0.facebook.com means zero money changing hands
The recent launch of Facebook’s new text-only mobile website, 0.facebook.com, is a good illustration of the kind of non-commercial relationship that online social networks and mobile operators tend to form. Although 53 operators from 45 countries have agreed to waive browsing charges for 0.facebook.com users for at least a year, they are getting no payment in return from Facebook. No money has or will be changing hands between the social network and its 0.facebook.com operator partners.
So what is in it for the operators?
It could to a certain extent be a retention/acquisition play by them. But these are not partnerships struck by Facebook exclusively with just one carrier per territory. At launch, there were a handful of countries with two or more operators signed up to 0.facebook.com, namely El Salvador, Greece, India, Indonesia, Tunisia and Turkey. The Philippines will soon be following suit too.
The real motivation for operators to subsidise a service like 0.facebook.com is to encourage more of their subscribers to use the mobile Web and, in turn, boost data revenues. This is the logic underlying most partnerships between operators and social-networking sites (or any major online brand, for that matter).
Facebook has become the world’s most popular social network and is one of the biggest drivers of Internet traffic, both on PCs and mobiles. So telling subscribers they can access Facebook on their phones, and on top of it for free, is seen as a big selling point by carriers.
Carrier thinking
Operators hope that by visiting Facebook on their phone subscribers will acquire a taste for the mobile Web and start browsing to other sites as well – other sites where browsing charges apply, leading subscribers to spend more per month on mobile services than they do now. Users about to stray away from the 0.facebook.com site get a message warning them that they will incur browsing charges.
The question for operators is whether there is a risk that 0.facebook.com users will stick to just using Facebook on their mobile browser. After all, in countries where mobile-Web traffic is regularly measured by market pollsters, Facebook is increasingly hogging most traffic beyond the operator portals that the browsers of carrier-sold handsets are automatically pointed to.
However, one factor that might encourage users to stray beyond 0.facebook.com is the fact that users are not able to view photos on the site. If they click to view a photo they get redirected to the social network’s main mobile site – again, with a warning on data charges.
0.facebook.com is designed to give free and faster access to Facebook on mobile browsers and only mobile users whose operator has partnered with Facebook to deliver the new service have access to it.
It is interesting to note that the vast majority of the operators enabling the 0.facabook.com service at launch were based in emerging markets, where mobile Web penetration is the lowest but where there is also the greatest market potential because of the big gap left by the relatively low penetration of fixed broadband and PCs in those countries. At the same time, mobile networks and handsets in such countries tend to be less advanced, making the delivery of mobile Web services to phones slower, dearer and more clunky. And because most mobile users in these countries are prepaid, flat-fee options for paying for data are limited. Hence the perceived need by Facebook for a data-efficient and cost-free service like 0.facebook.com.
Having discussions with two carriers recently has uncovered an alarming occurrence. They aren’t making any money out of FB0 and it is consuming a great deal of bandwidth. Who would have thought!
The are both now making network investment to carry the extra traffic. Even voice traffic is under threat of compromise. Trapped in a disaster scenario, was one description I heard. A team dedicated to risk mitigation of the Facebook 0 situation was another comment. Are there any indirect commercial benefits or rub offs? Actually… no. Our company offers simple conversational and person to person products on many carrier decks. We are competing with FB for user time and mind-share. FB 0 does have an impact on our revenue, although not that large. The fact that it doesn’t greatly affect our revenues raises interesting questions about user behaviour. Such questions get fed into our user behavior analysis profiling. Interestingly I don’t see many internet service providers doing any real dollar and cent analysis of user behaviour on mobile; except for the hype numbers. The carriers were presented with such hype numbers when they took on FB0, and the hype hasn’t eventuated. When we occasionally promote a “free period” we always get 50,000% increase in volume, but no revenue of course. The gap in usage between a modest charge and free is a massive gulf. There is a sweet spot in pricing, that gives a customers access to digital services at an acceptable price. Zero is not that price. There was an old saying that phone companies need to behave more like the internet. But what a terrible role model the internet is. It should actually be “The internet needs to be more like mobile” I hear so many BS comments about developing new revenue models, creating value chains, changing the paradigms of commercial relationships,… blah blah blah. But where are the successful new models? What drew my own company into mobile was the two incredible assets that mobile companies have; 1) customers and 2) a billing system. This is something the internet never had. Remember it was created by some old scientists to share information without any thought of commercialization. The cell company was built on the absolute mandate to bill customers for services. The cell companies have now become trapped by that stupid thought that they should be like the internet, and that is totally wrong. Yes we all love free stuff, who doesn’t. But that doesn’t mean we can’t and won’t pay. As a businessman I love the sound of the word “customer”. They spend money, so we can afford to serve them. I don’t like the word “users”. In fact; isn’t ‘user’ a derogatory term?. I would rather have 100 customers than a 1 million customers, because that creates a business model. I’m thinking that the mobile carrier’s flirtation with the internet is about to take another turn, where they try to adopt a new and commercially viable position. They have to, or they will burn. An FB 0 is an example of how they can get burnt. It’s ironic that Facebook has a total global revenue of about 0.5% of the revenue of Vodafone. Facebook’s revenue is smaller that virtually every mobile operator in the world. Yet there are dozens of operators who are risking serious loss and damage by engaging with this minnow and it’s free products. I figure that the clever eggs, who worked out the business models around the mobile engagement with the internet, went to the same college as the boys who created the global credit crisis.
Hi
Youve got to understand that 0.facebook.com is targetted at developing nations where they are seeing convergence happen. They want to train users to use internet for all those who believe its expensive. Its an investment which will provide returns. Remember, its just a way to train your army. But, the real war will be won by the operators.
A small correction to my post. I should have said “I would rather have 100 customers than 1 million users, because that creates a business model.”