Zuckerberg’s Internet.org feels the love (and fear) from carriers

At Mobile World Congress on Monday Facebook’s Mark Zuckerberg took the stage with three executives from carriers in developing countries to talk about the progress of Internet.org and its attempts to connect the world’s unconnected with free Facebook use.

You would expect this kind of thing to be a rather boring affair with Internet.org operators celebrating the project, and that was largely the case. But things got interesting toward the end as one CEO voiced what was on every carrier’s mind at MWC: In the process of helping them, [company]Facebook[/company] might just kill them.

That CEO was Jon Fredrik Baksaas of the Telenor Group, which may be based in Norway but runs networks in Eastern Europe and Southeast Asia. It’s also important to note that Telenor is not an Internet.org member, though it is in negotiations with Facebook to join its effort. Baksaas brought up the touchy topic of Facebook’s recent purchase of WhatsApp and how that messaging service directly threatens his company’s SMS revenues. It’s a “point of contention between Facebook and the operators,” Baksaas said.

He went on to say that there is a big risk that by inviting Facebook to offer free services on their networks, carriers risk Facebook converting their customers away from traditional telecom services to Facebook’s own apps and web-based services.

Zuckerberg responded that Internet.org works closely with its operator members to ensure that isn’t any cannibalization of revenue. WhatsApp and Facebook Messenger are not among the free services it offers through Internet.org’s zero rating policies. And the other two carrier panelists, Christian De Faria, CEO of Airtel Africa, Mario Zanotti, SVP of operations at Millicom – both of whom participate in Internet.org – pretty much backed Zuckerberg up.

Zanotti cited some impressive numbers: In Paraguay, Millicom’s Tigo saw a 30 percent increase in mobile data users after it launched free access to Facebook for six months. Millicom’s most recent foray with Internet.org in Tanzania resulted in a tenfold increase in data-capable phone sales, Zanotti said.

During the session Zuckerberg also downplayed the significance of laser-pulsing satellites and drones to Internet.org’s overall mission. He said that everyone focuses on that tech because its sexy, but the vast majority of connectivity in the developing world is going to be supplied through traditional carrier networks. That’s certainly true, but Zuckerberg did have a role in pumping up that technology in the first place, including penning a widely publicized paper on the merits of drones and free-space optics in providing internet access

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Report: Google following Facebook down the zero-rate rabbit hole

Google wants to make Android apps free to use overseas, giving more people access to mobile data services in developing markets, according to a new report in The Information. This kind of zero rating, as it is known, is exactly what Facebook does in several countries as part of its Internet.org initiative. The difference is, the report states, Google wants to exempt Android developers’ services from data charges, not it’s own.

Zero rating is a controversial topic since it could help create a two-sided internet where one company’s services are favored over another’s because they’re cheaper for a consumer to access. [company]T-Mobile[/company] for instance zero-rates dozens of music streaming services, allowing its customers to jam to their hearts’ content without having it count against their data plans. It’s great if you’re one of the companies on the list of exempt apps, but not so great if you’re a new company trying to get noticed.

Oddly, [company]Google[/company] isn’t looking to zero-rate its own apps like Gmail, Maps and Hangouts. Instead it wants to act as a middleman between carriers and app developers that want to foot the cost of their customers’ traffic. Google is talking specifically to ecommerce and on-demand transportation apps in India, using Android software to detect when their apps are accessing the mobile network, The Information reported. [company]AT&T[/company] is striking similar deals with U.S. app developers through its Sponsored Data program.

Zero-rating is pretty common overseas, where carriers often offer unlimited social networking plans to lure customers onto data services. Internet.org basically codifies those same policies across a group of pre-approved apps. In Europe and the U.S., though, zero-rating is on iffier ground as regulators decide whether it violates net neutrality principles. In the U.S. the FCC has proposed new rules that would allow for zero-rated programs in general but would give the commission ome wiggle room to review specific cases for net neutrality infractions.

Facebook just revealed its Kryptonite: mobile

In its IPO filing Facebook mentions the word “mobile” 123 times but didn’t use the term in positive ways. In fact, Facebook’s S-1 filing is one big warning to investors: Its growth is being driven by user behavior that it has so far failed to monetize.