BDC-Assignment

Impact on Airtel's Revenue Streams

Airtel Zero would have created a situation in which the developers could attract users without
charges for data consumption, while Airtel would benefit by expanding its customer base and
increasing data traffic. Net neutrality principles, however, are strongly against differentiated pricing
and prioritization. In case the government of India came up with strict regulations supporting net
neutrality, this would taint drastically an ability of Airtel to come up with similar platforms in the
future. This could limit Airtel's potential new revenue streams and partnerships that would have
leveraged the data usage deals with application providers, hence slowing innovation and competitive
difference in that part of the business.

Consumer Perception and Market Position

Airtel encountered backlash from consumers who, along with the stakeholders in the industry, felt
that the Airtel Zero plan promoted some applications more than others; this went against the spirit
of open and free internet. The fact that Flipkart pulled out from Airtel Zero over concerns about net
neutrality could have given the signal to the operators regarding reputation risk and loss of partners.
The imposition of net neutrality would, therefore, mean that Airtel Zero treated all internet traffic
non-discriminatory, thus placing a constraint on the operator's power to make very competitive
offers to both consumers and application developers by reducing their costs. Other than this, this will
weaken its relative competitive position vis-a-vis other operators who may want to pursue the same
innovative approach.

Operational and Infrastructure Costs

The rising popularity of OTT services, including WhatsApp, Skype, and Netflix, had already stung the
core traditional revenue streams of telecoms in the form of SMS and voice services. Airtel's data
revenue was on the rise, an indication that consumer behaviour was changing fast toward more
data-intensive services. To handle this transition, Airtel has to invest heavily in infrastructure capable
of handling increased data traffic. The struggles in this regard would increase manifold with net
neutrality regulations, since Airtel would not be allowed to manage network traffic in such a manner
that would reduce congestion and allow quality optimization at high demand applications.

Global and Regulatory Perspectives

The view on network neutrality differs across borders. On one hand, countries such as the United
States and the European Union come out strong on their stand on open, nonlinear internet access;
on the other, places like China tightly grasp their reins of control. The reviewing of the regulatory
framework on net neutrality and OTT services by the Indian government would have far-reaching
implications for Airtel's future strategic plans. In case India had strict net neutrality laws, Airtel would
need to re-approach and change how it partnered or offered services that would be very
instrumental in its long-term growth and profitability.

Conclusion

Adherence to net neutrality rules would indeed enforce severe restrictions on Airtel. Thus, the
inability to bring out differentiated services and zero-rating platforms such as those offered by Airtel
Zero will reduce Airtel's competitive edge in market share and diversification of revenue streams.
Besides, huge investments in infrastructure to manage fast-growing data demand without flexibility
in traffic management can increase operating expenses. The ability of regulatory compliance with
innovative service offerings needs to be managed carefully to ensure that Airtel stays ahead in
innovation and continues its leadership in markets amidst full competition pressures.