Credit: Shutterstock photoOn Sunday, Microsoft Corp. (MSFT) launched a fund for startups with plans to bring internet access to the approximately four billion people who currently lack it. For two months, the company will accept applications from companies with two or more full-time employees, a working prototype and, ideally, paying customers. It will provide around $75,000 on average to companies with scalable, commercial solutions for providing low-cost cloud services to “underserved markets.”
This is not Microsoft’s first attempt to expand global connectivity. Nor is it the only tech giant working towards that goal. Facebook Inc. (FB) and Alphabet Inc. (GOOG, GOOGL) are both working on what the latter calls “cell towers in the sky” to help expand local telecoms’ reach through stratospheric drones (in Facebook’s case) and balloons (in Alphabet’s). Facebook has supplemented this commercial effort with a free app, which provides access to a few sites.
Microsoft
Microsoft.
In addition to the newly announced fund, Microsoft’s Affordable Access Initiative has explored the use of TV white spaces, or idle frequencies, to provide internet access at a low cost. As of June, Microsoft and its partners had tested the technology in a number of countries. In Nepal and the Philippines, the company was able “to rapidly deploy ad hoc networks in response to natural disasters.” The bandwidth is sufficient for Skype (acquired by Microsoft in 2011); the energy needs are modest enough for solar power; and the infrastructure costs a tenth of what LTE infrastructure does.
When India’s Prime Minister Narendra Modi visited Silicon Valley in September, Microsoft’s CEO Satya Nadella pledged to bring internet access to half a million villages using white space technology, while other tech luminaries made similarly ambitious promises. But for all the apparent advantages of Microsoft’s approach, competition over TV frequencies might make it difficult in practice.
On November 9, the Broadband India Forum (BIF) sent a letter to telecom seretary Rakesh Garg asking him to ensure that frequencies would be apportioned through an open auction, not given away for free (by implication, to Microsoft). BIF represents Vodafone Group PLC (VOD), Qualcomm Inc. (QCOM), Ericsson (ERIC), Intel Corp. (INTC), Marvell Technology Group Ltd. (MRVL), UTStarcom Holdings Corp. (UTSI) and a number of local companies.
Alphabet
Google. .
Characteristically, Alphabet has opted for a more extravagant solution than staid, Washington-based Microsoft. The name for the Google X “moonshot” to deploy LTE-transmitting hot air balloons, Project Loon, is itself an acknowledgement of the idea’s improbability. But Rich DeVaul, the division’s “rapid evaluator,” couldn’t find a reason to kill the project—and not for lack of trying. Tests in New Zealand and elsewhere have shown that the balloons have potential.
The technology works by extending the networks of local telecoms (Vodafone in the case of New Zealand), with each balloon bouncing a tower’s signal to an area with an approximately 40km radius. This has led the company to refer to them as “cell towers in the sky.” Connection speeds are around 10 mbps, comparable to 4G in some markets. Since the balloons can also bounce signals to other balloons, the coverage area is potentially much wider. Navigating in the stratosphere, the balloons can stay aloft for an average of three months and a record of six.
In October, Alphabet announced that it would partner with Indonesian telecoms with the goal of bringing internet access to 100 million Indonesians. Similar plans were announced for Sri Lanka in July. Mike Cassidy, Project Loon’s vice president, told the BBC that one of his goals is to deploy 300 balloons by 2016; that would be enough to form a continuous ring around the earth—“our first,” as Cassidy describes it—and provide uninterrupted coverage in some regions.
Facebook. .
Facebook has also set its eyes on the stratosphere, but via an enormous solar-powered drone, rather than balloons. Aquila, as the company calls it, has the wingspan of a 737 but weighs as much as a small car. Cruising for three months at a time, it will beam local telecoms’ signals to areas with a radius of approximately 50km, with data rates of 10 gbps. Aside from the much faster data speeds, the idea seems to be substantially the same as Project Loon.
But that is not Facebook’s only approach to the problem. It also offers an app in conjunction with the Internet.org project, called Free Basics, which provides acces to a limited number of approved services for free. Unlike the other efforts mentioned here, which are commerical, Internet.org is a non-profit; led by Facebook, its other members are Samsung Electronics Co. Ltd., Ericsson, MediaTek Inc, Opera Software ASA, Nokia Corp. (NOK) and Qualcomm. In 2016, Internet.org will launch a satellite in partnership with French telecom Eutelsat SA to provide Free Basics to large parts of sub-Saharan Africa.
In markets where Free Basics is already available, however, the service has come under fire for violating net neutrality. The practice of offering certain services—which Facebook chooses—for free while any other data is charged at the normal rate is referred to as “zero rating.” Advocates of net neutrality argue that this practice divides traffic into “fast” and “slow lanes” and compromises the open, democratic nature of the internet.
In an open letter to Facebook, a number of organizations accused the company of “building a walled garden in which the world's poorest people will only be able to access a limited set of insecure websites and services.” They stressed that Free Basics (then known simply as Internet.org) was not “the full Internet” and expressed the concern that “new users could get stuck on a separate and unequal path to Internet connectivity, which will serve to widen—not narrow—the digital divide.” They also raised questions about data collection and use, as well as security.
Facebook’s CEO Mark Zuckerberg responded: “If someone can’t afford to pay for connectivity, it is always better to have some access than none at all.” He did not address issues of security or data collections.
Connecting the World
The benefits to tech giants of connecting another two, three or four billion people to the internet are clear enough. Consumers in poor, rural markets that lack infrastructure and, in many cases, stable government will not generate the same ad revenues and licensing fees as First World urbanites, but they make up for it through sheer numbers. Also, consumers’ access to improved information and communication may itself boost incomes and increase government accountability. The internet is not the panacea Silicon Valley entrepreneurs think it is, but it’s a start.
Amazon.com Inc. (AMZN) is conspicuously absent from this push to connect the world. Given that most of its revenue still comes from e-commerce, this is not terribly surprising. Even in markets with moderate internet penetration, such as some Southeast Asian economies, regulation, language barriers, reliance on cash and poor infrastructure make e-commerce difficult.
The temptation may be to pick a winner. Will it be Alphabet’s balloons? Facebook’s drones and free, walled-garden internet? Microsoft’s TV white spaces and other, yet-to-be-funded projects? In truth, it doesn’t matter. As long as at least one of these solutions extends internet access to another few billion people, the rising tide will lift all boats (Internet.org’s Free Basics being the exception, since it’s not a full internet connection). The risk that these projects’ costs—about which we know almost nothing—will strain companies’ finances seems negligible.
In a way, the push for universal internet access is like the space race. It’s expensive, but nothing compared to more accustomed, conventional expenses. It’s grandiose, extravagant, and as much an exercise in branding as a practical investment. Finally the payoff, if there is one, comes way down the road, but has the potential to be enormous.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
