Business Models for "Free Data"
TRAI's consultation paper on "free data" issued on 19th May 2016 talks about business models for offering free data. This note attempts to analyze the suggested models and possible implementation scenarios.
TSP Agnostic Model:
The whole idea of this model is to prevent TSPs (Telecom Service Providers) to act as a gatekeeper. Some of the questions that could come to one's mind are raised and answered as under.
a) Who will run the TSP agnostic model?
Ans : Most probably it will be run by a private operator and even MNP services are run by private players.
b) Will it need a license?
Ans : Yes, even an MNP operator in India needs a license.
c) What will be the rate of license fees?
Ans : DoT needs to decide, but could be at par with the TSPs.
d) Will it not increase the cost of accessing data?
Ans : Yes, the current AGR model does not allow pass through (License fees will get charged two times, first at the TSP agnostic platform level, and then at the TSP level). See my earlier note on "How Effective are the VNO Guidelines?"
e) Who will pay for the "free data" offered?
Ans: The content providers.
f) Who will pay the TSPs?
Ans : Operator agnostic TSP will share revenue with the underline TSP.
g) How will we ensure the operator agnostic TSP will not become a gatekeeper?
Ans: If the TSPs can become a gatekeeper the same logic can apply to the "Operator agnostic" TSPs too unless it is managed directly by the government.
h) Should there be multiple operator agnostic TSP players?
Ans : Yes, to ensure competition and a "marketplace" for effective negotiations of rates.
i) What are the issues if the TSP agnostic platform is managed by the government?
Ans : Market would stop functioning and operators will lose flexibility in pricing data.
j) Will TRAI's Feb 8 order need an amendment to support licensed operator agnostic TSPs?
Ans : Yes, as soon as the operator agnostic TSP acquires a license it will come under the TRAI's differential tariff order of Feb 8, and will not be able to negotiate "free data" tariffs with the content providers.
k) What if there aren't sufficient revenues for the operator agnostic TSPs to support a viable business case of "free data"?
Ans : The model will fail to take off or the operator agnostic TSPs should be permitted to pursue other revenue streams.
l) If the operator agnostic TSPs are allowed to offer other services to earn more revenue, will it not become a full-fledged TSP?
Ans : Yes, if not full but at least close to a VNO.
m) Then why not allow the TSPs to offer free data?
Ans : TRAI needs to reverse its Feb 8th order to enable that.
Reward-to-consumer Model:
This model is currently already functioning and does not violate the TRAI's Feb 8 order. Also, TRAI does not have any jurisdiction to regulate the content providers buying pre-paid data packs and selling it to the consumers accessing its websites. Refer to my earlier note "Content Providers Can Discriminate, But the Operators Can't!"
Don't Charge API Model:
Here all the operators (including the ISP operators) offering internet has to comply to enable the "Don't Charge API" for that website to support "toll-free" data. This is similar to toll-free voice calls where all operators switches have to be individually programmed to support that service. Who will ensure that? How will the operators be compensated?
Direct Money Transfer Model:
Who will pay this subsidy? The content providers? How is it different from Reward-to-consumer Model? Why should the content providers not provide free data, then providing cash back which consumers will anyways spend to buy data to access his website?
It seems there are too many questions and lack of clarity to all the models discussed in the paper. The best solution is to allow the operators directly to offer free data as other models suggested will end up indirectly achieve the same outcome.
(The views expressed are of my own and do not reflect that of my employer)
Excellent analysis Paragji....Following are my thoughts on this : TRAI does not have any jurisdiction to regulate the content providers from any perspective including CPs buying pre-paid data packs and selling it to the consumers accessing its websites thus cannot regulate their activities ... There cannot be any TSP agnostic platform performing the functionalities of a TSP as it would require TSP license ... Toll free data services should be allowed to TSPs on the same line as toll free voice services or interdict toll free voice services as well on the same grounds....Toll free data services does not mean prioritizing any content or throttling any other content on the network the routing wherein is agnostic and neutral to the pricing of content as per established principle of net neutrality which all TSPs follow... The proposed agnostic platform player will end up becoming a meeting point of all TSPs/ISPs if mandated by law and would by default end up becoming an internet exchange and not VNO... The licensing regime in India is already having multiplicity of services and TSPs and needless addition of one more category should be avoided ... Disclaimer :The views expressed are personal and do not reflect that of my employer
Partner Regulatory Consulting @ EY
8 年I agree with you Parag, any restrictive regulation will only produce monopolies or so called gatekeepers. The only answer to this is free market play for everybody
Experienced Professional in Sales, Marketing, Business Development , Corporate Affairs , Government interactions etc
8 年As always , very thoughtful and insightful analysis on the subject. However, there are a few questions that probably may be answered differently. First of all the TSP agnostic model ( if we assume is hypothetically possible ) makes him the gatekeeper and also the traffic aggregator for a vast majority of traffic going to the Internet which in many ways is against the awowed principles of Net Neutrality. Under this alone, it should not be permitted. Secondly, I beg to differ regarding the TRAI's third model which is " Direct Money Transfer " Model. This model differs from that of the " Reward to Consumer " model in the sense that in this case the cash reward enables the consumer to buy data which provides the consumer the freedom to visit other content/websites which are outside the ambit of the Free Data sites. Whereas the Reward to Consumers model is like the Loyalty /Bonus Card/Points model which you get for visiting a departmental store or a food chain. Those points enable you to only go back and visit the same store as they are not redeemable elsewhere ! Hence ,out of the three models , this one is awowedly the most Net Neutral rewards model . As regards the " Don't charge API " model or toll-free model, in my opinion may not be possible unless the CP/PF provider has access to the TSP/ISP's network which creates ' conflict of interest ' and is supposedly not allowed.
President at Broadband India Forum
8 年Compliments, Parag, for this great piece!