January 2016

[Commentary] It’s been almost three years since former Federal Communications Commission Chairman Julius Genachowski set a goal of having at least one gigabit network in every state by 2015. The year is now over and by Telecompetitor’s tally, we didn’t quite make it – but we’re close. We combed through our archives and other online resources and, by our tally, at least one network operator has announced plans to offer gigabit service in every state. Not all of these networks are actually deployed or supporting service yet. But generally network operators don’t announce specific markets more than a year or two in advance of when they expect to deliver service. We also didn’t count a deployment unless plans included residential users. Clearly Genachowski wasn’t talking about gigabit Ethernet service to commercial buildings when he set the gigabit goal.

Even heavily rural states – states such as Wyoming, West Virginia, or Maine – made the list, thanks to a wide range of small locally-focused telecommunication companies, utilities, municipal network operators, and others. Even though deployment costs tend to be higher in rural areas, entities with a local focus often manage to find a way to make gigabit happen – and in the telecommunication company arena, many companies already had fiber-to-the-home networks, making it relatively easy to upgrade to a gigabit. Another thing that helped put all 50 states on the gigabit map was that tier one or tier two telecommunication company and cable operators that had not previously announced gigabit plans decided to get in on the trend.

[Commentary] Here is the problem with Free Basics: the Internet access on offer is not unrestricted. Facebook and the mobile carriers get to decide what websites people can visit, and Facebook becomes the center of the Internet universe. Users can’t do Google searches and explore the web; they can only go to supported sites and search Facebook. Zuckerberg compares this limited service to libraries and hospitals. But imagine a private corporation being allowed to decide which books your children could read and which videos they could watch — and to monitor everything that they did. Imagine the corporation’s dictating what services your hospital would offer and what treatments it would provide. Would you accept that?

Google is launching Loons in Indonesia and Sri Lanka. It was also supposed to launch them in India, but India’s defense, aviation, and telecommunications ministries raised technical and security concerns and stopped the project. When the telecom providers figure out that with unlimited, inexpensive, Internet access, their cell and data businesses will be decimated, they too will place obstacles in the way of these technologies. This, therefore, is the real battle that Facebook should be fighting. If the goal is to provide everyone with Internet access, Facebook and the Internet-freedom groups that it is fighting should be working together to lobby for a change in government policies — for when the new space-based technologies are ready.

[Vivek Wadhwa is a fellow at Rock Center for Corporate Governance at Stanford University]

Consumers have difficulty distinguishing between native advertising and editorial content, according to a new study by researchers at Grady College in Georgia, published in the December issue of the Journal of Advertising. The study, titled “Going Native: Effects of Disclosure Position and Language on the Recognition and Evaluation of Online Native Advertising,” investigated how consumers react to the size and placement of native ad disclosure statements in online news articles.

Overall, only 17 out of 242 subjects -- under 8 percent -- were able to identify native advertising as a paid marketing message in this experiment. The experiment also revealed that consumers are seven times more likely to identify paid content as a native ad when it is marked with terms like “advertising or “sponsored content” than if it carries terms like “brand voice” or “presented by.” These findings should come as no surprise, considering that native advertising is intentionally presented in a format that resembles surrounding editorial content -- but they have particular relevance in light of the Federal Trade Commission’s recent unveiling of new standards for native ads, intended to prevent advertisers from deceiving consumers.

[Commentary] Facebook makes about half of its advertising revenue outside of North America, but its business is disproportionate to its user base. Roughly 85 percent of Facebook’s users are outside of the United States and Canada, established markets where the company’s growth is slowing. Facebook has nearly 2.5 times as many users in Asia-Pacific (APAC) than it does in North America, yet APAC generates less than a third of North America’s revenue. The point is that APAC and other “emerging markets” like India, Brazil and parts of Africa are growing a lot quicker for Facebook than the US or Europe.

In the first three quarters of 2015, Facebook added 73 million users in APAC; it added just 23 million across the US, Canada and all of Europe combined. Fast forward five, 10 or 15 years down the road and it’s possible (probable?) that those emerging markets — the areas of the world where millions of people are coming to the Internet for the very first time on mobile phones — will be Facebook’s most important markets. That’s why Facebook’s emerging markets team exists, and why it is spending so much time getting people Internet access through its Internet.org initiative. The idea that regions like India and Brazil may be anchors for Facebook’s bottom line a decade from now may sound obvious, but actually mining those countries for ad dollars isn’t necessarily simple.