Free Basics will damage Internet TV businesses: Star’s Uday Shankar

Facebook Inc’s Free Basics initiative will deal a body blow to the nascent Internet television market in India just as the decision to give more power to content distributors such as cable operators over content creators almost killed the broadcasting industry, Star India CEO Uday Shankar has said.

In a scathing attack on the social networking site’s plan to categorise certain services as basic, the head of one of the country’s biggest broadcasting networks also said the initiative is “highly dangerous and distorting” and will stifle growth of digital businesses.

“It reflects some kind of a colonial mind-set when someone comes and says, 'I have the answer for what are the basic services for Indians’,” Shankar told VCCircle. “No matter how big and successful Facebook might be, who is it to decide whether 'Free Basics' is actually a basic service?”

Shankar is the latest high-profile corporate executive to join the debate on Free Basics for which Facebook has launched a costly advertising and publicity campaign in India, its second-largest market. The plan has riled proponents of net neutrality as well as some of the most well-known entrepreneurs and startup investors. Infosys co-founder Nandan Nilekani has called Free Basics “a walled garden” while at least 528 startups last week petitioned Prime Minister Narendra Modi to safeguard the principles of net neutrality that they said are under threat from the Facebook programme.

Illustration by Raajan/VCCircle

Free Basics, earlier called, enables access of selected apps and app-based services to people from developing countries at zero cost. It gives access to sites such as Wikipedia, in addition to the social network’s own app, but doesn’t allow access to many services such as Gmail and Google. Last year, Facebook tied up with Reliance Communications Ltd to roll out Free Basics but the Telecom Regulatory Authority of India suspended the service in December pending the outcome of a public consultation it is holding on net neutrality, differential pricing for data and other related topics.

Broadcasters such as Star India Pvt Ltd have a direct say in the Free Basics debate because of their growing digital businesses. Star India, which runs a range of TV channels for entertainment, sports and movies as well as the related websites, also has a digital offering in Hotstar. The video streaming mobile app recorded 25 million downloads in the first eight months since its February 2015 launch.

Hotstar is among a host of the so-called over-the-top platforms that compete for what Hong Kong-based media research firm Media Partners Asia estimates is a Rs 1,000-crore market by revenue. Sony Liv from Sony Pictures Networks India Pvt Ltd, Zee Group’s Ditto TV as well as global brands such as Netflix also compete in this segment.

Star India is part of 21st Century Fox, the media house controlled by Rupert Murdoch. Murdoch also controls News Corp, the parent of this news website.

Shankar said that allowing telecom operators to control content through data services will be akin to permitting multi-system operators and local cable operators to distribute whatever TV channels they want and not necessarily what consumers want. “A telecom service provider can't be allowed to judge what service it will provide. It has to be determined by the consumer. This is exactly what has killed the content and television industry,” he said.

To explain his point, Shankar said that in case of TV, MSOs or cable operators take a fee from broadcasters to carry their channels. In case of some channels where they don’t earn this carriage fee, they offset the losses by raising the fee for other channels. “This is exactly the kind of distortion we can expect to happen in this case,” he said.

Shankar also said the pricing policy followed for TV doesn’t differentiate between good and bad content, and a similar situation will emerge in the case of internet if Free Basics or differential pricing for data is allowed.

“In case differential pricing on the Internet is allowed, it will give content creators with enough muscle power a chance to create unholy alliances with platform owners,” he said. “This way they can push their product to the detriment of others who have much better content.”

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