Update: our take on Airtel Zero: it splits India’s Internet into many Internets. Read it here
Flipkart, which raised $1.91 billion in funding last year, has signed up with Bharti Airtel, India’s largest telecom operator, four highly placed sources have confirmed to MediaNama. Airtel has confirmed that it is launching a platform called Airtel Zero, in order to allow companies to buy data to offer their apps to consumers for free. Zero Rating violates Net Neutrality, something which the Telecom Regulatory Authority of India has acknowledged in its consultation paper announced last week (paper, FAQs), which may end up in a licensing regime for Internet companies, or allow telecom operators to do traffic shaping – slow down or speed up certain services, make some expensive versus others, or slice the Internet into types of services, rather than offer access to the Internet as a whole.
Sachin Bansal, founder and CEO of Flipkart, declined to respond to the following questions:
1. Does Flipkart have exclusivity in the shopping/ecommerce category in this Zero Rating deal with Airtel?
2. Has Flipkart closed similar deals with any other telecom operator?
3. Is Flipkart in talks with any other telecom operator for similar deals?
4. Is there any preferential bandwidth allocation as a part of this deal? As in, will specific bandwidth speeds be allocated to Flipkart, so that access to Flipkart is faster than it is ecommerce/shopping apps or sites?
5. Does this deal involve any throttling of other ecommerce sites or apps? As in, will other ecommerce sites or apps be slowed down by Airtel so that the Flipkart app appears faster?
6. What is the price being paid by Flipkart, on a per MB basis, to Airtel, for making Flipkart free?
7. Is this a part of the Airtel OneTouch Internet access gateway?
8. We’ve further heard from sources that Flipkart is paying Airtel Rs 1000/gb data transfer for this deal. Would appreciate if you could confirm or deny this figure. If incorrect, would appreciate if you could share the actual figure.
Flipkart’s corporate communications team sent us the following statement, attributable to “A Flipkart Spokesperson”:
“We would not like to comment on speculation regarding any future associations that may or may not happen. All our activities in the past have always been completely compliant with all laws including those formed by TRAI – and we continue to remain committed to that. “
Well, there is no law regarding Net Neutrality in India, and we had asked about a current association. Our sources indicate that technical integration is under way. Bansal has not responded to a subsequent request for a confirmation or denial of a deal with Airtel. Flipkart was a part of the Airtel OneTouch initiative.
We sent the same questions to Airtel, and Srini Gopalan, Director- Consumer Business, Bharti Airtel, was kind enough to get on a call with us.
MediaNama: We’d sent some questions…
Srini Gopalan: Let’s back up a bit, and let me give you some background on this. What we’re launching is actually a B2B platform called Airtel Zero. By definition it is an open non-discriminatory platform, which we believe is a win-win for customers and developers. The platform is the same principle as toll free voice, which has existed earlier, and by plugging into the platform, the developers can make all his or apps toll free. The reason we think it works for customers is that it allows them to use their favorite apps or try his or her apps without paying data charges. The reason this works for developers, especially for smaller startups, is that a big issue when you’re starting up is the marketing part, apart from the product. Our pilot has shown that Airtel Zero is 1/3rd the cost per download as digital marketing. This gives not only give you lower cost per download, it also leads to much greater stickiness. There is a customer proposition that creates stickiness. The platform is open and non discriminatory. We’ve seen huge interested from a whole bunch of developers, and the we would like to get as many small startups on board. The way our pricing structure works, the pricing is transparent, but I can’t talk to you about the details right now. We have the same pricing structure for everyone, and there will be no slow lane and fast lane. This will be a toll free play, open to every app and every developer.
MediaNama: So Flipkart doesn’t have any exclusivity in this deal?
Srini Gopalan: This is something we’re opening out to all apps.
MediaNama: When is it rolling out to all apps? Flipkart, from what we understand is already doing technical integration.
Srini Gopalan: We’ve had conversations with numerous partners which range from startups to the larger players, and definitely different players are in different stages of technical integration. I will expect that the platform will scale, and different partners will come in at different parts of time.
MediaNama: Is there going to be a public listing?
Srini Gopalan: Not at this point, because we haven’t done the technical integration yet, and our partners at this point are not keen on us not sharing that information. We don’t have the technical integration done as yet. At this point we’re not promising on specific partners. There are large number of them.
MediaNama: This is technically, as per the TRAI paper, a violation of Net Neutrality. What are your views on that?
Srini Gopalan: This is an open, non discriminatory platform that we would like to bring as many providers on.
MediaNama: Does this include any differentiation in terms of allocation of bandwidth or speed?
Srini Gopalan: No
I’m not going to talk on my pricing structure a year on. This will stay non discriminatory, but how it will evolve, I can’t comment on.
MediaNama: Will there be a gateway like One Touch Internet?
Srini Gopalan: We will market this to our customers, through all of our channels. OneTouch Internet will be one such channel.
MediaNama: What has been the experience with OneTouch? How many users have been brought online using OneTouch?
Kinshuk Gupta (corporate communications, Airtel): We don’t give numbers on any of the products.
Srini Gopalan: OneTouch Internet was the pilot for comparing, which is where the comparison with digital marketing vs Airtel Zero numbers comes from.
MediaNama: You don’t see this as a form of discrimination, that a student startup can’t afford to pay you for data? You don’t see that as discrimination?
Srini Gopalan: The pricing structure is the same for everyone. The student startup needs to drive downloads, and this is a specifically cheaper way of driving downloads than any other option.
MediaNama: Is there going to be a cheaper pricing for student startups so they can come on board?
Srini Gopalan:: Right now, our pricing structure doesn’t discriminate between anyone.
MediaNama: That doesn’t rule out any changes in the future?
Kinshuk Gupta: We can only talk about right now.
Srini Gopalan: I’m not going to talk on my pricing structure a year on. This will stay non discriminatory, but how it will evolve, I can’t comment on.
MediaNama: Tim Bersners Lee, the inventor of the World Wide Web wrote in February that:
Of course, (net neutrality) is not just about blocking and throttling. It is also about stopping ‘positive discrimination’, such as when one internet operator favours one particular service over another. If we don’t explicitly outlaw this, we hand immense power to telcos and online service operators. In effect, they can become gatekeepers — able to handpick winners and the losers in the market and to favour their own sites, services and platforms over those of others. This would crowd out competition and snuff out innovative new services before they even see the light of day.”
That is his view on Zero Rating. How would you react to that?
Srini Gopalan: Our objective is to build a completely open world where everyone can provide, from an app developer perspective, a significant reduction in cost per marketing. It is not to discriminate between one service or another, and we will market it to all of our channels. We are merely looking to provide an alternative and significantly cheaper platform to get customers on board.
MediaNama: I wanted to understand whether there is a difference between what a customer pays today to access the Internet and what you charge apps and Internet companies to make it free.
Srini Gopalan: There isn’t a single tariff that a customer pays today…
MediaNama: There is an average tariff.
Srini Gopalan: Very few people pay the average tariff. I don’t…I’m afraid I can’t…we have a complete distribution of tariff, depending on whether you are on a pack or not, and depending on where you are. There isn’t an average. There is a massive distribution of tariff. It will be transparent, open way of charging and which will be non-discriminatory. I cannot reveal what that tariff table is right now, because we’re reasonably early in this process.
MediaNama: So you’re not charging Flipkart Rs 1000 per GB?
Srini Gopalan: I can only say that that specific number is wrong.
Disclosures: Readers should bear in mind that MediaNama has always taken a strong pro-Net Neutrality position. Our coverage here. Personally, I’m helping create awareness of the issues that might arise from anti Net Neutrality regime.