2014-08-16 by Wendy Lee for "San Francisco Chronicle" [http://www.sfgate.com/news/article/Facebook-offers-Zambia-free-Internet-access-5693578.php]:
In the African nation of Zambia, few can afford an Internet connection. Watching a few mobile videos on YouTube requires a data plan that costs 51 cents - roughly half the daily earnings of many Zambians.
It may seem purely altruistic, then, that Facebook is working to provide free Internet access to the country. But the Menlo Park company stands to benefit greatly if it manages to connect the developing world to its social network.
Working through its Internet.org coalition, which includes a number of tech firms including Samsung and Nokia, Facebook has launched a free app that provides limited Internet access to Zambians who have cell phones without data plans.
Bigger base -
Customers of cellular provider Airtel can download the app Internet.org for access to 13 outlets, including Facebook and Wikipedia. They can find out about the weather, women's rights and job openings for several months before they will eventually need to decide whether they want to buy a data plan. The app doesn't directly show ads, but users can see ads through certain websites accessed through the app.
Facebook says that by increasing Internet usage, it will improve access to health care and boost the economy in developing nations.
"Growing the Internet is going to pay off for a lot of different companies and a lot of different people," said Guy Rosen, product management director for Internet.org. "We really think it's going to be beneficial for everyone."
For Facebook, expanding Internet access helps expand its user base. Facebook wants to remain the dominant social network in the world. But after saturating developed countries like the United States and the United Kingdom, the company is rushing to convert people in developing nations into Facebook users before competitors can target them. Anyone who signs up for Facebook in Zambia through the free app will count toward the company's more than 1.3 billion monthly active users worldwide.
"There's a lot of companies that are racing on how to bring those people onto the Internet," said Brian Blau, a Gartner research director.
Google balloons -
Count Google as one of them. The Mountain View search giant is testing technology that uses balloons that float 12 miles above the Earth's surface to offer the Internet to rural areas of the globe. Google says each balloon could connect hundreds of people to 3G speed Internet. Last year, Google released 30 such balloons in New Zealand, serving several dozen testers.
Google hasn't revealed how much it's spending on Project Loon. Facebook says there is no business plan for its project and Internet.org declined to disclose the budget of its initiative or how many people in Zambia have downloaded the app. Currently, 33 percent of Airtel customers are using the Internet, either through a data plan or through the Internet.org app.
Google's Project Loon floats balloons above the Earth's surface to offer the Internet to rural areas. (Photo: Jon Shenk, Associated Press)
Advertising experts say there is great demand for a digital way to reach consumers in developing countries.
Right now, advertisers in developing countries run billboards and print ads - forms of advertising that don't provide as much data as social media ads, which can target specific consumers based on their age and interests, said Leo Ryan, group head of digital consultancy for Social@Ogilvy, United Kingdom. If Facebook's app becomes the primary way people in Zambia access the Internet, it could dominate the nation's ad market, Ryan said.
"In some ways, that makes it more valuable than a mobile phone does in a developed market," he said.
Even though more than 85 percent of the world lives in areas with cellular coverage, only 30 percent are accessing the Internet, according to Internet.org. But Facebook spokesman Derick Mains said there are no plans to monetize the Internet.org app.
"If we wanted to focus on just making money, the right strategy for us would be to focus solely on the developed countries and increasing the engagement of people already on Facebook," Mains said. "Facebook's mission to make the world more open and connected means the entire world - not just the richest, most developed countries."
Generating followers -
It could take a while before Facebook is able to generate the number of followers for advertisers to be interested in specific markets, like Zambia. Eight years ago, Myspace struggled to sell ads in areas like Malaysia and Vietnam, even though it had a large audience in those countries, said Jay Stevens of the Rubicon Project, which automates the buying and selling for ads online.
"The biggest barometer of how online spend (by advertisers) is going to go is how big the middle class is," said Stevens, who used to run the European operations for Myspace.
For example, the cost of a desktop ad viewed 1,000 times in the United States would be roughly double that of an ad in Southern Europe, Stevens said. The cost would continue to go down from there for emerging markets like Southeast Asia and Central Africa, he said.
Simply put, ads are cheaper in Zambia than in the U.S. because customers there don't have as much disposable income. But if Facebook is able to increase its base of users worldwide, it could become especially attractive to companies that operate on a global level, Stevens said. For example, if a global brand like Dove or Coca-Cola wanted to run a single campaign in many countries, Facebook could be its best avenue.
"The reality of it is, Facebook is making a play largely on their belief that the whole is greater than the sum of its parts," Stevens said. "That puts them in a very, very unique position. They have the ability to command the lion's share of marketing spend."
Facebook has had experience whetting users' appetite for Internet. Last year, the social media company partnered with a cellular carrier, Globe, to give its customers free access to Facebook in the Philippines. In the first three months of the campaign, 3 million people who didn't pay for Internet before tried the service.
There is potential for huge growth in emerging countries. Even among the few people who do go online in such nations, social media sites like Twitter and Facebook are popular, according to a report by the Pew Research Center. About 1 in 4 cell phone users in those countries go to a social-networking site "regularly on their phone," the report said.
"Once people have the opportunity to use the Internet in those nations, they tend to incorporate it into their lives very quickly," said Richard Wike, the center's director of Global Attitudes Research.
Testing out apps -
Earlier this year, Facebook and Ericsson announced a lab in Menlo Park where they will test out apps for developing countries. Rosen says the Internet.org initiative is a "really, really long-term project." He recently swapped his iPhone 5s for a much simpler device - a Moto E phone - and tried to maneuver his way online.
"We're all trying to really understand using the Internet outside of California," Rosen said.
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