Open Networks: A DPI-embedded Approach for Online Marketplaces

By Team Asianet Newsable | First Published Nov 29, 2023, 11:30 AM IST

Digital Public Infrastructures can be used modularly by governments and businesses, and the fact that they could be tailored to cater to the sectoral needs of any country has made their value proposition even stronger.

Digital public infrastructure (DPI) promises a transformative, digital, and whole-of-society approach to providing benefits for our economy and social lives. The Outcome Document of the Digital Economy Ministers Meeting convened during India’s G20 presidency DPIs are “a set of shared digital systems that should be secure and interoperable, and can be built on open standards and specifications to deliver and provide equitable access to public and/or private services at societal scale and are governed by applicable legal frameworks and enabling rules to drive development, inclusion, innovation, trust and competition and respect human rights and fundamental freedoms.” Most countries looking to adopt DPIs today want to use them for digital identities, payments, direct benefit transfer and credentialing. However, DPIs can also be used modularly by governments and businesses, and the fact that they could be tailored to cater to the sectoral needs of any country has made their value proposition even stronger. In the field of online commerce, DPIs are beginning to get developed on the principles of open networks to democratize access to goods and services in the digital economy.

An open network is a decentralized digital infrastructure that allows market access to all participants on the internet, regardless of the platforms and applications used by buyers or sellers. Open networks provide an alternative to closed, self-contained platforms that control large sets of consumer data and have become the so-called “gatekeepers” of the digital economy. They do so by enabling market participants in any commercial ecosystem to interact directly without the need for a platform intermediary. The difference between a platform and an open network is essentially the design choice that eliminates the reliance on platform intermediaries for an online transaction to take place in the latter. Any DPI is built on an open protocol that makes interoperability possible for digital systems to communicate freely with each other.

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Beckn protocol is one of the protocols being used for building open networks. It is an open protocol that enables location-aware local commerce across industries. It can be adopted for an industry, a region, or a market among its participants to enable open, interoperable interactions between them. By deploying a set of standard application programming interfaces, it unbundles the following stages of an online transaction.

Discovery: The consumers convey their intention to purchase a product or service, and Beckn opens the gateway to the catalogue of sellers.
Order: The buyer and the seller agree on the terms and conditions of the transaction. At this stage, expectations differ for each applicable sector.
Fulfillment: The service providers or sellers assign agents to implement the delivery to the consumer. Hence, an open network attempts to create a community-driven governance model that allows anyone and everyone to join the network of marketplaces.

India has already deployed open networks in several sectors. The most talked about is the Open Network for Digital Commerce (ONDC), a Government of India-led initiative aimed at promoting open networks for all aspects of goods and services over digital or electronic networks. Another open network-based DPI that is emerging in the sector of education and skilling is ONEST, which opens up access to diverse educational content, scholarships, skill development programs, and training for anyone through an interoperable network. A recent use case built on top of the Beckn protocol is the Unified Energy Interface, which is currently unifying the fragmented EV charging transactions to create a decentralized network for energy transactions. Another use case being built is in the healthcare sector, enabling open access across diverse health service providers and patients.

Beckn protocol was also behind the world’s first decentralized open mobility network in Kochi known as Kochi Open Mobility Network. Following its successful application in the mobility sector, Namma Yatri was built for the city of Bangalore to primarily offer an open network for auto rickshaw rides and is now expanding to the metro rail network. Open networks in mobility democratize access to transport for commuters and access to markets for drivers by eliminating intermediaries. Open mobility projects can be integrated with digital payment providers and allow any third-party app-based aggregator to offer a ride to users, provided they comply with the network standards.

Due to their sector-agnostic approach, open networks have also demonstrated the potential to be applicable globally. For instance, many countries around the world are dealing with antitrust issues in the e-commerce marketplace, where the market is dominated by a few platforms that have designed centralized, closed ecosystems. Open networks can solve this problem by offering a shift from a platform-centric model to a network-centric one.

In India, the ONDC has the promise to offer a decentralized model that makes e-commerce more inclusive and accessible to all kinds of sellers and buyers, including the MSMEs. Recently, Brazil has the launched an open network initiative in Belem—known as Rede Belem Alberta—based out of the Amazon forest region in Brazil. This initiative aims to transform education, healthcare, and mobility through open networks. It also supports local commerce by promoting sustainable livelihoods and nurturing innovation in the digital economy. Through this initiative, Belem is aiming to connect producers to markets, both locally and globally.

Singapore has adopted a similar approach under its pilot Project Guardian in the field of trading digital assets and liquidity pools across financial networks. We are also observing open networks being deployed in Africa with the Open Gambia network. The objective of Open Gambia is to address the considerable challenge of urban mobility, particularly considering the sector's unorganized nature. This is being built by the Foundation for Digital Economy, which envisions creating a digital infrastructure that opens up digital commerce across sectors, unlocking local entrepreneurship in Gambia and solving local problems digitally.

What distinguishes open networks from the foundational layers of DPIs is that they cater to the Global South and the Global North alike. For instance, France is applying open networks in the mobility sector. Padam Mobility is helping Ile-de-France Mobiltes develop a unified on-demand system for the Paris region, which consists of around forty networks that are interoperable. Zurich and Amsterdam are also looking to apply the Beckn protocol for an interoperable mobility solution. Germany is applying the open network concept in the manufacturing sector, where companies in the manufacturing sector will have access to other inventories with excess production capacities that can be made available on rent. Germany is building Industry 4.0 through projects like Manufacturing-X for data-based networking of the value chains in industry across sectors and countries. The aim is to set up an international, interoperable data ecosystem that enables digital innovations for more resilience, sustainability, and competitive strength.

Open networks are not a new concept. The internet was built on open protocols and designed to be interoperable, as a result of which, private enterprises could innovate on top of it. However, market forces took the internet toward a centralized model owing to various reasons, some of which can be attributable to building a business model around data monetization as well as building trust for online consumers. Open networks reimagine the current form of online marketplaces in their original state, with an in-built governance model by embedding the DPI approach, thereby possibly ensuring a trust-based framework that allows the private sector to build a business model around it and at the same time, building an inclusive marketplace that is accessible to all.

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