Ravindran Subramanian - Dy. VP (Corporate Communication) at HDFC Bank.

The billion dollar brand building opportunity for Indian Telcos

Should free Internet services qualify under the mandatory CSR spend?

The Telecom Regulatory Authority of India (TRAI) has upheld the principle of net neutrality by barring discriminatory tariffs for data services on the basis of content.  This has been widely interpreted as a rejection of Free Basics suggested by Facebook. To summarize under this program Facebook planned to Internet access free to new users. Facebook’s rationale for this programme was that “close to a billion people in India are unconnected and don’t have access to opportunities online”

On the other hand its critics argued that Free Basics violated the principle of net neutrality as it would enable Facebook to determine what the customer could or could not access since the social networking site offered access to only certain websites. The critics have clearly won going by the TRAI ruling and Facebook has also subsequently shut down this project in India.

This however should not be the end of the free Internet debate but the beginning of another one. Why can’t Indian telecom companies make Internet available free of cost to people at the Bottom of the Pyramid or certain backward\rural areas? What is more, why not ensure that these services are not restricted in any way and thus prevent arguments regarding net neutrality? Sounds crazy? Why should telecom companies in one of the world’s most competitive markets go around distributing freebies?  Especially at a time when they are unable to raise tariffs to augment revenues and many of them are also grappling with the problem of huge debt?

First things first. This is not about charity. It is about building the brand and tapping future customers. Future customers? What is that? Well, telecom companies can set the context by declaring right at the outset that the services will be provided to the backward areas for a certain period of time. Say five years.  Now history shows that those who get on to the Internet will at point demand more and more. Also this is a world that is getting increasingly getting digitized be it ecommerce or even banking. Such services have already moved to the mobile phone and this trend is only expected to accelerate. All this will only drive the adoption of Internet services especially through the mobile.

When the BoP customers can afford to pay for the Internet, they will logically be pre-disposed towards the service provider who has introduced them to it. This is something that a billion dollars spent on branding\advertising cannot manage.

Given the inexorable force that is the Internet, India’s billion plus population and the Government’s push on Digital India, connectivity will reach the untouched parts of rural India sooner rather than later. Facebook and its promoter Mark Zuckerberg were basically not letting this opportunity pass by and were trying to shape the market.  This is the way an industry leader is expected to behave.  The pity is that this is a space that the telecom companies with a well chronicled success story in India should be occupying.

Yes some companies are offering free Internet services but these seem to be characterized by low speeds and appear to have as short term duration. One can well understand the constraints for such a measure in a fiercely competitive market.

This is where the Government can choose to play a role. How about declaring that provision of free Internet services qualify under the mandatory two percent spent on CSR under the Companies Act of 2013?  For that matter investment in any kind of infrastructure like telecom towers\optic fiber networks which cater to rural India too can qualify under this Act. This can be a win-win situation for the government as well as the telecom industry. The industry helps enable the Digital India envisaged by the government even as it builds its brand and helps secure customers of the future. The entire debate of Free Basics would have served a purpose if the government and telecom companies move ahead in this direction.