says that they will charge separately for downloads (Torrents), VOIP (Skype / Google Talk), I will be immensely pissed. But for now, thankfully it does not see to be on the cards.

TRAI chairman has said that while its wrong from the angle of Net Neutrality, what Airtel is doing is perfectly legal based on current laws. Now, if the law is a ass, it makes no sense to penalize Airtel for using it to the maximum. After all, companies in US who like to showcase that they are highly patriotic do use whatever legal means available to ensure that they do not have to pay tax (especially on overseas income).

Lets try to compare the Airtel situation with say the Restaurant business. Any and every restaurant has a board that says “Outside food is not allowed”. Once you enter a restaurant, one is required to order from the restaurant itself and not take outside food.

For instance, how would Coffee Day feel if you sit inside a Coffee day cafe and then order Coffee from the nearby Shanti Sagar (where the price of Coffee is at least 5 times cheaper than Coffee Day). But go to a canteen and this distinction does not apply.

At our office, we have a canteen where we are allowed to use the infrastructure to eat eatables from outside (home or elsewhere). Tables are kept clean and if we do not order anything, we do not pay anything. Theoretically, we use the facilities for free while the cost of keeping it up (Clean Tables, Drinking water, Washbasins, Rest rooms) are all paid in one way or the other by some one. But nothing comes for free for there is always a catch.

Here, it’s possible because the canteen is not run as a restaurant. In most cases, the rent is highly subsidized, given for free or even paid to make it viable. If any canteen has to pay the market rent, I doubt anyone would want to put up one in the first place since there are always limitations on how many folks would come to eat (and pay). And they would definitely ensure that outside food (home made or not), is strictly not allowed inside.

When companies like Airtel bid for the spectrum, they are doing so in the hope of en-cashing on the usage. Of course, who knew how breakthroughs in technology would put a lid on many of their hopes. SMS used to be a big thing till the time we saw the arrival of Whatsapp. If much of Voice (especially non local) gets off the grid, the whole point of paying so much for the spectrum makes little sense.

Its all nice to say that we are in a age of disruptive economics. But no one would want to sit around while others burn their business literally to the ground. Every battle will be fought tooth and nail and this is no different.

Yesterday I was reading about Microsoft approaching the government to enable it to launch Wireless internet using what they call “Dynamic Spectrum and TV White Spaces”. If that is successful, that will change the whole game. Who knows, where go from there

I am all for Net Neutrality, but what we need is laws to ensure that. Without a supporting law, bashing a company for its policy takes us nowhere. While Airtel has been the fist to kick this off, it would be just a matter of time before other telecom operators replicate the same.

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About Prashanth

Have been a full time participant in the stock markets since 1996. Run a Yahoo Group where focus is exclusively on discussions of the Indian Markets using Technical Analysis as the tool (groups.yahoo.com/group/technical-investor)
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One Response to My thought on Net Neutrality

  1. Brijesh says:

    Actually, to the the contrary if I was the competitor (Reliance, Vodafone, MTS, umpteen others) this is the best chance to rip apart Airtel subscriber base. Airtel and most biggies have this monopolistic attitude. For instance, we are still paying roaming charges while it should have been freed long ago. We still do not have unlimited call plans at reasonable rates. Nor do we have mandatory (and sensible) per second pulse. What Telcos did was their calculation for bidding spectrum, if the technology leap-frogs them they cannot hold the tech hostage. The usage will simply “leak” else where.

    Frankly, Airtel is carrying data and we subscribers are buying data. Would airtel charge me if I record my video and send it to the recipient? Airtel and most legacy telcos are hamstrung by voice and data, while it should all be – and will become – only data. Voice is nothing by data. Like SMS was nothing but data. So, will Airtel charge for usage of Whatsapp and other apps?

    I kinda feel they let their insecurity out with this move. Either they revert it fast or lots of players will be out their mocking them in every ads.

    Moreover, we are in times where data will grow exponential. These kind of usage based fees are just absurd. (What will they do If I send all data through TOR or similar encrypt?) And there are lots of niche players and broadband operators who will leap at this opportunity.

    #2C

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