Bandwidth hungry but purchasing-power poor

Posted on April 27, 2009  /  1 Comments

For some time we have been talking about the scarcity and cost of international bandwidth. Looks like it is going to cost people in our part of the world access to sites such as Facebook and YouTube (full article). It appears that distance does matter. And everyone is not actually as close to everyone else as we were told. Of course, distance can be overcome, with money, not the user’s money but the money of the advertiser who believes that particular audiences are worth paying for.

Web companies that rely on advertising are enjoying some of their most vibrant growth in developing countries. But those are also the same places where it can be the most expensive to operate, since Web companies often need more servers to make content available to parts of the world with limited bandwidth. And in those countries, online display advertising is least likely to translate into results.

One problem that now exists is that the advertisers are in the developed countries; they do not particularly value developing country audiences. Now, what if Youtube and Facebook started advertising different messages to different regions? What if they brought down the transaction costs of placing ads? What if? Readers may wish to develop the argument, or propose their own solutions. What I suggest appears to be the choice for Facebook for now:

Facebook, which says it favors membership growth over profitability for now, is trying to increase revenue overseas by hiring advertising sales staff in countries like Britain, Australia and France.

1 Comment

  1. Name of the game is – unbundling the backhaul. It’s not rocket science. Look at the decades old business model of airlines. Various airlines come to one side of the airports (International gateways in telecoms) and their tickets are being sold through numerous travel agents at the other side of airports. Airport authorities (International gateway operators) are not in airline (Access line) business. Consumers enjoy the total liberty of picking preferred airlines. This is how fierce competition has been driving the aviation business. Why should international telecoms be any different than international air travel? It’s only a matter of conceiving the common sense, which is being practiced only by the common people. The policymakers in our part of the world are not common people. Hence, they lack common sense!