Facebook, Inc (FB - Free Report) is not letting the Free Basics fiasco affect its plans of connecting the whole of India. Per media reports, Facebook has been testing Express Wi-Fi, a service that “empowers local entrepreneurs to help provide quality internet access to their neighbors and make a steady income.”
Facebook further added that Express Wi-Fi will be "working with carriers, internet service providers and local entrepreneurs to help expand connectivity to underserved locations around the world".
Reportedly, the social media giant plans to expand this service to other regions in the coming days. At present, no details are available on how much does it cost to use the service and whether it provides limited internet access like Free Basics.
India deserves special mention when it comes to user growth. India as the world’s second largest populated country offers tremendous potential. It has over 1.2 billion people out of which only a little over 350 million use Internet. Despite low Internet penetration, India is already the second largest market for the company just after the U.S, given its extreme popularity. With most developed markets reaching maturity and China seemingly off the radar, India can prove to be a terrific growth engine for Facebook.
A burgeoning well educated middle class, increasing spending power and rapid adoption of smartphones will boost Facebook’s prospects in the country. Not just Facebook, tech behemoths right from Apple Inc. (AAPL - Free Report) , Amazon.com, Inc. (AMZN - Free Report) and Alphabet Inc. (GOOGL - Free Report) all are trying to grab a share of this lucrative market.
Last December, Facebook suffered a massive blow when Indian regulatory body TRAI asked Facebook’s India operator partner, Reliance Communications, to “put on hold” the Free Basics services in the country, citing net neutrality principle violation. Net neutrality implies an open-Internet atmosphere, which will prohibit ISPs, especially telecom and cable TV operators, from discriminating against applications. Following the suit, Egypt banned Free Basics services too.
Though CEO Mark Zuckerberg heavily defended the service in India by launching a marketing campaign, he eventually lost. Zuckerberg had earlier said that Facebook totally agrees with the net neutrality principle but at the same time he advocated “that if people can’t afford to pay for connectivity, it is always better to have some access and voice than none at all.” This wasn’t enough to pacify the critics of the service, who accused Facebook of trying to exercise control over users’ preference by giving them limited Internet access.
Free Basics Services, a part of the Internet.org project, is Facebook’s effort to rope in more users by providing free access to Internet across the 19 emerging markets of South East Asia, Latin America and Africa. These emerging economies with their burgeoning population offer great scope for expanding its user base. Also, the lack of physical infrastructure has propelled the increasing use of mobile Internet in the region, which is in tune with Facebook’s growth strategy. The project was launched three years back.
Facebook had collaborated with France-based Eutelsat Communications to launch a satellite that would beam Internet in sub-Saharan African regions. However, the SpaceX rocket explosion caused the loss of AMOS-6; the first satellite that could have helped in providing Internet access to Africa and Middle East.
Apart from testing Express Wi-Fi, Facebook is developing laser technology to move loads of data at superfast speed along with Aquila, a solar powered aircraft to beam Internet from the sky. At its last F8 conference, Facebook said that it was working on ARIES (Antenna Radio Integration for Efficiency in Spectrum) and Terragraph, two of its ambitious Internet connectivity projects. With ARIES, Facebook is testing to bring speedier connectivity in rural areas by using antennas to provide faster Internet coverage on 2G spectrum.Terragraph will boost connectivity in congested urban areas by employing WiGig antennas. We believe these initiatives will significantly drive Facebook’s user base in these regions in the long run.
At present Facebook carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Facebook have been on an upward trend on a year-to-date basis. The stock generated a return of 15.05% compared with the Zacks Computer-Software Services Industry’s gain of 3.82%.
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