Differential pricing will hit India's digital economy: Analyst

MUMBAI, INDIA: The pending TRAI decision on establishing a regulatory framework for Web-based OTTs if gets passed will have serious implications on millions of Indian’s lives. While the there is a lot of debate going on about the ramification of Net Neutrality and why its relevant in today’s digital economy, the two segments that will be clearly be affected are the telcos and the customers using Web-based or data-based services.

For the telecom operators/ISPs, the monetization of Web-based OTTs will result in larger autonomy over the consumption pattern of users as well as a substantial increase in avenues for revenue generation. The concept of Web as we understand and avail today is free access to all services where the telcos/ISPs do not have any authority to block any Web-based service provider. Thus by allowing ISPs to manipulate the Web-marketplace in the guise of charging for OTTs (as per TRAI regulations) will lead to ISPs creating selective & differential pricing for all Web-based services that we consume today.

This selective & differential pricing levied by the telcos/ISPs will definitely take a hit on India’s emerging digital economy. While rural India is still getting used to internet –based services for financial inclusion such as mWallets and online banking, the decision to monetize all web based apps will directly impact this part of the economy. Overall, all consumers of Web-based services will become entirely dependent on their Internet service provider for access to basic web-based apps that were earlier free.

However, Greyhound Research believes that this will not have any direct impact on BYOD and CYOA. BYOD allows employees to bring their own devices to work and be connected to work all the time. It does not have any restrictions on the type of content being used by the employees. However, individual users as well as companies have to pay extra for the apps that they are using.

While the TRAI regulatory framework will affect both consumers and Web-based service providers, the section  that will suffer the maximum blow will India’s burgeoning Web-based start-ups. Larger organizations will get to benefit from economies of scale and will get cost advantages in face of monetization of web-based OTTs. In simpler words, large organizations will be able to shell out easy cash to ensure their service is delivered to the customers in a seamless manner as compared to small and medium organizations. For example: India’s eCommerce sector is highly competitive at this point of time with FlipKart, Amazon and SnapDeal that rule the roost, at the same time one cannot overlook the thousand other eCommerce start-ups that have recently sprung up. The massive competition in this sector will lead to the giants dominating the industry, and leaving little or no space for eCommerce SMBs to grow.

Today the fact remains that all businesses are moving to the Web and to the cloud, this puts SMBs into a state of endangerment as process of dissemination of information & knowledge will be delayed thus directly impacting business processes at all levels.

The article is authored by Sanchit Vir Gogia, Chief Analyst and Group CEO, Greyhound Research, and opinions expressed are his own