No Such Thing as Free Facebook for Emerging World Users

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There's nothing wrong with the ambitious plan just unveiled by Facebook ( FB ) and friends to bring the Internet to the two-thirds of the world's people who don't have it.

It would have gone over a lot better, though, without the pretense that Mark Zuckerberg is some kind of benign 21st century missionary bringing the gift of Facebook to the benighted denizens of the third world.

That's the unfortunate impression left by the announcement Monday of a technology company partnership that is supposed to work on ways to reduce the cost of data plans so that customers in the developing world can afford to subscribe to them.

It's a business plan, and as such it's a pretty good one, and even an essential one for Facebook.

The partnership promises to invest in technologies that reduce the amount of data required to use Internet applications, and make the networks that deliver them more efficient, and therefore lower cost.

All of the companies involved have almost as good a business reason as Facebook to work on this. They include Ericsson ( ERIC ), MediaTek (OTCMKTS:MDTKF), Nokia ( NOK ), Opera, Qualcomm ( QCOM ), and Samsung (OTCMKTS:SSNLF).

"Almost as good" because Facebook is the only one of these companies that has little opportunity for growth in its customer base in the Western world. At more than 1 billion enrolled users, it has pretty much run out of developed world to exploit. It needs Asia, Africa, and Latin America more than they need it.

Google ( GOOG ) is in much the same position.

And where, you may well ask, is Google in this list of partners? It isn't in the partnership, because it has its own strategies for expansion in the works, and besides, Google and Facebook hate each other's guts, in a business-like way, of course.

Facebook, Google, and Twitter, among others, have programs to bring the Internet to underserved parts of the globe. None are charitable endeavors. In fact, they're not giving away much beyond teasers for new users. For instance:

  • The Google Free Zone, a project that provides free data access to top-level Google content on low-end feature phones, was extended to India through a partnership with Bharti Airtel (BOM:532454) in June. The service offers first-time consumers unlimited data for email and searches, but any click on a link brings up an invitation to purchase a data plan. Google had previously tested the offer in Sri Lanka and the Philippines. Airtel, headquartered in New Delhi, has 275 million subscribers in 20 countries.
  • Twitter and Vodafone (VOD) launched a similar joint venture in India last month. The program has a three-month limit, making it more a free trial than a service.
  • Facebook has Facebook Zero, a text-only version of the site designed for low-end feature phones that can be accessed free of data charges from participating carriers.
All of the above are limited in scope, and dependent on subsidies to partner companies. That may be as good as it gets without the kind of technology improvements that the new Facebook-led partnership is aiming to make.

Project Loon , also from Google, takes an entirely different and much more colorful approach to the problem of inadequate infrastructure.

In a test in New Zealand, the company sent up a network of 30 balloons that float 12 miles up, at the edge of space. People in remote areas can use a special Google antenna to connect to the balloon network, which is controlled by (what else?) "complex algorithms" that feed signals between network and user.

Just this week, Google announced that it was looking for volunteer participants for its first US test, based in Central Valley, California.

Unfortunately, the online form to apply was removed within two days of its appearance, leading to speculation that plenty of people had already applied.

It is unclear whether Central Valley residents are fed up with their current Internet data services, or just eager to participate in Project Loon.

Also see:

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks , Technology

Referenced Stocks: ERIC , FB , GOOG , NOK , QCOM

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