Op-Ed: Should Africa's telecoms industry be wary of Facebook?

In 2015, while no one was looking, Facebook quietly partnered with Eutelsat, a communications satellite operator (also partnered with DStv) to, as a press release put it, “get more Africans online”. It is part of Zuckerberg’s vision, as stated in an October 2015 Facebook post, to “connect the entire world” because “connectivity changes lives and communities.” Or as a press release stated, it will “accelerate data connectivity for the many users deprived of the economic and social benefits of the Internet.” It all kind-of slipped under the radar and everyone just went to back to business as usual.

But I’ve been watching this with cautious optimism. Facebook has looked at Africa’s Internet connectivity problems and is hinting at leveraging Eutelsat’s framework to do something about it. But Facebook is a for-profit company, and you can bet this isn’t a purely altruistic venture. Zuckerberg has something up his sleeve – and it can potentially change everything about Africa’s telecommunications industry – for the bad if we’re not ready; for the good if we are.

Facebook’s Free Basics app (internet.org) gives you a clue in what this behemoth of a technology disruptor is thinking. Free Basics allows users to to explore useful online services and websites – such as the news, health information, education, local information, weather etc. – at no (or very little) cost. With the Eutelsat deal, the idea is that consumers in Africa will get free access to the Internet through Facebook’s platform. And it sounds like a great idea, right? But obviously it can be used for a kind-of censorship.

Facebook can limit your access to certain sites, or make you pay for other sites that don’t fit into its service. For example, you can get Whatsapp (owned by Facebook) for free, but you might need to pay to use any Google services through their platform. You can browse their news sites they’ve partnered with (and we’ve seen how Facebook has recently come under fire for helping fake news to spread) but other news sites might be more difficult to find and could require additional payment. Of course, this is fair, given that Facebook is a for-profit company, but what happens if they manage a monopoly on Internet coverage on the continent? That is something we have to prepare for ahead of time, we can’t wait until that sort of thing happens.

There is a second side to this as well. It can completely cannibalise our existing telecommunications industries. And it’s this I don’t think we’re prepared for at all.

Let me talk you through it otherwise you can miss it. Facebook owns Whatsapp. Did you notice recently that Whatsapp added video calling to its service – with no pomp and circumstance? And it’s already had voice-to-voice for a while. We know that voice revenues are declining while data usage is going up, generally speaking. Now, think about this: what if Facebook offered you free Internet access, and you know that with it comes Whatsapp, allowing you to make not only free voice-to-voice calls but also video calls? What service are you going to use the most? Which service will begin to look a bit archaic in your mind?

Our telecommunications industry would be disrupted in an instant. From a consumer point of view, all of this makes perfect sense. But from a macro point of view we have to ask different questions. For example, Vodacom reported last year that its service revenue increased by 4.9 percent (49.3 billion) thanks to mobile data, fixed-line services, and voice revenue growth trends. 52.9 billion minutes worth of calls were made on Vodacom’s network, which grew from the previous year (so voice isn’t always declining). But data is still the big grower – 27.7 percent growth (R17,287 million) and a data traffic growth of 46.8 percent. [See http://www.vodacom-reports.co.za/integrated-reports/ir-2016/our-sa.php#sel=].

There is a lot of investment into data because we all know that’s where things are headed, right? But now imagine if this sort of revenue is no longer moving in the economy – both voice and data revenue. Obviously, this would be a massive blow. Our telecommunications companies would not be able to sustain their workforce, resulting in massive job-losses and skill sets that become redundant. Then also there is the supply chain that services these industries. This is just the tip of the iceberg. Sure, new industries will arise, as they should, and new skills will be needed – but the question is are our telecommunications providers ready enough to handle this kind of change? Are we as a continent ready for it? Have we prepared enough? Because this change can come quickly – history is showing us that it does – and it could come too quickly.

Maybe this sounds a bit far fetched for you, but you can’t negate the cultural change and perception change in Africa around the Internet and Facebook’s involvement. For example, Facebook is incredibly popular in Nigeria. In 2015, Geopoll did a survey in Nigeria which stated that up to 65 percent of those who participated in it agreed with this statement: “Facebook is the Internet”. The three most popular Internet-based services or apps in Nigeria are Facebook, Instagram and Whatsapp. Guess who owns all three of these? Facebook. [See http://qz.com/333313/milliions-of-facebook-users-have-no-idea-theyre-using-the-internet/]

What is also important to consider is where the revenue goes if Facebook launches this and consumers love it and are willing to pay for some kind of upgrade or extra service, or however Facebook intends to make money from it. I can guarantee you the revenue is probably not going to stay in Africa. So, from a macro level, we need to put ourselves in a position where we embrace the change and innovation that Facebook is initiating, because change will happen, but we insist that it must comply to certain kinds of regulation or implementation – for example, revenues must stay here, or they must create a certain amount of employment, and they must be part of fostering a new eco-system with its infrastructure, and not just provide a viable consumer-oriented product and take all the revenue home.

Perhaps there is an opposing view here to consider. Instead of fighting this change, telecommunications providers might want to embrace it and use it as a catalyst to put the right frameworks in place. MTN, Cell C, Airtel, Tigo and others have already partnered with Facebook’s Free Basics service in various parts of Africa. See the full list [https://info.internet.org/en/story/where-weve-launched/]. But I wonder if they’re seeing where this can go. As they focus on their bread and butter, it’s difficult to see the disruptor’s coming through. But the fact remains that they have to see it as they are poised to be the one collective force that can instigate the right kind of change, how much change should come, and make sure it benefits our economies. They’ve got to work with regulators, government, and the likes to make sure this will be a positive change.

Large corporates need to find ways to embrace change and channel it in a beneficial way for our continent, and to ensure it’s sustainable for everyone involved. The change is coming, it’s inevitable, and when it comes, are we ready? We better be, because otherwise I think we’re going to find ourselves in a fair spot of trouble.

Partner Content

Digital Transformation: A Key Driver of Business Success

In the digital age, more people have access to some form of mobile device over a bank facility and this is nowhere...

The star-studded multi-national line-up for Singularity USA Online Summit 2020

The line-up for the SingularityU South Africa Online Summit features thought leaders from across the globe, some as far as USA, Denmark,...

The COVID Currency Survival Guide for Corporates

Learn about what larger companies in South Africa need to know when it comes to foreign exchange during COVID-19 and beyond

Subscribe to our newsletter

Sign up for free newsletters and get more CNBC AFRICA delivered to your inbox