Facebook's Connectivity provides ASEAN $70 billion in economic value

20 July 2020 Consultancy.asia 4 min. read

Facebook has been actively investing in eliminating connectivity barriers being faced by ASEAN countries, which Analysys Mason estimates could generate $70 billion in value for the region over the next half a decade. 

Having people online is central to the Facebook business model as it attempts “to give people the power to build community and bring the world closer together.” In recent years the company has taken on a more active role in making this happen, targeting regions where universal connectivity remains an issue.

ASEAN is one such region where Facebook has been particularly proactive. Internet connectivity in ASEAN has been expanding at a rate of knots recently on the one hand, but Analysys Mason points out that this has mostly been concentrated in a handful of rapidly growing urban centres. More than half of the population in the region – a large part of which is rurally situated – continues to have connectivity issues.Barriers to connectivity along the value chainFacebook has been working to change this. In a new report, Analysys Mason has done a roundup of the company’s activities in the region, broadly categorising its efforts into infrastructure-related investments, partnerships with local telecom players to enhance connectivity, and freeing up the connectivity value chain.

In the infrastructure space, Facebook has been directly involved, in some cases signing long-term development contracts. Projects include the laying of submarine cables, developing data centres and building edge network infrastructure, among others. A prime example is the company’s fibre investments under the OTNx umbrella in Indonesia, which is expected to bring nearly a million people online by 2024.

Then there is a spectrum of partnerships with local service providers, also aimed at better online penetration. “These initiatives are primarily focused on access network infrastructure and aim to support operators and service providers in bringing more people online by extending network coverage and improving service affordability,” explained Analysys Mason.

Targeted Facebook infrastructure initiatives

An example here is the company’s Express Wi-Fi initiative – an end-to-end SaaS platform that enables public Internet access through a Facebook-designed interface. So far, the solution has been deployed across Indonesia, the Philippines and Thailand, amassing just under 70,000 monthly users across the market. Another example is the Telecom Infra Project, which is conceptualised as a facilitator for high-speed and high-capacity wireless Internet access.

The third and final category of Facebook initiatives includes those that are smoothening the entire connectivity value chain. As explained by Analysys Mason, connectivity is not simply about supplying a Wi-Fi connection. It requires the interplay between multiple networks, internet service providers, multiple users, and online content providers across national and international borders.

Seanless interaction among these different players is crucial, and requires a broad-based approach. Facebook is solving problems at each stage of the connectivity value chain, from access networks, backhaul, edge networks and international links, all the way to data centres in strategic locations.Projected yearly GDP impact of Facebook investmentsThrough this combination of infrastructure investments, partnerships and problem-solving, Facebook is working towards bringing more people in ASEAN online. More than 300 million people in the region currently lack Internet access. If Facebook’s plan’s stay on track, more than 450 million people in ASEAN could be online by 2024.

As pointed out by Analysys Mason, such a scenario will have tremendous economic implications for individuals, businesses and governments. “Individuals benefit through increased access to information and services, which leads to improved quality of life, health, education and income.”

“Businesses benefit from increased organisational efficiency and ease of reaching and communicating with customers. Finally, governments can use better connectivity to boost efficiency and transparency, as well as increasing the reach and quality of e-government services,” explained the report.

Add to this the budding ecommerce landscapes across young ASEAN economies, which are only likely to grow stronger with better connectivity. Combined, these benefits could amount to a $70 billion increase in the regional GDP leading up to 2024, according to Analysys Mason's authors David Abecassis, Elena Korsukova, Michael Kende, Richard Morgan and Jia Yee Lim.

ASEAN is already tipped for substantial economic growth in the near future, and better connectivity among the economies only serves to improve this scenario.