Just 26% of 1.3 billion Indians had access to the internet in 2015, but the government believes that 338 million number will shoot up to 730 million by 2020, thanks to increasing penetration in the rural areas. The government in 2011 launched an effort to provide broadband connectivity to 250,000 local village governments, but that plan has hit a speed bump and Facebook's (NASDAQ:FB) internet.org is hoping to fill the gap.
It's been reported that 61,000 villages have been reached, but only 7,000 have a working connection. Facebook's internet.org is planning to help fill this gap in collaboration with Indian telecom giant Bharti Airtel by launching 20,000 Express Wi-Fi hot spots over the next few months in rural parts of the country. Express Wi-Fi is currently available in nearly 700 hot spots in India.
"Express Wi-Fi is designed to complement mobile data offerings by providing a low-cost, high bandwidth alternative for getting online and access apps, download and stream content," internet.org wrote in a press release. "Our Express Wi-Fi partnerships empower local Indian entrepreneurs to start businesses to offer internet access to their town or region. They also help Indians connect to the internet easily and for an affordable rate."
Facebook has been testing the Express Wi-Fi service in India for the past two years with the help of internet service providers and more than 500 local entrepreneur partners. Express Wi-Fi reportedly offers a minimum speed of 10 Mbps. This is higher than the country's average internet speed of 4.1 Mbps, giving the company a solid ground to charge for the service.
Facebook's reseller partners and the internet service providers will charge people to use the service via daily, weekly, or monthly data packs. The social media giant won't be setting prices, but will benefit in non-monetary ways.
What could Facebook gain from this move?
India is currently Facebook's second-largest market with 184 million users, but it can become bigger as internet penetration increases. Not surprisingly, the company has been rolling out new features designed especially for this market. For instance, Facebook users in India can use the Lite version to access the platform over slower internet connections. What's more, the company has equipped this app with new camera effects and the "Reactions" feature that lets you respond to posts with emojis.
Facebook doesn't want to miss out on any potential ad revenue growth in the long run. The company wants to be at the forefront of India's internet growth as competitors such as Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google are already making moves to bring internet connectivity to the public.
For instance, Google has tied up with Indian Railways to provide Wi-Fi connectivity to 400 railway stations by the end of this year. The project has already been deployed across 115 stations, and over 5 million people are reportedly using it every month. Additionally, Google is connecting 15,000 new users to the internet every day through Wi-Fi kiosks set up in stations.
This strategy will give Google a lot of visibility across India's railway stations as an estimated 8 billion passengers travel by train every year. Now, Facebook seems to have taken a leaf out of Google's playbook as the Express Wi-Fi project should provide visibility in smaller cities and towns, where demand for regional content and e-commerce is rapidly growing.
According to a survey by the Center for Customer In-sight, as reported by telecomlead.com, there will be 315 million connected people in India's rural areas in 2020 as against just 120 million in 2015. Not surprisingly, Facebook wants to move fast in this space by providing Wi-Fi-based internet services as this could lead to potential expansion of its user base in the world's second-most-populous country.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool has a disclosure policy.