The first post in this series discussed the reasons the Freedom 251’s pricing was so significant, and discussed the factors that affect a smartphone’s price. This post discusses the controversies the Freedom 251 has found itself mired by, due to its supposed defiance of these factors. The most interesting controversies, of course, are the IP ones!
The Curious Controversies
First off, the device shown to the media reportedly has Adcom trademarks, concealed with white paint. A Hindustan Times review sports images of the phone with the Adcom branding clearly visible. Adcom is a New Delhi-based importer of IT products. Some reports claim that the device in question is the Adcom Ikon 4, which sells for Rs. 4,000. If true, this amounts to a clear case of passing off. Additionally, newsreports also claim that logos being used by the device closely resemble Apple’s iOS logos.
Ringing Bells reportedly brushed aside both of these issues, stating that the initial handsets “has(sic) been procured from another manufacturer” and that “those are beta models. The phones that will be sold in the market will not bear AdCom’s logo”. With regards to the Apple logos and home button, they state that Apple ‘Apple hasn’t copyrighted its designs’. Not only is the former explanation highly unsatisfactory, Apple has in fact copyrighted its designs. As their iOS Human Interface Guidelines page states here: ‘Don’t use Apple app icons, images, or screenshots in your designs. Apple designs are copyrighted and can’t appear in your UI unless they are provided by the system.’ (emphasis added)
Which brings us back to licensing issues. Making a smartphone involves substantial royalty payments for patents alone. A major portion of these patents are for standards and the Standard Essential Patents (‘SEPs’) they involve, which must be complied with and must be licensed and are a a very legally contentious topic. In Freedom 251’s specifications, the 3G, Bluetooth, WiFi and GPS technologies are all SEPs, and it is as of yet unclear how Ringing Bells will be handling these payments. This is without even tacking on the ‘hidden prices’ that Original Equipment Manufacturers (‘OEMs’) reportedly have to pay for Google’s ‘open’ Android.
Notably, however, royalty fee for SEPs is sometimes charged as a percentage of the final selling price of the device in question. The fee that is finally paid by Ringing Bells should be quite interesting!
Furthermore, NDTV also notes that the phone may not be certified by the Bureau of Indian Standards (‘BIS’), as Ringing Bells is not listed in BIS’ list of certified manufacturers. On being questioned regarding certifications, Vikas Sharma, the company’s Technical Head, stated that they were just showcasing a prototype, and that ‘BSI certification and licensing will be taken care off(sic) in due course.’ This lack is believed to have prompted a request for clarification from the Telecom Ministry to Ringing Bells, and a request to the U.P. government asking it to check the company’s credentials.
The most curious issue, though, is Freedom 251’s method of distribution. The Freedom 251 claims to be a ‘people’s phone’. However, Ashok Chadha stated ‘we will be selling online first and thus save the costs incurred on large distribution networks’. Newsreports also indicate that the only available payment options were debit card- and credit card-based. This would mean that the portion of the Indian population which a) does not have internet access or b) does not have a debit- or credit-card would be unable to buy the phone. This lack of options, of course, makes sense considering how drastically the cost of the device has been cut, but represents quite a chink in Ringing Bells’ armour.
The Options
One of the more popular arguments for the low cost of the phone had been that the device is heavily subsidised by the Indian government. However, Ringing Bells has directly denied receiving subsidies. The second argument is for carrier subsidy model, emulating the American model; again, however, no evidence of any such deals being made is available.
Another theory argues that since Ringing Bells wouldn’t really be profiting from the sale of their phones, they may be going the Google and Facebook way – mine and sell data on their users. This is supported by Ashok Chadha’s statement noted earlier, that ‘The real cost of the device… will be recovered through tie up with startups, innovative marketing…’ (emphasis added). So if you just bought a Freedom 251, and if you do actually get it, make sure to check if your phone is selling out your information to pay for itself in four months!
Conclusion
The Freedom 251 definitely presents a very interesting proposition. The final possible theory is, of course, that all of Ringing Bells’ claims are valid, and they have truly designed the technology and managed the licensing necessary to sell the Freedom 251 at Rs. 251. If true, that would mark a huge turning point at least in internet access among the socio-economically poorer sections of society in India. At best, the technology could be revolutionary.
The number of holes being poked into Ringing Bells’ claims, however, makes this seem like a pipe-dream. So much so, in fact, that even the government is poking in. Along with the telecom ministry’s request for clarification mentioned above, Ringing Bells’ office was also raided by the Income Tax Department on Friday. The bells seem to be ringing for Ringing Bells’ future!
My thanks to Rajiv Kr. Chaudhary and Sai Vinod for their inputs on these posts.
