Free Basics, more Internet

How should governments and regulators view the Internet.org initiative to expand Internet use I argue that we must rely on established regulatory principles rather than ideological preferences.

The stated objective of Facebook’s Internet.org initiative is to “connect the two thirds of the world that doesn’t have Internet access”. Till recently, the plan consisted of enabling target users to access an assorted group of websites without incurring additional data charges. Facebook has now rechristened this plan as “Free Basics”, making it a part of its larger set of Internet.org initiatives to bring more people online. In India, Free Basics is available on the Reliance Telecom (RCom) network.

It would be tempting to dismiss Free Basics — as many critics of Internet.org have done — as a self-serving attempt to expand Facebook’s business and clout. Facebook is a leading social media platform with growing influence on all aspects of our lives. Its revenues — $12.4 billion in 2014 — come from advertising. Its international user base of over a billion is an obvious asset. More subscriptions can only help.

However, to look at Free Basics as a purely commercial exercise is somewhat harsh and not just because Facebook claims to offer no advertisements on its own abbreviated service as a part of Free Basics. In fact, Free Basics seeks to address head on, key concerns that commercial players have largely ignored or at least downplayed.

It recognises that most low-income users use inexpensive feature phones with relatively small screens and little support for data services beyond text-based information largely through SMS. Less than 10 per cent of these devices are smartphones that connect easily to the Internet. Add to this the fact that most developing countries rely on wireless, with an inherent limitation on bandwidths available for Internet use.

A less-talked about yet key feature of Free Basics is that it actively seeks applications and services that use bandwidth efficiently and can be consumed on the relatively basic feature phones whose screens, unlike those of smart phones, are rarely large enough to accommodate much content.

Free Basics’ technical guidelines actively encourage “low over-head” applications that work with the relatively small bandwidths available in developing countries. This means that the platform largely excludes websites with heavy video content or requires partners to offer a light version suitable for wireless networks and small-screen devices. The absence of video would go a long way to keep traffic on the wireless networks within reasonable and, more importantly, sustainable levels.

But the strict control over video content means it is unlikely that users of Free Basics will be content with the free offering. In fact, the absence of video entertainment provides an obvious incentive to explore the wider web. Of the overall Internet traffic, video share is over 50 per cent now and expected to rise to around 80 per cent in 2019, as recent studies indicate. So, any user who comes online, taking advantage of the free access to some websites, however valuable the content, will have to pay the high and, presumably, unwelcome cost of forgoing popular video entertainment. Therefore, they would have to leave the confines of Free Basics eventually. This distinguishes it from other sponsored data packages which would not restrict high over-head content a priori, if its cost could be recovered from the advertiser.

This also allows us to understand the incentive for operators to offer Free Basics. The operators receive no payments from Facebook, as it has stated repeatedly. It would make little commercial sense to offer free content unless Free Basics was seen as an attractive opportunity for market development. Operators are aware that, like most users of the Internet, Free Basic subscribers will eventually access entertainment and other services. It must, therefore, comfort regulators that the Free Basics model seems, a priori, to be sustainable with incentives for not just Facebook, but also users and operators to continue their participation.

Critics have argued that Free Basics poses a problem because it offers free access to a limited number of websites. This would be the case, if the websites were representative of the diversity of content available on the Internet and the free service was sufficient incentive not to further explore the Internet. But Free Basics actively discourages the kind of content it would need to keep users locked to its services. Hence, a user who thinks, as critics and surveys have suggested, that Facebook is the Internet itself cannot possibly continue doing so. It makes little sense to suggest that they can remain oblivious of the larger Internet, given how often its content figures in today’s print and TV, and even SMS-based humour.

This, therefore, makes a dent in the arguments of proponents of doctrinaire net neutrality who oppose any kind of zero-rating such as Free Basics. The design of the Internet itself has ensured that walled gardens are easy to work around. The success of Android operating system over Apple’s IOS is one such example.

It would be naïve to suggest that regulators should be blind to the potential of abuse, even if there are yet no glaring or even significant examples. However, policymakers and regulators cannot miss the evidence that Free Basics is an open platform that focuses head on the key challenge of delivering Internet access on predominantly wireless networks using a rudimentary feature phone.

Fortunately, regulators worldwide, and in India, have a long history of identifying, preventing and even punishing market abuse. There is much economic literature to fall back on to understand the many implications of bundling services for good and for mischief. Free Basics offers tangible value to be allowed to compete in the challenging task of expanding Internet access. Regulators have all the tools to act if there is reason to.

The writer is a consultant on regulatory affairs and has advised several players in telecom and Internet industry. He can be reached at mahesh.uppal@gmail.com