Facebook Will Become a Major ISP

Facebook will become an Internet access provider on a wide scale, it now appears, joining Google Fiber as a major supplier of Internet access services.

Facebook has purchased Titan Aerospace, giving Facebook the ability to launch fleets of solar-powered drones providing Internet access to billions of new users in the global south, primarily in Africa, it now appears.

The Titan Aerospace drones would represent a novel attempt to bring Internet access services to billions of people at lower cost than has been possible so far.

The Titan Aerospace purchase is among activities Facebook and others are taking as part of the Internet.org project, which is is similar in intent to Google’s “Project Loon,” which uses fleets of balloons, not aircraft, to bring Internet access to billions of people in the global south.

Internet.org is a Facebook-sponsored effort to connect the unconnected. Ericsson, Nokia, Samsung, MediaTek, Qualcomm, and Opera are members.

As you might guess, both the Facebook and Google initiatives are among examples of instances where traditional suppliers of key communication services face new competition from new providers, with new business models.

The biggest challenge to incumbent service providers (telco, cable, satellite, wireless ISP) are the alternative business models, where Internet access might in many cases be a loss leader or breakeven activity, in other cases profitable lines of business with revenue models beyond actual payment of access fees.

There are any number of potential losers, including satellite providers of access and mobile service providers.

Fixed network providers might actually gain, eventually, as consumers discover the value of Internet access, and then desire faster speeds. Also, an “inside out” approach that extends fixed network access from buildings out into other areas could  achieve an order of magnitude improvement in coverage, Internet.org believes, without imposing heavy new infrastructure costs.

In the near term, there would in any case be little potential for fixed service providers to serve the billions of people the new Facebook, Google and potentially other ISPs will target.

Mobile operators and satellite access providers have the most to lose, as the new delivery methods could have vastly lower capital and operating costs.

Facebook also is working on ways to lower its data center costs, using standard and lower-cost hardware for servers as well as using content delivery networks. Facebook believes CDN approaches could help it lower access costs.

Reallocation of spectrum (including TV white spaces and shared spectrum), particularly when available on a non-licensed basis, also can help.

Overall, Facebook hopes to increase the capacity of its networks by at least an order of magnitude over the next five to 10 years while keeping costs relatively constant.

That in turn would enable lower costs per megabyte, lower by perhaps an order of magnitude.

Better coding and protocols also can help by reducing the need for transmitting so much data to enable use of applications. “Facebook for Every Phone” is one example, allowing Facebook usage on feature phones.

Data compression is another tool. Modern text compression frequently yields results of 70 percent to 80 percent bandwidth savings, for example.

The Facebook for Android app originally used about 12MB per day on average. By focusing on improving data usage, Facebook expects to reduce data consumption to about 1MB per day.

Greater use of Wi-Fi also will help. And Facebook also is “zero rating” Facebook access, a move that encourages people to use the app without worrying about the cost.

The point is that Facebook expects to provider Internet access to billions of people at far lower costs than has been possible in the past. That will be helpful for billions of people, but also prove a challenge to incumbent Internet access providers.
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