Facebook Inc (NASDAQ:FB) has been working deals with carriers in several emerging markets to offer free access to its services, but at least one carrier has turned it down. According to the Financial Times, Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) rejected Facebook’s request to offer free access to its social network.
Facebook requests free access
According to the report, Facebook Inc (NASDAQ:FB) Chief Operating Officer Sheryl Sandberg requested that Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) “zero rate” content from the social network. That basically means not counting it toward data minutes in subscribers’ plans. Vodafone CEO Vittorio Colao was reportedly in the U.S. to speak with the carrier’s shareholders before it finishes selling its 45% stake in Verizon Wireless to Verizon Communications Inc (NYSE:VZ).
ValueWalk's Raul Panganiban interviews William Burckart, The Investment Integration Project’s President and COO, and discuss his recent book that he co-authored, “21st Century Investing: Redirecting Financial Strategies to Drive System Change”. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors.
Targeting emerging markets is an important part of Facebook Inc (NASDAQ:FB)’s growth plan because penetration levels in both the U.S. and also Western Europe are very high. The social network remains concerned that wireless subscribers in emerging markets will be hesitant to use its services out of worries about the high costs of Internet usage on their mobile phones.
Facebook strikes other deals
Facebook Inc (NASDAQ:FB) has signed deals in other emerging markets and even in the U.S. through pre-paid service GoSmart, which is part of T-Mobile. Colao said all content providers would like usage of their site to be excluded from data plans because it will help them increase the amount of engagement which occurs on their sites. However, he said that would be “conceptually wrong” for their business model.
However, he did say Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) would be open to other deals with content providers—as long as they don’t discriminate against some companies in the same part of the market. He said he would review a movie put together by AT&T Inc. (NYSE:T) which focuses on sponsored data.
The U.S. carrier said at the Consumer Electronics Show that it would become the first mobile carrier in the U.S. to offer sponsored content and a number of other free services to subscribers. Some believe that this goes against net neutrality rules, however.