Every web startup depends on a free and open internet that provides a level playing field and enables “innovation without permission.” This requires telecom operators to adhere to a set of principles known as net neutrality. These principles, followed voluntarily since the earliest days of the Internet, were recently made legally enforceable by the US telecom regulator, the FCC:
- No Blocking: Internet providers may not block access to legal content, applications, services, or non-harmful devices.
- No Throttling: Internet providers may not impair or degrade lawful Internet traffic on the basis of content, applications, services, or non-harmful devices.
- No Paid Prioritization: Internet providers may not favor some lawful Internet traffic over other lawful traffic in exchange for consideration of any kind.
In India, however, net neutrality is under grave danger. Telecom operators like Airtel and Vodafone want to block apps unless they get paid by app developers, and our regulator, TRAI, looks likely to capitulate to their demands. This would be an extreme violation of network neutrality.
However it’s not just the extreme violations that will destroy net neutrality in India. Even the practice of zero-rating — where operators have a separate, free plan where only apps that pay them are accessible — would kill the web startup ecosystem in a few years. An example of such a plan is Airtel Zero, announcing yesterday to garner public support as TRAI prepares anti-neutrality regulations. You can see that zero-rating violates principle 3 above, but it might not be obvious why this is harmful.
The current form of zero-rating, with a handful of apps, is just the thin edge of the wedge that will split the Internet in two. In two or three years, the 100 or so top sites and apps will all become available on the “zero” plans of all operators. As these 100 websites cover 95% of most consumers’ usage, a majority will choose the zero plan rather than the open internet. The operators may also dramatically increase the prices for the real internet access in order to to accelerate this switch.
These users will all be lost to startups that cannot afford to be on the “zero” plans.
Why would operators want people to switch to a free plan? That looks like a terrible business strategy!