Virtuosity of Net Neutrality

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TRAI latest regulation against differential internet access pricing is based on questionable reasoning. It seems to assert and attribute absolute virtue in Net neutrality and does not get into the core issue of who (or what) is sought to be protected and why. TRAI seems to be swinging in favor of popular opinion expressed in social media where the opinion makers have somehow created a scenario that net neutrality is protecting free access while the reality is far from that.

What the service provider intends to do is to offer differentiated lower access charges for few bundled sites and it is customers call whether they want to avail that bundle or not. The access charges for all non-bundled sites will be the same. And that implies Favorable Partiality for few sites and neutrality for all other. It is most likely that “net partiality” and access plans thru partnership will open up real free access.

Whose business is it?

Do the service providers who have put money to create the access have a right to decide what pricing business model they want to pursue??

Airtel’s Zero plan would have enabled end customers to access a whole lot of sites without paying for the data charge.

This will set a new trend of alliances that will soon make more and more sites accessible without paying data charge. It is amazing customers and regulators would sit in judgment of what marketing strategy Telecom service provider should follow. If the telecom service provider can strike an alliance with a portal and make the portal pay for the access.

Why would Telcos want to do it?

It allows them to build alliances with large e-commerce and other portals and generate committed revenue. It increases the data penetration and usage. The alliance will also open up partnership for promotion/advertisement and even revenue share with portals. The alliance is about generating revenue from the participating business enterprise and passing on the benefit to customers. This is the business model followed in media.

Why would E-commerce sites want to do it

To gains an edge over competition and extend the partnership for frequent browsing and more business? They will evaluate the return on Data cost paid by them based on hits/conversion/loyalty etc.

Who gets impacted

Smaller E- commerce portals could be challenged by one more competitive factor that favors the bigger or financially more powerful player.

That’s what market economy and competition is all about.

What is in it for the Customer?

Many e-commerce sites could be free to access. Absolutely win for customers. For other non-bundled sites the data pack or pay per use is available — at same cost or possibly LOWER cost. It is therefore neutral for the non-bundled sites. This is actually the key aspect of the argument. If a telecom service provider starts charging “more” for some portals, it creates a RISK of customers churning. It will and should be competition that will determine the price.

Data tariff in Telecom has dropped by 90% in the last couple of years due to exacerbated competition.

It does NOT adversely impact any customer but only creates disadvantage for portals that are not joining the alliance.

The frenzy that was whipped up in social media about net neutrality would indicate that people join causes without knowing what the business is all about. The only other explanation that the customers on Social Media have collectively decided to take the side of small portals who could be at a negotiating disadvantage with telecom companies.

Or are they taking sides because neutrality sounds virtuous?

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Surya Mahadevan
Prof. Surya Mahadevan has 30 years of work experience in FMCG and Telecom sectors. He played leadership roles managing large brands such as Tata, Reliance, Aircel, Loop, Maltova, Viva and Amul.

He has worked across Sales, Marketing, Retail and Customer Service functional areas and in his last assignment before joining TAPMI, he was responsible for Mumbai Circle Telecom operations as Chief Operating Officer at Loop Mobile.