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Net neutrality & mobile network operators: Are they startup kingmakers?

   

Last year, when I wrote that we should all be worried about the path we’re going down when mobile operators start to have influence what internet subscribers can have access and no one has a problem with it.

I wrote this because I was (and still am) worried that mobile operators, by making WhatsApp, Facebook and Opera individually priced lower than the regular internet we know, were having huge influence on what internet subscribers can access. Further, they were creating internet silos.

Today, it’s normal for someone to effectively say, “I don’t use that internet (Email, Facebook), please send it via that other internet (WhatsApp).” When I spoke to an executive at Econet about it he said ultimately they are doing a good thing by making a bit of the internet more accessible. He also said it wasn’t them picking what app to bundle up and offer cheap, the market does.

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His explanation was that if an app is popular enough or there’s clear demand for it, they find ways to silo it and offer it at a flat monthly price. Like the WhatsApp bundles. This, he said, was the reason they didn’t have WeChat bundles. In short, they were not app Kingmakers; they’d just reward the most demanded one with a bundled service.

My argument to him had been that WeChat has no chance of success in this market if Econet are offering WhatsApp at a much cheaper price. The problem with that of course is that it’s Econet who decides what demand is, and that demand ultimately has to benefit them directly. But still, his indication that there was some meritocracy to it made me think it wasn’t as bad as it initially looked.

A recent development though shows that there’s no such meritocracy. The mobile operator does play the role of Kingmaker, as long as you’re able to convince them there’s money for them too if they bundled your app.

biNu, an app that lost much of its appeal locally to the extent they had lost more than half their subscriber base between 2012 and last year, was zero rated starting in December. Surely, I could count a number of web companies that have more than 53,000 active users.

The biNu business case is that by giving users access to cheaper data (while keeping rich content like videos, and sound files out of reach) Econet’s subscribers would access enough internet to hopefully ignite demand for the heavier expensive internet.

The biNu system, like Opera’s in Opera Mini, is super clever. But in a neutral world, biNu would have to make itself appealing enough to the consumers they’d use it to save their precious data. biNu wouldn’t need to go and beg Econet for a deal to access subscribers.

The precedent that it sets is that the operator becomes the gatekeeper of startup success. They can heavily influence the success or failure of a startup. At the very least they can attempt to be Kingmaker. Whether that succeeds or fails is another thing altogether.

God forbid if they happen to be your competition – say they decide to launch an eCommerce startup (which they have wanted to do for a while), you may have to contend with the reality that Econet’s eCommerce platform will be zero rated while yours will be 15 cents a megabyte for subscribers to reach.

Of course, if Econet only had a third of the mobile market, this wouldn’t be as big a deal as them having the +60% they have.

image via: imgarcade.com


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