This was unexpected: Airtel reached out to me for an interview with K. Srinivas, its President of B2C businesses. The name was familiar, and looked up MediaNama to land upon something I had written a couple of years prior: Airtel Broadband doesn’t want to be a dumb pipe. This was a critique in response to a statement that Srinivas, then the President of Telemedia at Airtel had given to the Hindu Businessline, where he said that “Within the next 6-12 months, we are working on moving a dumb pipe to an enriched pipe.” I had pointed out how ISPs can be a gateway to the Internet, in a manner that AOL had been one in the US, but also that there’s a dark side to it: that an ‘enriched’ or ‘smart’ pipe cab impact the neutrality of access to the Internet. I was reminded of my experience with Airtel Live, which was an early mechanism for mobile Internet Access, where access to some services was blocked. I wrote then, that
“Telecom operators in India, including Airtel, Videocon, MTS and Tata Docomo have, over the last six months, offered access to certain sites for free, as promotional initiatives, providing preferential treatment to a few sites over others, in terms of cost of access. On Broadband, Airtel Broadband did upgrade the access speed for its users for YouTube during the Indian Premier League. Verizon and Google recently announced a joint proposal to allow content companies looking to deliver bandwidth heavy services, through a separate set of pipes, for a fee.”
This was tricky for me: When I had pointed out what MTS was doing in terms of giving access to some sites for no data cost was a net neutrality concern, Sumant Srivatsan, a friend in Advertising had said that Net Neutrality was about speed of access, not cost. I had looked up Wikipedia about Net Neutrality (the concept was new to me), and it appeared that the idea of cost of access was not seen globally as a net neutrality concern. However, for me, the speed of access really didn’t matter: mobile Internet was expensive, and access was slow on 2G/Edge anyway. The cost mattered in India.
I remember Srinivas being fairly open and pleasant when I met him. In an interview that spanned across connectivity, data pricing, carrier billing, digital money and app stores, when I asked him about Net Neutrality concerns, he laughed and said “I knew you were going to ask about this.”
“The notion is that everything on the Internet is free. So Google doesn’t charge the customer, Facebook is free. There are billions of dollars of investment going in. This is not just an Indian issue, it’s a global issue. We’d not even rolled out 3G, and 4G has dawned upon us. The industry, and the costs of rolling out, building a backhaul. Backhaul costs in India are backbreaking. In South Bombay, if you want to put up a kilometer of fibre, the Right of Way cost is almost about Rs 1 crore. Show me one business model, with the data consumption going up, that supports these continuously increasing costs. The data ARPU the world over is flat to declining. The notion that telecom operators are making tons of money is incorrect. Show me one company in India or anywhere in the world that is thriving on data. You need to have the right kind of model. There is no free lunch.”
MediaNama: But as a customer, I’m paying you for this access.
Srinivas: If you’re paying me 100 bucks for 1 gb, but beyond that you’ll have to pay.MediaNama: So don’t charge me Rs 98 for 2gb.
Srinivas: At some stage, Rs 98 will become Rs 200 for 2gb.I’m not getting into whether this pricing is right or wrong. Even on voice, the current rates are not sustainable. Every single operator is sitting on huge sets of investment. This pricing for data or voice is not sustainable. Lets build the right business model. On one side you compete, and on another you collaborate. The point you were making (in your post) was that I need Google and Google needs me. Very true. The issue is that the amount of investment that goes behind. Tell me one product or commodity in the country which has not changed its price upwards in the last 10 years, or even the last one year. You’ve seen everybody drop prices. I pay in dollars for all my investments and I earn in paise. There is significant investment.MediaNama: How would you respond to a situation in 2013, where Reliance comes in and drops prices?
Srinivas: We have dealt with that more than adequately. I don’t want to talk about what we will do, and we’ve dealt with it in the past, and there is a solution going forward. If there is one company which can survive and sustain, and there are bigger issues in the market.One other thing I wanted to talk to you about was that a lot of guys actually believe that speed doesn’t cost money. It’s completely untrue.