What Silicon Valley Pundits Dont

What silicon valley pundits don't get about FB's free basics and TRAI | Sandhya Hegd...
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What silicon valley pundits don't get about FB's free

basics and TRAI

Originally posted on Medium.
Yesterday, Marc Andreessen got into trouble for saying Indias anti-colonial
sentiments had held its economy back. He did not mean colonialism is good, give
him a break.
What was far more troubling and got less flak was his comment that Indias
interpretation of net neutrality was immoral and the country should be ok with
a bad growth plan for mobile internet because, you know, poor people.
Heres the underlying fault in this perspectivehe assumes that Facebooks Free
Basics is as good as it's going to get for the 75% of India yet to come online.
FALSE.
https://www.linkedin.com/pulse/what-silicon-valley-pundits-dont-get-fbs-free-basics-tr... 11-Feb-16
What silicon valley pundits don't get about FB's free basics and TRAI | Sandhya Hegd... Page 2 of 20
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offering it for free but then walling in the platform to only showcase their own
What TRAI and activists in India stood up for was to ask telcos and leading
internet companies to do better. Not do nothing, but to do better. And
TRAI (Im quite proud of them for this) understood that if they wanted internet
access to grow sustainably in India, rather than in a haphazard, damaged way,
they needed to make Airtel and Facebook (and everyone else) come back with a
much better strategy on how they were going to invest in this market without
creating multiple walled gardens of free, unsustainable access to a few websites.
What would go wrong if Free Basics operated in its current form?

What Facebook (and Silicon Valley pundits) probably imagine is 500M poor
people using Free Basicsa partnership between Reliance Communications
and Facebook to better their lives. But that was never going to happen. Reliance is
losing subscribers rapidly and no other telco was joining this platform. Airtel
(Indias leading telco) was launching its own zero rating (Airtel Zero) with
Flipkart. Vodafone has its own plans, probably trying to partner with Google
(Vodafone is testing launch in Kenya and politely declined to share plans before
the TRAI ruling in India).
So what you wouldve had by June 2016 is 7 different free internet
platforms offered by telcos trying to stay competitive with different technical
stacks and bad user experience for the startups trying to get on them as well as
customers.
Yes, this fragmented, limited free internet would still be better than the market
not growing at all (this is the argument made by the other side of this debate), but
who says thats the only alternative!! When did free or nothing become the
premise of this debate?
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How did we get to 1.1B mobile subscribers?

Telecoms and content companies together invested in growing the market with a
lot of competition and innovation to bring price points low enough that most
people could afford it. The average monthly spend of these 1.1 billion
users on their mobile plan is $1.5. Not free, but affordable.
TRAI made sure that the competition was healthy and introduced regulations like
mobile number portability to protect consumer choice. Companies came up with
marketing plans that offered free talk time to users as an incentive to use more
mobile services. It worked brilliantly. And consumers could use the talk time to
do whatever they wanted. We already see Airtel testing the waters here with free
mobile internet starter packs and Facebooks planning to grow its Express Wifi
platform.
So heres what telcos and internet giants (as well as Twitter pundits) need to take
away from TRAIs decisions to implement net neutrality in Indialaunch
platforms and offers that give people access to all of the internet
within their budget.
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Mahesh Bandakka
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favouring the net neutrality and not giving in for greed of few business
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3 hours ago
Sandhya Hegde
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America Is Enabling Tax Evasion

The combination of increasing inequality and anemic economic growth has
thrown a political spotlight on tax havens. Research has shown that governments
are losing at least $200 billion in potential tax dollars every year because of them.
Politicians throughout the world are feeling pressure to address this perceived
injustice.
Consider, for example, Democratic presidential candidate Hillary Clintons recent
comments about companies routing income through the Bahamas or the
Cayman Islands or wherever in an effort to minimize or avoid taxes. Clinton
would like America to capture lost tax revenues from corporations booking profits
in their offshore subsidiaries.
My guess is that your image of tax havens, like Clintons, is a small island with
free-flowing rum and sun-kissed, care-free locals. You may remember The Firm,
the 1993 film based on the John Grisham thriller, in which Tom Cruise plays a
lawyer who gets mixed up with a firm that helps clients launder money through
the Cayman Islands.
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especially compared to other jurisdictions. The territory now complies with

about foreign account holders to their home countries. Further, anonymous
corporations in which ultimate ownership is unknown no longer exist in Cayman:
it has collected beneficial ownership information about corporations set up under
its jurisdiction for fifteen years. Preventing the existence of anonymous shell
corporations makes it more difficult for individuals and firms to hide taxable
income from authorities.
Ironically, there is strong evidence that some of the most egregious tax havens are
more like the country Secretary Clinton hopes to lead than the islands she
highlighted. In fact, major OECD countries are guilty of doing exactly what these
more notorious havens once did. In a 2009 audit study published in the Journal
of Economic Perspectives, a researcher attempted to set up anonymous shell
corporations using 45 different firms across 22 different countries. More than
75% of firms in OECD countries agreed to set up anonymous shell corporations,
compared with less than 15% of firms in the traditional tax havens. That's right,
it's probably easier to set up an anonymous corporation in the US than in the
Cayman Islands.
A recent Bloomberg report described how the United States in particular has
become "effectively the biggest tax haven in the world," with the global rich
moving their offshore funds from the Bahamas and the British Virgin Islands to
Nevada, Wyoming, and South Dakota. The reason? These American states allow
anonymous bank accounts. Further, the US has refused to sign on to the OECDs
new standards that would require American financial firms to disclose accounts
held by foreigners to their home countries. This comes off as hypocritical to much
of the world, because the US through FATCArequires other countries to do
provide information about foreign accounts owned by Americans.
Anonymous banking facilitates crime and corruption. The UN estimates that
between two and five percent of global GDP is laundered every year. A recent 60
Minutes report demonstrated how the US facilitates these illegal financial flows.
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recounted
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employee undercover as a representative of a corrupt African politician to seek
The nonprofit arranged 16 face-to-face meetings with New York lawyers

including the then-head of the American Bar Association and only one outright
refused to help. As Charmian Gooch, the head of Global Witness, pointed out, US
law requires bankers to report such requests, but it does not require lawyers to do
the same.
The real problem, former Senator Carl Levin pointed out, is that US law does not
demand disclosure of beneficial ownership of new corporations, a practice that
has become standard in places like the Cayman Islands. The American Bar
Association, he pointed out, has been a particularly vigorous opponent of this.
The result: it is easier to set up an anonymous corporation in the US than it is in
traditional tax havens.
As the US presidential elections move forward, if candidates want to criticize
traditional tax havens and avoid hypocrisy, they better start taking a cold, hard
look at their home turf.
Vikram Mansharamani is a Lecturer at Yale University in the Program on

Ethics, Politics, & Economics. He is the author of BOOMBUSTOLOGY: Spotting
Financial Bubbles Before They Burst (Wiley, 2011). Visit his website for more
information or to subscribe to his mailing list. He can also be followed on
Twitter or by liking his Page on Facebook.
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