Proposed net neutrality policy is deterrent to India's startup culture, say entrepreneurs

14 Apr, 2015


Telecom operators would stifle innovation on the internet if the sector regulator backs their quest to provide free access to certain applications while charging a premium for others, India's leading startups believe.

Internet firms such as Zomato, Appiness Interactive, Spotwrks Technologies and others have joined the chorus against the Telecom Regulatory Authority of India's (TRAI) draft paper on Over The Top (OTT) services/net neutrality, as they don't want telecom operators to become 'gatekeepers' of the internet.


In the absence of net neutrality, internet service providers can provide users with different connection speed for various types of content. Thus, smaller portals will be compelled to pay a high price for enabling faster access to their websites, thereby choking the dreams of India's burgeoning entrepreneur class.

"Couldn't have built Zomato if we had a competitor on something like Airtel Zero," tweeted Deepinder Goyal, founder and chief executive officer of Zomato Media Pvt Ltd, which owns the restaurant and event-listing site zomato.com which has raised more than $163 million in VC funding till now.

The basic principle of net neutrality implies that all traffic on the internet gets treated impartially regardless of the Internet Service Provider (ISP).


The issue of net neutrality has come to the fore after Bharti Airtel recently launched the 'Airtel Zero' scheme, wherein customers can access a variety of mobile applications for free, with the data charges being paid by startups and large companies.

"Look at Facebook, Airbnb, Quora and the current crop of favorites. They would not have achieved prominence if the ISPs were to pick a winner. The users must be the ones who will pick the winner, not the ISPs. Net neutrality will promote innovation where a startup with a great idea and excellent execution skills can take on the current market leaders," says Visakh Viswambharan, founder and CEO of Appiness Interactive, a Bangalore-based digital media firm with operations spanning across India and Middle East.

Moreover, the internet-based startups want to keep their communication costs low. Any extra charges for OTT services would increase their overheads. "An open internet culture will definitely open new doors of permutations with ideas. India's internet rules have always been known to be fair to all, with the focus on empowering the Bottom of Pyramid (BOP) communities – it should remain the same for startups to grow," says Ankit Khanduri, co-founder and CEO of Spotwrks Technologies.


Sunil Abraham, executive director of the Centre for Internet and Society (CIS), believes that TRAI should refrain from defining network neutrality. It should rather protect net neutrality by putting in place safeguards and deterrents.

For its part, Airtel has vehemently denied that the 'Zero' plan violates net neutrality. "Airtel Zero is "free" for all our consumers and open to all marketers. Yes, open to all - big or small," says Srini Gopalan, director - consumer business, Bharti Airtel. Gopalan adds that about 150 companies, majority of them small startups, have contacted the company to enquire about the product.

Startups are supporting Bharti Airtel for providing an 'equal opportunity' to compete, says Gopalan.


Bharti Airtel's views have been endorsed by Flipkart's Sachin Bansal. "0 rated apps for limited time doesn't go against #NetNeutrality. Costs/competition is very high. Can't be sustained for long. 0 rating only reduces data costs for users. Fears of a telecom big brother emerging are unfounded. Choice wins. Always," the Flipkart CEO tweeted.

Most startups don't seem to agree. Goyal of Zomato said: "Calling Airtel Zero fair and not a violation of net neutrality is bs. I think Airtel will bully TRAI to agree. Long term plea: please ensure our kids have access to education. We all learn a lot from the net."

More and more startups are coming out in support of net neutrality.


"Net neutrality is absolutely essential for a free and competitive market especially now since there is a start-up boom in the country particularly in the online sector. Most importantly Internet was created to break boundaries and as concerned industry players, we should maintain that," said Ritesh Agarwal, co-founder and CEO of Delhi-based Oravel Stays Pvt Ltd, which runs an online marketplace for branded budget hotels OYORooms.com, and recently raised Rs 150 crore ($24 million) in a new investment round led by Greenoaks Capital.

"It's well acknowledged that Internet has disrupted the world of business like no other technology has in last few decades. It has enabled start-ups with hardly any capital and clout to make a mark. So by rejecting net neutrality, we will be shutting the door on the entrepreneurial aspirations of millions and will leave telcos to play the gatekeeper to a valuable resource as the Internet and challenges the democratic behaviour that Internet in known for," said Sumit Jain, co-founder and CEO, real estate and apartment management portal CommonFloor.com which has raised up to Series E funding in private capital till now.

Telecom operators such as Bharti Airtel and others are under pressure to find new revenue streams as OTT services have been eating into their pie.


Venture capitalist Mahesh Murthy attributes the outstanding growth of OTT services to the lack of innovations by telcos. The operators, he believes, are losing ground to the likes of WhatsApp and Skype as they were caught napping with outdated technologies.

(Edited by Joby Puthuparampil Johnson)