Facebook’s ‘Free Basics’ Program: Can Rural Carriers Benefit?

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facebook-1Facebook, the U.S. government and wireless carriers are embroiled in a debate about the social media’s proposed “Free Basics” app, which may improve lives of Americans living in rural areas. So, what’s the debate about?

According to The Washington Post, the app, which has been released abroad effectively in 49 countries, is causing quite a stir. Free Basics, American style, would “target low-income and rural Americans who cannot afford reliable, high-speed internet at home or on smartphones,” The Washington Post reported. The app does not pay for users’ mobile data, but they can stretch their data plans because they will have free access to the internet, thanks to partnerships with wireless carriers.

The Competitive Carriers Association (CCA) told The Washington Post, “Facebook’s Free Basics is yet another way competitive carriers can improve the lives of rural Americans … by increasing access to and adoption of broadband, and a partnership with Facebook would certainly further CCA’s mission.” 

While we don’t yet know how the offering would work in the United States, sources note that Facebook’s Mark Zuckerberg is looking to avoid regulatory scrutiny that shut down Free Basics in India this year. Since last spring, Facebook has been trying to “connect the world” by asking small and rural cellular service to support Free Basics, along with the White House.

Arguments for Free Basics, according to The Washington Post, include giving wireless companies a way to reach rural consumers; a potential close to the ‘economic divide’ in regard to connectivity in the United States; an easier way for underserved populations to access civic and social services online; a portal to access education, financial services and healthcare; and overall benefits of high-speed internet access.

Additionally, wireless companies could benefit, because in time, Free Basics customers could convert into paying customers. Facebook data reported that “about half of those who log on to the internet for the first time as a result of Free Basics wind up paying for a mobile data plan within the first 30 days of use.”

However, others like Craig Moffett, a telecom analyst at MoffettNathanson, said that allowing Free Basics could open “a Pandora’s Box.” He told The Washington Post: “You’d have to be concerned that Facebook might ultimately usurp the customer relationship and, at renewal time, demand to be paid rather than just carried [by the wireless company].”

Facebook has changed its initial focus after Free Basics was nixed in India. For starters, Facebook wants to make sure the U.S. government is on board with the program. The Washington Post noted that the app was banned because “consumer advocates argued Facebook was handpicking the services users could see and access on Free Basics, potentially disadvantaging any competing companies and nonprofit groups that were left out of the program.” For now, Facebook is pursuing Free Basics with lesser-known carriers in the United States, according to The Washington Post, not the giants such as T-Mobile and AT&T.

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