Ditched! Will Flipkart bailing out force Airtel to scrap the zero charge plan?

Sunainaa Chadha April 14, 2015 16:15:03 IST
Ditched! Will Flipkart bailing out force Airtel to scrap the zero charge plan?

After a massive backlash against its plans to join Airtel Zero, India's largest e-commerce major Flipkart today pulled out of the service, buckling to popular sentiment. "We at Flipkart have always strongly believed in the concept of net neutrality, for we exist because of the Internet," declared CEO Sachin Bansal in a statement released today.

Airtel Zero had become the flashpoint in the net neutrality debate, with activists slamming the company for violating its norms. Last week, Flipkart co-founder Sachin Bansal entered the fray when he took to Twitter to express his views on signing up with Airtel Zeo. “Zero rated apps for limited time doesn’t go against #NetNeutrality. Costs/competition are very high. Can’t be sustained for long. 0 (Zero)rating only reduces data costs for users. Fears of a telecom big brother emerging are unfounded. Choice wins. Always,” Bansal had said. And today, after a social outrage against the company, which cannot afford to lose its core online customers ( several had threatened to blacklist Flipkart and delete the app), he has done a complete u-turn and decided to support the cause of net neutrality.

The reaction was fast and furious, with netizens downvoting the Flipkart app on the IOS and Android stores and venting their ire on social media. Some even reminded CEO Sachin Bansal about his startup days and how difficult it could have been to compete on a platform like Airtel Zero.

Deleting Flipkart app, until they change their stance on #NetNeutrality. We must have freedom to choose what we do with our internet access!

Following is the company statement:

"We at Flipkart have always strongly believed in the concept of net neutrality, for we exist because of the Internet. Over the past few days, there has been a great amount of debate, both internally and externally, on the topic of zero rating, and we have a deeper understanding of the implications. Based on this, we have decided on the following:

We will be walking away from the ongoing discussions with Airtel for their platform Airtel Zero

We will be committing ourselves to the larger cause of Net Neutrality in India. We will be internally discussing over the next few days, the details of actions we will take to support the cause

We will be working towards ensuring that the spirit of net neutrality is upheld and applied equally to all companies in India irrespective of the size or the service being offered and there is absolutely no discrimination whatsoever"

It seems Flipkart has already initiated an 'image makeover' drive with the company's CTO tweeting that Flipkart is serious about putting its weight behind net neutrality.

Given the negative media coverage both Airtel and Flipkart have received over the last couple of days, it makes sense that Flipkart has been quick to back out. But isn't it just a matter of time before Airtel follows?

Ditched Will Flipkart bailing out force Airtel to scrap the zero charge plan

Flipkart founders Sachin and Binny Bansal.

Airtel too may be forced to scrap its Zero plan or put it on the back-burner for now  in a last ditch effort to save its brand  image from getting tarnished. No respectable brand will dare support Airtel Zero post the Flipkart fiasco. So with zero support, can Airtel really go ahead with Zero? Already Airtel  stirred up a hornet's nest in December 2014 when it decided to charge higher tariff for internet telephony services like Skype, Viber and Line. It can't afford more consumer bad will.

Rajeev Chandrashekhar, MP of Rajya Sabha believes that Flipkart pulling out of the Airtel deal implies brands are getting increasingly sensitive to what consumers are saying and that telcos must come up with new strategies keeping 'consumers front and centre'.

In other words, the voice of people is now resonating with the government, the regulator and corporate brands.

Even Yuva Sena chief Aditya Thackeray has urged the Telecom Regulatory Authority of India (TRAI) to stall attempts to axe net neutrality which according to him will draw public ire and do lasting damage to the nation which is on the threshold of moving forward digitally.

Thackeray, in a letter to TRAI, said that killing net neutrality and allowing telecom operators to do so is not only draconian but also messes up the entire utility angle of access to internet that has been widely used in the country.

"People from almost every social and economic strata have a mobile phone and unknowingly use the Internet to communicate," the letter stated.

"Furthermore, such an option to charge websites for either access or speed would simply kill NDA government's 's Make in India, whereby many young people have startups or small businesses via websites. To milk them, to be at the same access speed of a (telecom) giant isn't simply fair," it said.

Given the pressure from all ends, it seems even the government is  likely to back net neutrality in India. Telecom and IT Minister  Ravi Shankar Prasad on Monday said, "We feel that Internet is one of the finest creations of the human mind. It should have linkages with the common man in a non-discriminatory manner." He added that a committee has been set up in the department of telecommunications (DoT) to help government take a "comprehensive decision" on the matter and the report will be out in the second week of May. This commitee  would would be independent of Trai.

Airtel has defended the plan saying Airtel Zero is "free" for all its consumers and open to all marketers big or small. Airtel also claims that Zero provides a platform for app developers to showcase their application while Airtel markets their apps to its customer base, thus cutting marketing costs for developers. From customer's side, they would not have to pay for data while downloading an app from this platform. However, debates have pointed out that the charging customers for data while downloading apps which weren't on the Airtel platform violated the principle of net neutrality, which holds that the provider must treat every bit of data equally and without preference. Those on the Airtel Zero platform would inevitably be favoured both in price and speed compared to other players.

As Vishal Misra, a professor in the Computer Science Department of Columbia University, has in a rebuttal published on MediaNama rightly pointed out, "Airtel Zero will lead to an arms race where just to remain competitive with existing services every start-up will be forced to sign Zero Rating deals. Not only that, they will be forced to sign such deals with all ISPs. Imagine a world where there are thousands of Zero Rated services available to consumers with every provider. How does this translate to differentiation, targeted marketing and customer acquisition? This would be strictly an additional expense to bear for start-ups and deep-pocketed incumbents will bleed the start-ups to death with these expenses."

The crux of his argument is this:  ISPs should be competing with each other and bending over backwards to provide their customers with the best service, not using their customers as leverage to get content providers to pay for bandwidth. ( You can read the details  here)

Already Twitter is abuzz with jokes about how Airtel Zero is a complete #fail

As for Flipkart, Twitter seems to have already bought its image rebuilding exercise and has given the company full points for accepting its mistake. The beauty of social media is that it can both make and break a brand. A huge drop in positive perception in just one week for a million-dollar company spells diaster.

Is Bharti Airtel ready with its social media crisis plan? For now, the company is sticking with its product, but the coming days will be crucial for whether it can really stand by this statement.

Updated Date:

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