Don’t make India a circus of cartels and monopolies
Facebook’s Free Basics trial was so legendary that one Ganesh could double the yield from his fields with the knowledge FB-patented internet facilitated. While, advertisements are notorious for making lofty claims, this one goes beyond limit. Considering the state of agriculture in India, this can’t even be an exception let alone a norm. As it unfolds, the recent war of words between TRAI and Facebook over latter’s attempt to solicit support from its users for its Free Basics model exhibits how hell-bent monopoly seeking entities are to trash free competition.
The concept behind Free Basics is, well, basic. Somebody is calling us to a mall, the entry to which is free, but there is a rider: we are free to shop at only selected group of stores. If you want to roam and shop around in the entire mall, the entry will not be free. Do we like such an arrangement?
Before you decide, let’s understand how things stand today. Under the current system of internet, spectrum is allotted to mobile operators which provide equal internet access to everybody. Whoever takes whichever data package of whatever speed decides the quality of internet use. It is important to keep internet cheap, but if a company offers you free access to a limited area of internet, then it goes against the idea of freedom that we enjoy on the World Wide Web.
Three stakeholders there are in the world of internet which make it more or less, a free world. Facebook’s Free Basics will distort this equilibrium. Mobile operators are the first stakeholder. They have built the highway to internet i.e. telecom network. It is obvious that Facebook’s Free Basics will be available on a single company’s network. That means the operator will get more buyers, which will distort competition. The second stakeholder of this market is media, e-commerce and other content and services companies. Internet is fully independent in India. But in the market of Facebook, only those will set their shops who will support it. The third stakeholder is the internet itself. The free, but limited access to it will shake the very foundations of its freedom i.e. net neutrality.
The debate on net neutrality now exhibits, time is ripe to dig deeper into the design of various monopolies lurking around. Monopolies and cartels are already operational in the Indian market. Facebook will only aggravate this imbalance with its size, following and influence.
Through liberalization, we had embarked on a course that was supposed to offer equal opportunity to everyone. We had hoped the role of government in people’s life and business would go on shrinking. However, moving from Congress to BJP, the liberalization model has only turned warped. We are face to face with a new kind of statism that limits competition.
Even after the end of license-permit raj, Indian market is not opened fully. Once government withdrew, people became captives of selected companies. Our monthly bill payment receipts will show how we have been paying a large share of our money to just a few companies. From mobile phone to chocolates, we are served with limited option to choose from. This distortion is the reason why monopolies and cartels survive.
On the other side, the government has a monopoly over petroleum, railway, coal and electricity etc. Thus, in both the systems, the consumer is a victim of anti-competitive environment. Only automobile, FMCG and pharmaceutical sectors enjoy a relatively better competition.
Facebook cannot make offers like Free Basics in Western market where competition is an absolute value. It can attract developing countries only. Despite this, Egypt closed trials of Freebasics recently.
India has to take comprehensive call on existing and potential monopolies and cartels. The government must jettison its own monopoly along with making sure competition thrives back in private sectors where cartels have developed over the years. India needs an open but balanced market, which calls for business neutral government and independent regulators.
Before we get our markets and liberalization rid of government and private monopoly, we are getting trapped into much more convoluted politics of market. This politics is more complex than the electoral politics of India, because even elected governments get enmeshed in it. As the debate on net neutrality will soon be knocking at the door of PMO, we must hope Modi Sarkar will provide us an authentic free market and governance which creates a difference.