Friday, April 17, 2015

Net Neutrality and the Death of Distance

Many years ago, I had interviewed Kevin Kelly, the celebrated former editor of Wired magazine. From that interview, it was clear that the telcos and the Internet players would end up clashing one day. The net is a global platform where distance does not matter, while the telco world is metered on distance through different rates for STD and ISD calls. The advent of smartphones and the mobile Internet has lead to a collision of both these worlds. In a world where bandwidth is abundant and cheap, the concept of metering based on distance will fade away. This is the reason that telcos are mortally scared of services like Skype, Whatsapp and others that take away their voice and SMS revenues. The death of distance is a consumer friendly evolution that the telcos will keep resisting till their last breath.

Telcos have also not been terrible at fostering innovation as the failure of Value Added Services proves. In sharp contrast, the combination of smartphones and mobile internet has lead to a thriving app ecosystem. The telcos have only themselves to blame for the fact that the app ecosystem has completely bypassed them. The VAS ecosystem they controlled was extremely unfriendly to entrepreneurs and customers. If the telcos are allowed to decide which app to promote, it could lead to another fiasco. The Internet is a level playing field where innovation and consumer friendliness wins. Private arrangements like Airtel Zero could distort this market through sheer money power, because those who pay to be featured on such platforms would get an advantage over others. However, I have mixed feelings about, which provides some Internet services for free, since those who could not afford Internet would at least get a taste of it.

Tampering with the level playing field of the Internet is an extremely bad idea which will destroy the innovative nature of the Internet. If we go down this path it could take years, if not decades to repair the damage. TRAI has done a great disservice by putting out a discussion paper that articulated only the telco's point of view. I hope the government nips this proposal in the bud and defends net neutrality.

I am quoted in this article in Economic Times. My quotes have been heavily edited, and hence this lengthy preamble.