Airtel 'Zero' and is it actually as evil as it has been made out to be.
(AP Photo/Kevork Djansezian)
Here's what the Airtel website says about how Airtel 'Zero' will work:
1. Mobile app makers register with ‘Airtel Zero’ to give customers toll-free access to their apps
2. Airtel informs customers about these toll-free apps
3. Customers download and access these apps at zero data charges – and enjoy their favorite online tasks (e.g. entertainment, shopping) for free – even at zero mobile balance
As I mentioned in my previous post, I mentioned how I saw the Airtel 'Zero' initiative as a win-win-win for Airtel-marketers-consumers and I stand by that, with a caveat. But was there then such a brouhaha over it? Well, I don't want to comment on how public sentiment gets built in India but look at it this way - what if Flipkart wanted to pay every user for every minute he/she spent on the app [while Airtel continued to charge usage of that app at normal rates]? Would that have been OK? Of course right. It's similar to any loyalty program [offline or online] where the more you shop, the more incentives you get. While the user-behaviour expected in this case isn't one of shopping but of activity, it would nonetheless have been seen as a 'marketing tactic' by Flipkart as it would have barely made the headlines in the paper. Why, then, was it different the moment Flipkart decided to give that same money [that it could have given you and me] to Airtel instead? And here come the caveats:
If Flipkart, as a participant in the Airtel 'Zero' program, was paying Airtel the same that an end-user would have paid Airtel, then there isn't a risk of Airtel's shifting interests. But this parity probably wouldn't have happened:
Airtel, in their #airtelpledge mentioned 'toll-free' 9 times and went on about how the 'Zero' platform is similar to a toll-free number system. So allow me to take the same parallel. I looked up Reliance for their toll-free services and it mentions [apart from a INR 10K deposit and a INR 3K one-time cost], a variable cost of INR 2.40/min for operating a toll-free number. While at the same time, the cost of a local call on Reliance's prepaid 'One India One Rate' plan is between INR 0.30-0.40/min. That's right, Reliance makes between 6 to 8 times more money for every call that is made if that call were to be made to a toll-free number than if the user were to pay normal mobile rates and call up the same number. Note: I have taken the example of Reliance but the argument holds across. Extending this to the above case, Flipkart most probably would have ended up paying more per Kb than what a end-user would have paid Airtel under normal [i.e., non-'Zero'] access.
In an organization, the moment one revenue channel starts delivering better than another for the same resources consumed, it is but natural that the organization diverts its attention to ensuring that revenue channel gets all the resources it needs, correct? Sometimes, even at the cost of the other 'low' performing revenue channels [esp. when resources are limited]. Let's translate this: in a scenario where the bandwidth available for Airtel is limited and it has to, as a for-profit organization, keep growing profits, is it hard to imagine a future where a disproportionate amount of the bandwidth is allocated to powering apps/services by brands that pay Airtel directly [a.l.a the 'Zero' platform] considering we have already established they are probably gonna be paying more per Kb than you and me to Airtel? And what then happens to other apps/services that are not part of the 'Zero' platform? They need to now travel along a much narrower highway as the 'Zero' apps need a much broader higher [for higher profits].
As the non-Zero apps/services try traversing the narrowed highway, they get frustrated and these companies also decide to jump onto the 'Zero' platform as it allow for better access [even though it comes at a cost]. What if all the 'ones who can afford it' jump onto the 'Zero' side? The narrow lane keeps getting narrower for non-'Zero' apps [as a larger part of the highway is now required to accommodate the ever-increasing 'Zero' participants 'cause remember: the total width of the highway a.l.a bandwidth can't go up significantly]. And if recent claims are anything to go by [here and here], this is perhaps already happening. And this differentiation is exactly what defeats the principle of Net Neutrality.
And it is thus that Airtel 'Zero' that seemingly is a win-win-win for everyone involved can end up messing with the tenets of universal equal access to the internet.