The Mobile Movement

Flipkart, India’s sixth most popular website (according to Alexa) recently announced that it would abandon its web portal and go mobile application only. Here a good article on why Flipkart abandoned its mobile website:

Now, if you tack on a gigantic population with miserable internet connection speeds, the prospect of scaling up your website operations and back end to deal with not only the overload on it, but also the abysmal experience on the consumer end, whether it is mobile or desktop, is even more bleak. An app allows a user to stay logged in while updates and other information are efficiently and constantly downloaded, ready for consumption almost instantly. It is, in fact, perfect for low-bandwidth situations.

People often write of countries like India or Africa bypassing landlines or PCs to skip ahead to technologies like wireless or smartphones, but I haven’t heard of countries treating the web as one of those intermediate technologies to be hopped over. Internet connection speeds are really slow there, and loading the web can be painful. Seeing so much content and online interaction move behind the walls of social networks seems like an epic tragedy to many, and I empathize. Many people in India, China, and other parts of the world, where bandwidth is low and slow, and where mobile phones are their one and only computer, have no room for such sentimentality. They may never have experienced the same heyday of the web, so they feel no analogous nostalgia for it as a medium. Path dependence matters here, as it does in lots of areas of tech, and one of the best ways to detect it is to widen your geographic scope of study outside the U.S. Asia is a wonderful comparison group, especially for me because I have so many friends and relatives there and because I still interact with them online at a decent frequency. In the U.S., many tech companies were lauded as pioneers for going mobile first when in Asia companies are already going mobile only. In some ways, Asia feels like it lives in the past as compared to the U.S., especially when one sees so many fast followers of successful U.S. technology companies, but in a surprisingly large number of ways, Asia lives in our near future.

Net neutrality

What exactly is net neutrality? In the simplest terms – data is data irrespective of the source or the destination. 1MB of data from Netflix would be exactly the same as 1MB of data from Flipkart. Now you may ask – “Isn’t this obvious?“. Well it is. But not to the telecom companies. They want to ride high on popular websites such as Facebook and Flipkart and charge higher amounts for them. (For completeness, Flipkart recently pulled out of Airtel’s zero scheme).

The debates

President Obama recently endorsed net neutrality in the US. FCC outlined 6 principles of net neutrality:

  1. Consumers are entitled to access the lawful Internet content of their choice.
  2. Consumers are entitled to run applications and use services of their  choice, subject to the needs of law enforcement.
  3. Consumers are entitled to connect their choice of legal devices that do not harm the network.
  4. Consumers are entitled to competition among network providers, application and service providers, and content providers.
  5. Non-discrimination: ISPs must not discriminate against any content or applications;
  6. Transparency: ISPs must disclose all their policies to customers.

The debate however, has restarted in India. But of course, the telcos and cable companies don’t want to be subject to these rules and they have been fighting them tooth and nail for years. They complain that they won’t be able to invest in their networks. They say that business interests don’t support these rules. Without these rules, investors who invest in the “open internet” will not be able to invest anymore. So you can choose between telcos saying they won’t be able to invest under one set of rules vs VCs who say they won’t be able to invest under another set of rules. But if you look at history, you can see that telcos have invested very heavily in their networks while under the threat of net neutrality regulation or even in instances when they were under direct net neutrality regulation. The argument is specious and their actions have show that. But if you look at VCs, you see another story. Look at the mobile Internet from the late 90s until the advent of the app store.

Benedict Evans from Anderson Horowitz says:

Many VCs such as our firm would not invest in the mobile Internet when it was controlled by carriers who set the rules, picked winners, and used predatory tactics to control their networks. Once Apple opened things up with the iPhone and the app store, many firms changed their approach, including our firm.

And if you look at the hundreds, maybe thousands, of mobile Internet firms that were VC funded in the first decade of the mobile Internet, when the business was controlled by the carriers, you will see an enormous failure rate and certainly negative returns for the entire sector. Contrast that with the current environment and the difference is striking. So a lightweight regulatory framework for the Internet is good for business, particularly the businesses that are getting funded today. And it is not bad for the carriers’ businesses.

There is no mention of pricing in the six principles. The carriers will be able to charge whatever they feel is necessary to finance their network buildouts. But what they will not be able to do is charge on both sides of the network, where they could stifle innovation at the edge. The bottom line is we want the carriers to be able to make money, invest in their networks, and build the broadband internet. But we do not want them to be able to control it and turn it into the kind of Internet that existed in the mobile environment in the past decade. I care deeply about the net neutrality debate, but the reason I am writing this is my fear that what we are witnessing is the start of a pattern that will hurt tech industry in the long run. Those who are injured by the impact of technology will diligently make their case in the political realm, while we in the industry who genuinely believe we are changing the world ignore the messiness of politics. And then, suddenly, we will be blindsided again and again by unfavorable legislation or regulation, at which point we will raise a fuss, with ever decreasing effectiveness.

The truth isn’t just that technology has had an impact on society, but that it is only getting started. FiveThirtyEight and the End of Average talks about the power curve in journalism; this idea, though, is broadly applicable to every field touched by technology. The ease of communication and distribution on the Internet is rendering vast swathes of the economy uncompetitive, even as certain sectors, companies, and individuals reap absolutely massive profits. I am by no means saying this is a bad thing, but I am certainly sympathetic to those who can no longer compete. I am also extremely concerned that recourse for these changes will increasingly be sought through the political process without tech having a seat at the table, much less a coherent solution for dealing with the human fallout of technological progress.

We as an industry absolutely need to wake up

I understand that politics is messy, and leaves one feeling just a bit queasy. But that queasiness is not a function of politics in the abstract, but the reality of any institution concerned with the behavior of humans. I am familiar with the desire to escape, to put one’s head down and do work that makes one proud, but I don’t know how much longer we as an industry have the luxury. I also know how easy it is to look at politics with a defeatist attitude: how much of a difference can one person make? And yet, working at scale is exactly what we as an industry are good at! Every business model in the Valley is predicated on the idea of serving massive groups of customers with easily repeated processes and software. We can do this. The world is changing because we are changing it, just like we all wanted to, and now it’s time to grow up and deal with the consequences in a serious way. I truly hope that the fight for net neutrality will only be the beginning. That is what this fight is all about. And so I would encourage all you business leaders working and investing in the open Internet to stand up and say that net neutrality is pro-business. The following video explains the issues with TRAI’s proposed regulation in layman’s terms. https://www.youtube.com/watch?v=vxaFnc-MoVE

Save the internet. Tell TRAI we need network neutrality!

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