What happens if free basics is legalized?
There have been multiple arguments on either side of Facebook's Free Basics and net-neutrality debate.
Taking a neutral view- let's see what could actually pan out if Facebook's Free Basics gets a go-ahead in India and other focus markets - in order of occurrence -
- Definitely a lot of people without access to Internet would get access to the "free basics" portfolio. These guys would get on the digital platform
- They would start using the limited bouquet of services and Facebook would get to analyze their consumer behavior
- As per Mark Zuckerberg's own statistic - 50% of them would evolve into full paying data customers
- As of result, telcos would penetrate into an entirely new segment - good news
- These upgraded users would also seek to better their experience with better devices- I believe mostly android low end smartphones- So OEMs gain- Good news again
- With the insights gathered about upgraded users in the "free basics" phase - Facebook would be uniquely positioned to target them with specific advertising. So, more the upgrades from free basics to fully paid users - more the cache of the target base Facebook can target. This would obviously lead to an upside in their advertising revenue from a totally new untapped base- excellent marketing strategy
- Seeing this success, carriers and content companies would line up to join Free Basics. With old rules of supply and demand coming in- there would be a situation of haves and have-nots
- What this would lead to is that the have-nots would rally around the other biggies - Microsoft, Google, Amazon and others to create their own versions of Free Basics
- This would divide the Internet into "private clouds"- a collection of sites and content provided free of cost to end users by various players including but not limited to Facebook, Google, Amazon, Microsoft and others
- So a user would now have less incentive to upgrade to a full data pack as he would find most of his used apps and content falling within the multiple "private clouds"
- Operators now would start suffering as growth to paid users would slow down unless they stick to a single "free basics" platform which seems to be difficult
- With these multiple "private clouds", user choice in any category would be pre-determined to what is part of these systems
- This would create huge entry barriers for any new innovation or game changer
- It was this openness and the lack of entry barriers which lead to Facebook and Google becoming what they are today
- This ultimately would lead to the end of the Internet as we know it
As Robert Frost said - "Something there is that doesn't love a wall,
That wants it down."