Decoding Free Basics And Its Effect On Entrepreneurship

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We have been hearing about Free Basics for quite some time now. What exactly is Free Basics and how will it affect Entrepreneurs or the Startup landscape in India?


Okay, let's start with Free Basics. Why the word free? Maybe because Indians are more attracted toward free things - like Buy 1 Get 1 Free, Free toys, Free gift, etc.

Basics - because they claim to provide basic services like healthcare, ecommerce, etc 'free of cost'

The Good, The Bad and The Ugly of Free Basics for Indians

Do you remember the whole talk of and Net Neutrality that had raised a storm in India and had failed eventually? Yes, exactly! When failed in India, Facebook marketing team came up with the term Free Basics. And thought Indians will lap it up!

The way it's put, Free Basics sounds like a noble idea very pro-poor and with good intentions, but probe a little deeper and you'll understand how damaging it really is. It has the potential to destroy the entire start-up ecosystem that is thriving right now.

So, how will it function?

In simple terms, people will get free internet, which in today's times means free Facebook and WhatsApp along with a few other apps/services/sites that tie up with Internet Service Providers (ISP) for Free Basics.

Free Basics is an appeal to the Telecom Regulatory Authority of India (TRAI) to provide free internet connection through ISPs. If free basics appeal is accepted by TRAI, then popular websites like Facebook, WhatsApp, etc. would be provided for free to all. Sounds okay, right?

NO. This is where the problem is.

Let's break it down and analyze

Let's say Free basics gets approved and is implemented. Then Facebook, WhatsApp plus a bunch of other participating sites/apps will become free - free in this context means, you will not be charged for data used for browsing/surfing. Now, the catch here is - (hypothetically) if you like to read NDTV news, the partnering site could be Times Of India, which would be free but you would still need to buy a data pack to browse NDTV, a news site that could be denied a partnership because of an exclusive deal with the rival site. Similarly, if you like to shop from say -- Amazon, but partnering site is Flipkart, you will have to keep yourself aligned to Flipkart to avail free internet, however crappy you might feel the site and the service is. The sites listed on Free Basics would get large number of subscribers and the risk is - they could stop adding value or stop innovation but you would still be forced to use their services to avail zero-rating. The ISPs could indulge in discriminatory pricing based on content. Do you get the drift now?

This will absolutely kill any kind of startup that is not a part of Free Basics and create monopoly of a handful of companies - a scary situation for entrepreneurs. Also, not a great idea if you want Net Neutrality. ISPs should not discriminate on the basis of access, speed, cost or content.

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