The case for Facebook Zero and similar applications

Early last year Facebook launched Facebook Zero, a stripped down version of its mobile website at no data cost primarily to attract new users in the Global South. Facebook Zero, unlike the standard version of Facebook mobile, does not serve multi-media content like images and videos (which can clog data pipes) — making it possible for carriers to make it available for free. Multi-media is stored at the back end, and if a user decides to access images then standard charges apply.

Facebook Zero was launched in about 45 countries in the Global South with the help of strategic partnerships with 50 carriers allowing users to access Facebook Zero at no data costs. Facebook has been working at extending partnerships with more carriers even in developed countries like UK and Austria.

Although smart phones and 3G networks are becoming ubiquitous across the globe, I believe that there is a strong business case for services like Facebook Zero because a sizeable segment of mobile users will not have access to faster networks (3G and beyond) or be able to afford smart phones (despite the prices dropping significantly).

For further details, please see below:

  • Despite the rapid deployment of 3G networks across the world, which provide faster connectivity, 2G networks will still dominate in the global South in the coming years. For example, about 3 billion people in Asia Pacific will be still using 2G networks in 2014. In comparison, 3G networks will cover only over 1 billion people in Asia Pacific. We see a similar story in MENA and S&C America. There will be more people in these regions who will be still using 2G networks v/s 3G networks.
  • Another barrier to the adoption of 3G is the cost of 3G devices. 3G devices continue to be extremely expensive in the global South. With GDP/capita as a base we find that 3G devices are the most expensive in Africa. A 3G device in Africa is about 6.9 percent of GDP/capita. Unlike the US where carriers subsidize mobile phones, most users in the global South have to buy the mobile phone at full price themselves. This is the number one reason why iPhone, which was available at $500 did not take off in India despite India being one of the hottest mobile phone markets. Another interesting point to note here is that the cost of a 3G device as percent of GDP/capita is inversely correlated with 3G penetration.
  • What this is telling us is that in the coming 2-3 years, the mobile phone market will not uniform, but will continue to be fragmented into two. There will be two kinds of users: those who have 3G devices and primarily use 3G networks. The other users will be those who will still be using older, 2G devices that run on 2G networks. These numbers make a strong business case for investing in lightweight versions of mobile websites, and Facebook is leading by example.

    In addition, the mobile web is forecast to overtake the desktop web in 2014 making it imperative for companies to have a strong mobile presence.



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