These
days’ Indian youth more concerned about Net Neutrality than anything else.
Though, most internet users do not have any idea, what exactly net neutrality means,
but they are ready to change their Facebook status and send an email to TRAI.
Interestingly, the All India Bakchod, who is known for great entertainment not
for their knowledge in the field of economics or laws, has released two videos
explaining why one should support net neutrality. Talented AIB has been
successful to make fun of important issues, while pushing ill-informed users to send email to TRAI.
There
are two key issues over net neutrality- one Should companies like Whatsapp and Skype share their revenue with Telecom companies or Not? To answer
this tricky question, let’s understand this – In a hypothetical world, there
are 5 villages and these villages are not connected with each other. Now Assume
a company A (Telecom) has built connecting roads between these villages, by
paying millions of dollars in government and investing another million in
building infrastructure. Soon after building the road company at (Telecom)
starts bus services and it charges Bus fare (Voice and SMS) and road toll
(Internet) separately. So basically, the company A has divided its revenue
between the Bus fare and Road toll. Now, after a few months, Company B
(Whats~app) is launching a new bus service while offering free bus rides to
all. Hence, most of customer shifted from company A’s bus service to Company B.
Now
please answer Should Company A charge
anything from company B? or Should
Company start charging more for Road toll (Internet Pack)? While answering
the same one should not forget that company B has not invested a single penny
in constructing the road neither it has paid anything to the government!
Second,
Should Companies like Flipkart or Snapdeal pay to Airtel on behalf of their
customers? I think it is not a question of net neutrality, but a question of
marketing strategies? To answer this part, let’s consider this scenario,
assuming the two companies P & Q have their stores in a village 5 and sells
Mobile Phones. The customer has to pay for bus service to R (Telecom). R
charges a fixed amount charge of INR X. One fine day, to attract more customers
company P announces that it will start paying the travelling costs to or on
behalf of its customer!
What do you think, is
it illegal on the P’s part to provide free travelling service?
What will happen long
run ~ Will Q be out business, if it does not pay on behalf of customer? Most
likely No!, Since
from the customer’s perspective, it is overall cost that matters, if the mobile
price of Q including traveling cost is less than mobile price of P then any
rationale customer will buy from Q only. Additionally, since travelling costs
will be very low in comparison of mobile cost, it does not make any difference.
One
more point, there is not much of difference in a toll-free number and company
refunding the internet charges on behalf of the customer. So, when toll-free
number does not affect your freedom to call anyone, how come free-website
affects your freedom?
This Article (Click Here) gives a heavy dose of economics
while explaining why or why not Telecom should be paid by E-commerce and other
companies, while this article (Click here) raised the concerned misplaced use
of net neutrality. I would also recommend reading Airtel
side of the story (Click Here)
At-last,
let me clarify, this is a very imperfect analogy. It helps one understand what
is going on, but only in the sketchiest fashion. It leaves out very many things
that should, under ideal circumstances, have been included.
