TECH
07/31/2015 07:28 pm ET

Gigato Tries To Make Internet Access Affordable With Data Rebates

"Until the cost of data comes down, there needs to be some sort of solution that bridges the cost gap."

For many people in developing countries, the cost of data incurred by using social networks, sharing files, watching videos and playing games makes such activities prohibitively expensive. But if the idea behind a new startup catches on, "data back" programs might become the new cash back reward programs for mobile users around the world. When people who have downloaded the Gigato app use other apps from Gigato's partners, they'll earn mobile data that can then be used for emailing, web browsing or anything else they want. 

Gigato was built by Mavin, a startup based in Silicon Valley and India. The five co-founders of Mavin include Shailesh Nalawadi, a former Google engineer who worked on Street View, Maps and Glass, and Raina Kumra, a former filmmaker and federal government contractor whose clients have included the State Department and the Broadcasting Board of Governors.   

"In emerging markets, cheap devices are proliferating, but the cost of access is not dropping fast," Nalawadi told The Huffington Post. "There's a coming crunch with cost of data and how that impacts engagement. We thought it would be a problem two years ago, and that's now borne out: Consumers in emerging markets are rationing data consumption."

Prepaid data in emerging markets is relatively inexpensive, at least by U.S. standards. Two gigabytes of 3G data in Delhi, for instance, is about $8 from Airtel. In the States, two gigabytes of prepaid 3G data costs $25 from AT&T. But the average income in India is just $31 a week, with many workers earning between $2 and $3 a day -- which means the cost of data remains prohibitive. 

In markets like India, Brazil and many African nations, a lot of people prepay for data, just as they do for minutes. As a consequence, they have to budget for what they might use in a given week. Each time they use voice or data, the telecom company reminds them of the remaining balance. The result is that people are on a constant "data diet," always needing to be mindful of how much they have left.

"Until the cost of data comes down, there needs to be some sort of solution that bridges the cost gap," said Kumra. 

Mavin is not the only startup pursuing this sort of model in India. Whenever users of the mCent app try an app or service, they get data that they can use elsewhere. This approach to giving people free data has proven to be popular: According to Forbes, mCent now has 30 million users worldwide and its parent company, Jana, is profitable. 

Gigato, which has launched on Android devices in India, is an interesting experiment to get people online in a sustainable way. It could potentially make it possible for millions of people to use apps from startups that would otherwise face populations constrained by expensive prepaid minutes. Where Facebook is testing drones and Google is lofting balloons, Gigato is essentially letting app developers invest in getting their future customers online.

"As we started thinking broadly about who the other players are for whom consumer rationing data becomes a problem, app developers are the next most critically affected," Nalawadi said. "That's how we got to think about the model we're in right now: Businesses could have the budget to pay for a solution to this problem."

Gigato charges app developers for the ability to facilitate this transaction, with options to pay per user or per installation. While mobile consumers are key for the model to work, Mavin is focused on the makers of apps as potential customers. To that end, they're thinking about how to eliminate any biases in how partner apps are displayed in Gigato, randomizing the order the partner apps are shown in.

"Our goal is to get a fully sponsored data plan for every person," said Kumra, "so that they never have to pay for data again."

Kumra and Nalawadi are acutely aware of the furor over Internet.org and net neutrality in India, where Facebook is working with telecommunication companies to provide free data for a selected set of services. So-called "zero rating" or sponsored data plans have been deemed incompatible with net neutrality laws and regulations around the world, although the Federal Communications Commission hasn't decided where it stands with respect to regulations that came into force this summer. 

"In true zero-rating, while the goal is a good one, there are troubling aspects to what it means in long run," Nalawadi said. "Gigato brings the benefits without the net neutrality implications. What we do is give data as a rebate rather than zero rate up front. When we can see that you used an app, we give cash back in form of megabytes. It has never been illegal to give them coupons."

Kumra agreed, saying that being a violator of net neutrality is of zero interest to Mavin.

"We designed this product so that it did abide by rules, regulations and traditions of net neutrality as we understand them to be," she said. "The apps they get credit for are the ones they ended up using. If you get 150 MB, it can be used on any service, browser, music streaming app or the music streaming app's competitor. We are not favoring channels." 

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