India may pull plug on Facebook’s bid to offer free Internet service

In a decision that could have momentous implications for the private sector’s role in expanding Internet access in the developing world, India’s telecoms regulator is expected to rule this week on whether to cut off Facebook’s Free Basics — a package of free online services, including Facebook, that the social media company wants to offer India’s 1.2 billion people.

The decision from the Telecom Regulatory Authority of India (TRAI) will close the book on months of public debate between digital rights activists and Facebook founder Mark Zuckerberg, who is touting Free Basics as a partial solution to India’s meager Internet penetration — only 15 percent of the population has access. Open Internet advocates, however, argue that Free Basics undermines the principle of net neutrality by letting a corporation dictate which Internet services are available to the poorest Indians, who cannot afford regular Internet access.

After debuting in India in February, Free Basics was suspended by TRAI in December amid a public outcry spearheaded by an activist campaign, Save the Internet. The group's members accuse Zuckerberg of corporate exploitation masked as philanthropy and even of economic racism, alleging that if limited Internet is not good enough for Westerners, it shouldn’t pass the bar for Indians. On Monday, Save the Internet sent a letter signed by hundreds of startup founders to Indian Prime Minister Narendra Modi warning him of the danger posed by Free Basics and other so-called zero rating services, in which tech companies compensate Internet service providers (ISPs) for any traffic to their servers.

The stakes of TRAI’s decision will be high for Internet.org, Facebook’s affordable Internet initiative (rebranded as Free Basics last year), which has brought 15 million people online in more than 30 developing countries but has its sights set on reaching potentially billions more. It would also be a blow to Facebook, which sees India as a largely untapped market for its services – but only if more Indians can get online. Although the company has sought to cast the project as partially altruistic, they have not denied it will also be good for profits. As one Facebook policy official told Buzzfeed this month, “I don’t think we’ve shied away from the fact that this is going to be good for Facebook, but I also don’t think that we should be shying away from the fact that it’s going to be good for the world as well, to bring more people online.”

Though there is little question that India is desperate to fill its Internet infrastructure gaps, critics say Free Basics is not the solution. Save the Internet activists, in an op-ed, called zero rating services “a pernicious and slow-acting poison that seems harmless at first glance, as all things ‘free’ often do, but will cause lasting damage to innovation, competition and freedom.” They argue the service will be a “walled garden” for India's Internet-illiterate poor, confusing them into thinking they are accessing the Internet when, in reality, they can only use a minuscule selection of Facebook-approved sites or applications.

But the deeper fears are that compromising net neutrality in India will stymie innovation in the tech sector. Indian tech entrepreneurs point to Facebook’s staunch defense of net neutrality in the United States, where the company opposes ISP efforts to offer fast lanes — speedier service — to companies that can afford it. Yet in India, critics say Free Basics would impose differential pricing that will have much the same effect, edging out services (including competitors of Facebook and the 80 or so Free Basics partners) by making their sites and applications relatively unaffordable. Small startups would be particularly hard hit, argued Mahesh Murthy, an Indian venture capitalist and a member of STI, in an op-ed for Quartz. The irony, he wrote, is that if Zuckerberg had been brought up on Internet.org, “he couldn’t have ever built a Facebook."

TRAI has pointed this out to Facebook and told the company to survey its users’ opinions on differential pricing, essentially asking them whether they understood that nonpartners would be disadvantaged by Free Basics. Last week, however, the regulatory body accused Facebook of spinning the requested questions with phrasings like “Shutting down Free Basics would hurt our country’s most vulnerable people” and “I support Free Basics — and digital equality for India.” In doing so, TRAI wrote, Facebook had reduced “this meaningful consultative exercise designed to produce informed decisions in a transparent manner into a crudely majoritarian and orchestrated opinion poll.”

Zuckerberg, for his part, has framed the net neutrality debate in India as fundamentally different from that in the U.S. In a post to his personal Facebook wall in April, he defended Internet.org by noting that it “doesn’t block or throttle any other services or create fast lanes — and it never will.” Yet while he formally denies violating net neutrality, Zuckerberg acknowledged the project represented a compromise. “To give more people access to the Internet, it is useful to offer some services for free,” he wrote. “If you can’t afford to pay for connectivity, it is always better to have some access and voice than none at all.”

Regardless of how TRAI rules, public pressure on Indian tech companies has already damaged Internet.org's reputation in the country. Several high-profile partners have pulled out of the initiative, with the Indian travel booking site Cleartrip expressing concerns about “large corporations getting involved with picking and choosing who gets access to what.” More generally, the controversy has also thrown into question whether zero-rating is a viable means of merging the resources of tech giants with efforts to close the Internet access gap between rich and poor, as Zuckerberg has argued. Despite a nationwide public relations campaign launched by Facebook last month, the company could soon see India go the way of Chile, the Netherlands and Canada, all of which have banned the service.

Still, some observers say this would be a lost opportunity. Writing in the Wall Street Journal, columnist Sadanand Dhume noted that during Free Basics’ brief stint in India, from February to December, 40 percent of users eventually purchased regular Internet access, undermining the argument that Indians will settle for a limited package of services once they understand the true value of the Internet. “That Free Basics may be self-interest dressed up partly as altruism shouldn’t matter,” Dhume wrote. Facebook may be violating “the purest idea of net neutrality,” he said, but “as long as paying consumers can continue to access an unfettered Internet, this looks like a reasonable trade-off for now. India needs a little less high-mindedness and a little more practicality.”