Disrupted Internet – how free internet access is coming for all

Back end loaded business models spell the end of legacy telecoms businesses

iDisrupted Commentary

We’ve ambitiously declared the death of the legacy telecoms business several times over the past 12 months at iDisrupted – disruptive technology + disruptive business model + cash rich players will cause serious damage in the telecoms market.
Google Loon is a classic example – beaming of gigabit Internet access from the stratosphere via balloons – it’s implemented and working very well. Google is doing this “to bring Internet access to the 3rd world” (of course the marginal cost of bringing it to the first world is zero and therefore disruptive to front end loaded business models – a la BT/EE). Google isn’t alone with this ambition – Facebook is getting in on the act as well.
What we hadn’t previously considered was the marketing economics of bringing net access to the 3rd world – here’s an excellent view of that subject from FastCompany: Last August, Facebook announced that for the first time, a billion people had used the service in one day. It was a landmark moment. But in a way, it was also a sign that the company was reaching the end of the phase of its history that was mostly about signing up people in developed economies and getting them to spend time on the service. If Facebook is going to continue growing, it needs to cater to the next billion consumers—the ones in emerging nations where you can’t assume that people have PCs, high-end smartphones, or speedy Internet connections.
Disrupted Internet - how free internet access is coming for all
Google Project Loon

At an event on Thursday morning at its headquarters in Menlo Park, Calif., the company provided an update on its efforts to make Facebook inviting to people in new markets, as well as to help marketers reach those users.

Facebook chief product officer Chris Cox kicked off the event by noting that it’s not always easy for a Facebook employee in the U.S.—where many people choose to use a shiny new iPhone, connectivity is usually zippy, and using the Internet is second nature—to empathize with the needs of the next billion people who will come online. The issues are cultural as well as technological, and the company is still in the process of addressing them. Instead of using the term “last name” in signup screens, for instance, it now uses the more universal “family name.”

Things that Facebook has assumed everyone knows, it’s now reassessing. “A word like ‘password’ is not a word that can be taken for granted,” Cox said. People may know they want Facebook, Instagram, and WhatsApp, but not understand the basics of creating an account. “We need to help them get started, rather than [say] ‘Hey, you’re a sophisticated American college student, set up your profile.'”

The company is also reacting to the fact that people in different countries use Facebook in different ways. In Indonesia, it discovered, people liked to use the service to buy and sell secondhand kids’ clothing and auto parts. So it began to build functionality designed with that in mind.

A new technology called Network Connection Class lets Facebook build a News Feed designed to identify and accommodate the speed of the network it finds. On a slow connection, for instance, it might load a low-resolution version of a photo while the higher-res one is loading, rather than displaying a gray box. And if users are disconnected from the Internet, they can still see content that the app downloaded and stored earlier.

With the speedy connectivity at the company’s headquarters and other locations, the default state of Facebook is far more optimal than in much of the world. As a reminder, an internal program called 2G Tuesdays prompts employees with an option that lets them simulate a creaky 2G connection for an hour—a strange experience in Menlo Park in 2015, but perfectly normal for millions of people who the company would like to feel at home in its service.

The event also covered the company’s efforts to let advertisers reach consumers in emerging markets, something that it says these new Facebook users are eager to have happen. “There’s this really fascinating connection that people want to have with businesses and brands,” said Kelly MacLean, who’s responsible for this effort as Facebook’s product marketing lead for emerging markets.

Even though emerging countries operate under technological constraints, MacLean said, marketers should know that they can outpace established markets when it comes to embracing innovation. In the U.K., MacLean said, 5% of retail transactions are made with mobile NFC payments. But in Kenya, a third of the GDP already flows through the country’s mobile payments system.

In developed nations with robust Internet access, marketers love video ads. In emerging markets, however, the resources needed to produce compelling video may be hard to come by—and wireless networks may be too sluggish to stream such ads even if they exist. So Facebook is introducing a new ad format that it announced at today’s event. Called “Slideshows,” they’re rotating sequences of between three and seven still images, designed to provide the ability to tell a story with some visual pizzazz without clogging networks. Facebook has created a tool to help advertisers assemble them out of stock images, further reducing the bar to entry.

Facebook’s efforts in emerging economies—from its Free Basics app to the drones it’s developing to shoot Internet connectivity down by laser—are not without their controversies. The discussion of marketing in today’s event is a reminder that the company never claimed that it wanted to spread connectivity for purely philanthropic reasons. Bringing another billion people onto the Internet will be good for those individuals and the world in general—and new offerings such as Slideshows are meant to ensure that it’s also good for Facebook’s bottom line.

Google Loon Update
More news on Project Loon rollout in the southern hemisphere (with specific use case in Indonesia) from Engadget; Google’s Project Loon has big plans for 2016, including its first round-the-world coverage. Its vice president, Mike Cassidy, told the BBC that the team is hoping to launch 300-plus balloons next year to “make a continuous string around the world.” The idea is to make sure that there’s always at least one balloon covering a particular area — when one drifts away, another immediately takes its place. If the team successfully deploys its first continuous string, which will cover the Southern Hemisphere, it plans to start taking its first beta commercial customers. While this particular goal depends on whether things go well for the team in the near future, Project Loon’s partnership with Indonesian providers is already a done deal.

The team has joined forces with local providers Indosat, Telkomsel and XL Axiata, giving them the power to transmit their signals to even far-off islands by bouncing them from one balloon to the next. According to the Google+ announcement, only one in three Indonesians have access to the internet, but the initiative’s presence in the country could change that. Project Loon launched a similar test run in Sri Lanka this year, which will continue until March 2016.

Take note that the initiative’s balloons are now much better than the ones introduced in 2013. Devices that connect to them can enjoy almost up to 10Mbps, 4G-like speeds. The balloons themselves are easier to set up, taking only 15 minutes with a couple of people and a crane; they used to take an hour or two to prepare, and that’s with over a dozen workers. In addition, each balloon can now last for months instead of days.

Image Credit Flickr