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November 07, 2012

Facebook a Service Provider?

By Gary Kim, Contributing Editor

Facebook (News - Alert) is testing a new service that allows local businesses to offer customers free Wi-Fi after checking in on the social network. That doesn't actually mean Facebook is testing a new function as a Wi-Fi hotspot provider. Instead, Facebook is supplying the router, while participating businesses supply the actual Internet access.

Some have suggested Google (News - Alert), for example, could help boost its own local business, and that of retail partners, by supplying devices to business owners. None of that would necessarily turn an application provider into a service provider. 

Image via Shutterstock

As part of the Facebook test, when visitors check into a location on Facebook, they are redirected to the business’ Facebook page and can continue to browse the Web for free.  Facebook isn't actually supplying access.

Page owners will be able to track how many new "Likes" they received from people who took advantage of this service, so the revenue upside for Facebook would come from the ability to demonstrate advertising value for Facebook partners.

But such notions also indicate the ways that application providers, retailers or other non-traditional providers might one day find themselves pondering becoming "service providers," if only in a limited sense, as part of a business model relying on commerce, marketing or advertising.

The persistent rumors about Facebook creating its own branded smartphone provide another example of how “non-traditional” entities are, in some cases, becoming part of traditional communications ecosystems in new ways that could potentially lead to more direct competition with traditional suppliers.

Edited by Brooke Neuman
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