Free basics is a walled garden: Here’s a much better scheme — Direct Benefit Transfer for internet data packs

Nandan Nilekani and Viral Shah

Whenever Sanjay Sahni, a school dropout working as an electrician in New Delhi, returned to his village, Ratnauli in Bihar’s Muzaffarpur district, he would hear complaints that his fellow villagers had not received their Nrega wages or job cards. One day in Delhi, he got his hands on a computer and simply typed: “Nrega Bihar”. Among the many links he found was a list of job cards for his village that turned out to be riddled with discrepancies. Armed with 3,000 pages of data, he empowered the villagers of Ratnauli to fight for their rights.

Sahni’s crusade was only made possible because he had access to an open internet. Sanjay could enter data into any search engine, visit any website and find the relevant information. What if Sanjay’s first foray into the online world was not on the open internet, but through Facebook’s Free Basics platform? Would the same, freely published government information be available on Free Basics?

The internet is a powerful poverty alleviation tool, offering unbounded opportunities limited only by imagination, whether it is a farmer looking for information on monsoon preparedness, artisans connecting with buyers in a marketplace or a college student from rural India enrolling for an online course. Against this backdrop, we have Free Basics, a Facebook-run programme where partnering telcos offer free access to specific websites. Free Basics’ defendants are puzzled by the opposition to the programme. We think Sanjay Sahni’s story makes the reasons for opposition obvious.

We have witnessed Facebook’s massive multimedia campaign over the last few days – double spreads in newspapers, ad campaigns on television and heavy promotion on Facebook itself. While similar earlier attempts from telecom operators were stalled by the volunteer-run SaveTheInternet campaign, Facebook has mounted a multi-million dollar campaign powered by marketing muscle and its own platform to generate support for Free Basics without explaining all the facts.

The walled garden of Free Basics goes against the spirit of openness on the internet, and in the guise of being pro-poor, balkanises it. Only Free Basics-approved websites will be accessible for free. In theory, anyone meeting the technical guidelines today can participate. However, services that may potentially compete with telco offerings may not join Free Basics. Since Facebook does not currently subsidise free usage, telcos will have to foot the bill by raising prices.

The future is uncertain – the rules governing participation may change arbitrarily, there may be Facebook ads on the platform, or businesses may need to pay to be included. How can innovation flourish in such a claustrophobic space? In the next few years, government services at the central, state and local levels will go online. Must every government agency then submit its website to Facebook? With Free Basics, Digital India is as good as dead on arrival.

We propose a different solution – one that respects net neutrality, aligns incentives, can be rolled out swiftly, and which allows Facebook to also participate. We propose that the government take the approach of a Direct Benefit Transfer (DBT) for internet data packs. This idea is based on the success of LPG DBT or Pahal, where over 100 million families receive LPG subsidy in their bank accounts.

Suppose the government announces a Data Pack DBT scheme that offers 120MB annually to every subscriber with the first 10MB free every month. A scan of various existing data packs suggests that 1MB data over 3G conservatively costs 25 paisa. At government’s scale, this could be much lower.

Even with all existing 400 million data users plus 400 million new data users being offered a free Data Pack DBT, the cost to the government would be 30/user x 800 million users = 2,400 crore a year. People may buy multiple SIMs for free data, but this problem is easily solved by linking mobile numbers to Aadhaar numbers (now held by 950 million people) so that one person can get access to only one Data Pack DBT.

This may sound like a lot of money, but we as a country can afford this cost to bring everyone online. The Department of Telecom’s Universal Service Obligation Fund today has a corpus of 40,000 crore with contributions from all telecom operators over time. Facebook can simply contribute to the same fund and achieve its own stated goal of bringing all of India online without distorting markets. With our design, government can roll out Data Pack DBT nationwide within 3 months.

The Internet and Mobile Association of India reports 400 million internet users in India. All these users came online not through Free Basics, but because of the inherent value the internet has to offer. With the diversity of India, it is easy to imagine thousands or perhaps even millions of entrepreneurial experiments playing out over the next few years over the internet. Consider innovations like the India Stack which combines Aadhaar authentication, e-KYC, esign, Digital Locker and UPI interoperable mobile payments to provide cashless, paperless and presence-less transactions. All these innovations will be stifled if we as a society take the wrong road at this important juncture.

Our government must immediately announce and enact laws protecting net neutrality and preserving our right to freely access the full internet. Anything less, and India runs the risk of serving someone else’s interests instead of our own, becoming a digital colony of the internet giants.

Nandan Nilekani was chairman of UIDAI and Viral Shah led the design of government’s subsidy platforms using Aadhaar

Government could start a Data Pack DBT scheme that offers 120MB data annually to every subscriber with first 10MB free every month … funded through Universal Service Obligation Fund, to which Facebook can contribute too.

Mark Zuckerberg defends his $45B charitable impulse

Mark Zuckerberg has had to explain how his new charitable initiative will be set up.James Martin/CNET

Grand gestures don't always go over the way you hope they will.

The CEO of the world's largest social network has promised to donate potentially billions of dollars to worthy causes and companies. It didn't take long, however, before he felt compelled todefend his decision on how to set up his new philanthropic endeavor.

On Tuesday, Facebook's Mark Zuckerberg and his wife, Priscilla Chan, said they plan toestablish the Chan Zuckerberg Initiative, which will receive 99 percent of the CEO's Facebook shares, currently worth about $45 billion. In a rather unconventional move, the organization that will distribute the blocks of stock as donations will be established as a limited liability company (LLC) instead of a traditional nonprofit foundation.

That decision has some people questioning his motives, as noted in the headline of a commentary in The New York Times: "How Mark Zuckerberg's Altruism Helps Himself."

Zuckerberg is one of a number of tech moguls who have pledged hefty portions of their wealth for charitable purposes. Billionaires such as Google co-founders Larry Page and Sergey Brin and Microsoft co-founder Bill Gates typically have set up their charitable endeavors as traditional nonprofits. Some have started using LLCs instead, but such a move can raise red flags.

Unlike a nonprofit organization, an LLC more closely resembles a corporation in that it can generate profits and offer certain tax benefits. It also would impose fewer restrictions and obligations on how Zuckerberg and Chan could distribute money than if they were to set up a regular nonprofit foundation. They could donate to political organizations and for-profit entities as well as charities. Some critics also claim an LLC would allow the couple to avoid paying taxes.

In a Facebook post published Thursday, Zuckerberg explained how the tax structure would work for the new initiative, which he said plans initially to focus on "personalized learning, curing disease, connecting people and building strong communities":

By using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively. In fact, if we transferred our shares to a traditional foundation, then we would have received an immediate tax benefit, but by using an LLC we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC.

Zuckerberg also emphasized the ability to donate to groups and causes no matter how they're structured.

In September, Zuckerberg and his wife donated $5 million through their Zuckerberg Education Ventures LLC to MasteryConnect, an education tracking company, according to The New York Times. A new initiative called Breakthrough Energy Coalition founded by Zuckerberg, Gates and other tech honchos will make private investments in clean energy. Zuckerberg also said that his LLC will provide funds to efforts such as the Centers for Disease Control and Prevention's Ebola response and San Francisco General Hospital.

Facebook did not immediately respond to CNET's request for comment.

Google to display Facebook content in search results

Google's search results are getting a boost from Facebook.

Facebook will reportedly provide a boost for Google searches, allowing data from its mobile app to show up in a Google search.

The Wall Street Journal reported on Monday that Facebook has begun allowing Google to crawl and index its mobile app.

For users, that means that Google search results on smartphones will display content from Facebook's app, including public profile information.

Google cannot, however, show content shared through logged-in and private Facebook app sessions, which can be found using Facebook's own search service.