Facebook, in an increasing attempt to prove its utility beyond its own site (and hence build on its advertising potential in the long run), is expanding its Facebook Connect service on some major media and services sites, including Discovery.com, SFChronicle, Digg, Citysearch, CBS.com and Hulu. The Connect service allows a federated identity system of sorts, competing with other services/efforts such as OpenSocial (backed by Google and MySpace) and OpenID, and also allows Facebook services to go outside its own site onto other services. It allows Facebook users to sign in on these third-party sites, connect with their friends who also use the sites, and then share their info and actions on the social networking service.

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Facebook, which has 120 million members worldwide, will not be monetizing Connect in any direct way yet, reports the NYT, mindful of the Beacon disaster last year, but down the line could help serve more personalized ads on partner sites. Connect on other sites will drive traffic back to Facebook, thus increasing possibilities. For now, the service on third-party sites is available by approval only, but in the next few weeks Facebook plans to allow sites to register themselves for Connect, without having to seek approval.

It will be interesting to watch this battle among social networking sites, and which wins out in making its identity systems more pervasive…