Robbing the poor to feed the rich

Today I read an article about Telecom companies again petitioning TRAI to implement a usage fee on Internet messaging and VoIP apps such as Whatsapp, Viber, Skype , WeChat and many others. This seems to be a classic case of the Rich getting richer, poor getting poorer(as Rajni says so vehemently in Sivaji)

Telecommunication firms have noted that in recent years, voice revenues are slowly reducing while data and non voice revenues are increasingly becoming a major part of their revenues and profits(For more details, read my previous post). That said, telcos now want to hobble users and raise the stakes so that they can effectively gain total control over the Indian market.

The Indian telecom market is one of the best, for consumers , across the world. We speak at some of the lowest rates and our data charges are also quite nominal. Although much investment in infrastructure and networks will be required to match city states like Singapore/South Korea or even advanced countries like US/Europe, we definitely are progressing and mobile internet usage as well as broadband connectivity has been rising slowly. Smartphone usage has exploded from 10 % of overall phone base in 2013 Jan to nearly 29 % in March 2014. Further with low prices of entrylevel smartphones and feature phones, usage has been rising which is reflected in the higher data revenues of many telcos.

What has also been noted is that some phone companies have identified specific trends, such as high interest in Facebook/ Whatsapp and have designed phones with dedicated features which focus on these trends. Facebook chose to make Internet access to the Facebook page free across telcos, by tieups with Airtel, Aircel and others. Whatsapp OTOH has not chosen any such tieup, working entirely on the belief that the necessity of chatting with your friends will force you to use the application so they dont need to incentivize the telco or the user. Similarly apps such as WeChat and Viber (both of whom have strong user bases in SE Asian countries and China) dont see the need for any tieups as there are already many people who see the benefit of using these applications to supplant SMS messages and phone calls.

The issue for telcos here is two fold – these apps do initially require a linkage to a specific mobile number but over time, if the app disables that requirement, people may choose to use these apps without the necessity for the voice connection or the data package. Secondly, apps such like Whatsapp and Viber use very low data requests to send across data thus there is limited scope for upselling of data packages to customers which means that the hope of raising the Average Revenue per user is low. Thus telcos will be stuck with a large base of customers who dont use their phones for voice / data beyond a certain value but choose to use alternatives such as these apps. Thus the telcos will not be able to raise rates  and mint money, on the lines of  US and European telcos.

The most worrisome point about TRAI even considering this proposal is that its a fundamental attack on the concept of neutrality. One of the best points of the Indian telecom market has been the focus on ensuring the best and cheapest service for the customer. Whether it be in forcing telcos to reduce rates or remove roaming charges or introduce Mobile number portability, TRAI and the Telecom Industry has a duty to Indian customers to ensure that our rights and requirements are the first and last point of interest. Implementing an access fee is a negative approach which is like a fine charged on people seeking an alternative to a costly and ineffective communication channel such as SMS. Its for the telcos to either implement a better pricing scheme or come up with a better alternative to make people switch back from these Internet messaging/ chatting apps. That is the concept of a free market system. If tomorrow, Coke was to ask the GoI to make people drinking Paper Boat or Roohafza pay extra just to be able to drink it, that would be anti -competitive and trying to force a trade monopoly. Thus this proposal is fundamentally illegal and anti-competition. Instead of considering it seriously, TRAI and the Telecom Ministry should be forcing the Telcos to come up with better indigenous apps to utilize the existing network and infrastructure.

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