Info-tech

From Free Basics to stake in Jio, Zuckerberg gets the mojo back into Facebook’s India strategy

Thomas K Thomas Mumbai | Updated on April 22, 2020

Facebook co-founder and CEO Mark Zuckerberg. File Photo   -  Reuters

In October 2014, Mark Zuckerberg visited Chandauli, a village near Alwar in Rajasthan as part of his vision to get one billion Indian users connect to Facebook. Back then India’s telecom networks were mostly supporting 2G voice telephony and access to Facebook was limited only to the urban users with 3G or wired broadband services.

Zuckerberg’s India visit was basically to launch a controversial programme called Free Basics under its Internet.org platform, which on the face of it promised free Internet access, but in reality, it was a project aimed at promoting Facebook usage. “Because India has embraced science, research and development, the benefits of bringing connectivity to India are going to be profound. When you bring the Internet to India, you are empowering people to build tools that can really benefit the world,” Zuckerberg had said at a press conference in New Delhi.

 

The promise of giving free Internet access to a digitally starved nation sounded too good. Zuckerberg’s premise was that by offering free Internet it could create a walled garden of select applications including Facebook. From 200 million users in India, it could become a synonym for Internet services for a billion Indians.

Chris Daniels, then vice-president of Internet.org at Facebook told Business Line in an interview in 2015 explained the project by saying “The biggest challenges are affordability and awareness. On affordability, people can’t simply afford the Internet, they can’t afford the data charges. On awareness, people don’t understand why it is valuable. So providing free basic services will add value to their lives and opens a gateway of opportunities.” Daniels made multiple trips to India to convince stakeholders about the project. Facebook partnered Anil Ambani’s Reliance Communications to do a pilot. In 2015, Zuckerberg invited Prime Minister Narendra Modi to Facebook campus in Menlo Park. On the sidelines of this meeting. Zuckerberg told a group of Indian reporters that his entire objective was to connect the unconnected Indians. “We have this great example of the Indian mathematician Srinivas Ramanujan who had just one math text book. What if he had access to the Internet? What if there are other Ramanujans out there who still do not have the Internet,” he said.

However, the programme was seen to be against the principles of net neutrality because it allowed free access to only specific web sites. In 2016, the Telecom Regulatory Authority of India shut down the ambitious project TRAI said that operators cannot “charge discriminatory tariffs on the basis of content”, or sign contracts with anyone that result in such discriminatory data tariffs with immediate effect, and will impose fines of Rs 50,000 rupees a day if the regulations are broken.

Then in 2017 Facebook launched a programme called Express WiFi in non-urban areas. Facebook had partnered with 500 local entrepreneurs who sold WiFi services through vouchers that were priced ranging ₹10-20 for a day or ₹200-300 for a month. “We are not looking at making any revenue from this initiative. Our mission is to serve the underserved and underconnected and by charging users for the service, we are ensuring that it is a sustainable effort at an extremely affordable cost for the consumers,” Munish Seth, then Head of Connectivity Solutions, Facebook Asia Pacific, had told BusinessLine in an interview in May 2017. Seth subsequently exited the company and there has been no update on this service although the website shows active services in multiple regions in India.

While projects like Free Basics was a non-starter, the real impetus came when Reliance Jio launched cheap 4G data services across the country. India’s data consumption in 2019 grew by 47 per cent year on year, out of which 4G contributed to a whopping 96 per cent. Each smartphone user consumed 11.2GB of data each month, according to a study by Nokia.

 

The Rs 43,574 crore deal with Reliance Jio is a culmination of what Zuckerberg has been wanting to do- to get a piece of the growing data usage in India with Facebook at the forefront. “India is in the midst of one of the most dynamic social and economic transformations the world has ever seen, driven by the rapid adoption of digital technologies. India is a special country for us. Over the years, Facebook has invested in India to connect people and help businesses launch and grow,” Facebook said in a post.

But will it succeed this time? Zuckerberg must be hoping to gain mileage by partnering Mukesh Ambani, one of the most influential and successful businessmen in the country. The stake sale will allow Ambani to reduce debt at a time when his petroleum business is going through uncertainty with oil price crashing. The additional funding will position Reliance Jio to invest in 4G and 5G networks at a time when rival operators are struggling to survive.

The deal comes at a time when Facebook as a social media platform is under attack for not protecting user privacy. The popular messaging app WhatsApp is also facing heat over fake news. Its efforts to launch a payment application in India is yet to bear fruit. With Ambani’s backing, some of these regulatory challenges could also be resolved.

Published on April 22, 2020

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