Zero Rating: Not Subsidised Internet but Enclosure of the Internet

After the firestorm of criticism from the Indian netizens on the violations of net neutrality by Reliance-Facebook ( and Airtel (Airtel Zero), Facebook and Airtel have come out with their defence: they love net neutrality, and will never, never violate this principle. They are only providing cheap internet access to their subscribers, who are currently without this access. So why should their critics object?


The problem is of course in their calling what they are providing as the internet – it is connecting only a very small set of players under the guise of “zero rating” and pretending that is the real internet. So discriminating between different websites is violating net neutrality but blocking bulk of websites is not? This is what zero rating is all about. As the business model of the internet is selling its “users” as a “product” to the advertisers, it is an attempt to create a monopoly in the developing countries by capturing their economic space in the guise of a free or subsidised internet. It is advertising revenue and that drives the profits of the internet companies, and this is what they want to maximise.


For the size of this economic space, we have only to look at China. By keeping Google and Facebook out, they have been able to make Baidu, Tencent and Alibaba global players, the only ones that are able to compete with the big US companies. In 2014, Baidu and Tencent (now Alibaba too) were the only non US companies that were among the top 10 internet companies in terms of market capitalisation. So net neutrality is not just about some complicated, technical issue, but also about who owns the digital economy and who is making (or will make) money out of it.


Shorn of technicalities, net neutrality is that those who control or own the physical network on which the internet runs, shall not discriminate between the different kinds of services or websites that are provided over it. It is a non-discriminatory principle that prevents the telecom companies, who have the monopoly of the wires (or the spectrum in the case of mobile communications), to extract monopoly rent from the users. Defined in this way, zero rating or trying to license internet services separately, as TRAI has proposed in its consultation paper, are both violations of net neutrality.


This brings out the changing equations in the net neutrality debate. In the first net neutrality wars, waged between the telecom companies (telcos) and the internet companies, the internet players were small. The telcos, as monopolies who owned the connection to their subscribers, were demanding a “fee” to connect websites to the telcos’ subscribers. This battle still continues as was addressed in favour of net neutrality by the US Federal Communication Commission (FCC) recently.


Today, the internet companies such as Google and Facebook have become global monopolies, and are big, much bigger than the telcos in the developing countries. With the emergence of these big internet monopolies, we are seeing cartels emerging between telcos and these internet monopolies. Facebook’s or Airtel Zero are classic examples of such cartelisation. The zero rating services of various kinds are their instrument to monopolise the internet. While the old net neutrality war is still continuing, the “right” of telecom companies to charge toll from websites for providing access, the new net neutrality wars include this and more. The new net neutrality wars are being fought between internet and telecom cartels on one side, and the smaller internet players, start-ups and the bulk of the netizens on the other. Zero rating is a part of the new net neutrality wars.


So what is the harm of getting internet monopolies to subsidise cheap access to Indian or other developing countries’ telecom subscribers? This is the zero rating issue.


There are three level of problems associated with offering a few sites and calling it as the internet. The first is that it locks the users to only a few sites and denies them access to the bulk of services or information that is available on the internet. The so-called subsidy is the money the few players on such platforms ( or Airtel Zero) are willing to pay to get this preferential access. These companies, in turn will recover this “subsidy” from the consumers by charging a higher rate from the consumers coming through such “subsidised” access. For example, Amazon or Flpkart can levy a higher fee or price to those coming from such zero rating platforms than those who come from the general internet. In other words, the subscribers will pay to through such transactions what they “save” on their access costs.


Facebook’s business model of selling its subscribers to advertisers will also be greatly enhanced through a platform such as All internet companies, who will be on this platform, will have to also share the data of their subscribers data with Facebook, greatly expanding its reach. This is a part of Facebook’s terms of agreement with all players who want to be on


The second is that it will keep any new services out of such restricted internet (more correctly FacebookNet or ZuckerNet), as start-ups and those creating new apps will not be able to pay such platforms. This means the current monopolies on the internet will remain frozen permanently, damaging one of the most important characteristic of the internet — its enormous capacity for continuous innovation. This is what is called permission-less innovation; we do not need anybody’s permission to offer services or connect devices to the internet. As long as we follow the technical protocols laid down, anybody connect to the internet and offer services.


The last, and to my mind the most important point, the internet allows any organisation or person to connect their website to the internet. Of course, they have to obey the laws of their lands, but beyond that, a website of the richest organisation or one with no resources, have equal access to connect to the users, and the users would see the same quality of connection for both. This is why net neutrality is important; it is the principle net neutrality that provides the equality between different kind of websites on the internet. Without this property, all small organisations, movements, progressive news organisations, will be effectively closed out of the internet.


Of course, connecting people — or access — to the internet is important. In the telecom world, we have Universal Service Obligations (USO) that the telecom companies have to fulfill. USO means that anybody, staying anywhere in the country, will still be provided with access to voice telecom services. In India, we have created a USO fund, which currently has more than 50,000 crores in it. We need to understand what USO means today and extend it to the internet. We have already extended USO fund’s usage from landlines to mobile. Similarly, extending from voice to internet access would be a simple step. Apart from the USO fund, we are also spending a large amount of capital in extending the fibre optic cable network. How this infrastructure can be extended as internet backbone for the country needs to be discussed, instead of handing over our vital economic space to Facebooks’ of the world.


Apart from the economic argument, there are other key issues that we as a country need to take into account. Facebook is very much a part of the NSA’s Prism program that the US uses to spy on the entire world. Thus not only Facebook, but also the NSA, will have access to the data of all the subscribers of a platform such as Is this what a country like India should do? Provide its economic space as well an easy platform for surveillance to others?


There is also the issue of censorship. Facebook imposes private censorship on its users as a part of its contract, the one we generally click yes without reading, “do you agree to our terms and conditions”. By this, we have already given Facebook private censorship powers, which they routinely exercise. Thus sites (or Facebook pages) criticising Israel, are routinely taken down as antisemitic by Facebook. The copyright protection on Facebook is as per the US copyright law (life plus 70 years or 120 years after creation) not that of other countries. One can multiply such instances. It means that Indian subscribers using the restricted internet, will have very different rights from those who use the internet.


There are two models that exist for providing access to subscribers. One is the cable TV model, in which the subscribers are offered a set of channels. The contract between the platform – e.g., Tata Sky, Hathway, Reliance Digicom, etc – and TV channels, are private contracts. Each of them have negotiated individual deal based on their and the platform’s market power. For example, ESPN charges platforms to provide its feed, while some channels have to pay the platforms for their feeds to be carried. This model works as the number of platforms and channels are still not very large. But it does limit the spread of smaller players, as only players with big pockets can engage with platforms all over the world. What or Airtel Zero is trying to do, is to convert the internet to equivalent of a cable TV platform, a private contract-based connection model instead of the permission-less connection model of the current internet.


In the internet world, we have already exceeded 1 billion websites out of which 850 million are active sites. Switching to a cable TV model means that only a very small minority will ever be able to either negotiate the private the contracts or have the money to pay the platforms. This is not a subsidised internet, but a massive enclosure of the public internet being carried out by emerging internet and telco monopolies.


The internet is one of the most important technological developments in recent times. It provides access to knowledge, a means of communications, and increasingly a platform of commerce. It is a public utility and should be looked at as such. The big internet companies and the telcos are now forming cartels to enclose the internet. This is the threat we are facing today and that is why net neutrality is important to all of us.