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Facebook’s Controversial Free-App Plan Gets Competition

As Facebook offers free data on mobile phones in India, a competing plan makes the same technology available to any Android app in 15 countries.

Facebook is confronting controversy in India over its app, which would use a concept called “zero rating” to give people free access to Facebook and selected other websites, such as Wikipedia, through one carrier (see “Indian Companies Turn Against Facebook’s Scheme for Broader Internet Access”). Now a startup says it has a way to significantly expand—and democratize—this idea of free Internet usage.

The new system announced today by Jana, a Boston startup, will make it possible for any app developer to underwrite a user’s cost of downloading and using an app. The end users get a credit on their bills—plus a bonus of extra airtime that can be used for any online activity.

Jana’s service, implemented through Jana’s Android app, called mCent, could have broad impact because Jana will not serve as a gatekeeper or restrict it to one carrier. “We are not interested just in free Facebook and free Wikipedia, but free Internet for everybody, so we are giving people the ability to earn credit in their accounts to use it for anything,” says Nathan Eagle, founder and CEO of Jana.

Meanwhile, Facebook has revised its own plan. Facing criticism that the app violates the concept of net neutrality, founder Mark Zuckerberg said Monday that he was expanding the India plan so that any developer can offer an app through if it meets certain guidelines. About a million Indians had e-mailed the Telecom Regulatory Authority asking that it not approve the plan.

Jana has a unique base from which to offer its service. It has relationships with 237 mobile carriers. That is how it will put credits on customers’ accounts. “The reason why this hasn’t happened before is because we spent the last eight years building infrastructure that connects to hundreds of mobile operators’ [billing systems],” Eagle says. “This lowers the barrier for app developers.”

Jana’s technology got its start in 2006 as a way to reimburse health workers in remote locations in Kenya for the airtime they spent in sending health data to a government ministry on their mobile phones. It later expanded the concept with a service on basic feature phones that offered free airtime for users who filled out marketing surveys.

Last year Jana extended that idea further with mCent. Released last year, it was initially engineered to compensate consumers for data usage associated with downloading (but not using) apps from the likes of Twitter, Amazon, and China’s TenCent, among many other services. About 25 million people have registered for the app, which is available in 15 countries including India, Indonesia, Nigeria, and Brazil.

The new twist announced today detects and reimburses actual app usage—creating a full zero-rating service.

If an app developer becomes a Jana client, that app gets presented through the mCent app and advertised on the users’ phone. Jana collects fees in a manner similar to how ad networks conduct business. Essentially, Jana advertises a client’s app on users’ smartphones in proportion to how much the app developer has paid—a version of an auction system.

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