Facebook to wireless carriers: Let's team up for profits

Facebook targeting emerging markets for growth

BARCELONA, Spain--Facebook's (NASDAQ:FB) Dan Rose said the company must team with wireless carriers in order to be successful. And he said those partnerships much create value for both sides.

Facebook dan rose


"We have to partner to be successful," said Rose, Facebook's VP of partnerships, during a keynote appearance here during the Mobile World Congress trade show. Rose explained that Facebook looks for "ways to create value" for both itself and its wireless carrier partners when it inks deals.

Specifically, Rose said Facebook obtains new users through its partnerships with wireless carriers, while wireless carriers can score additional revenues by encouraging users to sign up for data plans to access Facebook.

As an example of Facebook's partnerships, Rose pointed to Facebook's recent announcement of a promotion that will provide users with either free or discounted access to its Facebook Messenger service in a handful of emerging markets. Facebook said the promotion will be available through 18 operators in countries including Indonesia, Thailand and Brazil. Although Facebook did not detail the terms of its partnerships, it's reasonable to assume Facebook is subsidizing the cost of users' data charges via payments to the wireless carriers.

During his appearance at MWC, Rose addressed concerns among some operators that Facebook is essentially stealing carrier profits by being an "over the top" service provider. Operators have blamed OTT services like Facebook Messenger, Skype and WhatsApp for cutting into their messaging and voice revenues. Indeed, Vodafone CEO Vittorio Colao said the carrier's "Red" service plan, which offers unlimited messaging, talking and a data allotment, was a response by the carrier to declining SMS and voice revenues driven by the likes of Skype.

"We can't reach our customers without the partners that we have," Rose said, noting that Facebook has partnerships with virtually every wireless operator in the world.

"Unlike the providers of other over-the-top communications services, Facebook has so far been willing and able to maintain what appears to be a good working relationship with its mobile operator partners, and its latest partnership announcement is testament to that," noted Pamela Clark-Dickson, an analyst with Informa Telecoms & Media. "However, it's possible that Facebook's relationship with mobile operators will be tested by the addition of VoIP to its iOS applications, which may be one reason why the company has only rolled out the capability in North America."

Facebook late last week added VoIP-based calling to its app in the U.S. market.

Interestingly, Rose said that Facebook's ultimate goal is to connect every person on the planet, which means Facebook is working to break into emerging markets where it does not yet have a strong presence. He said some of these users might not have running water, but thanks to low-cost smartphones and wireless networks, these users can connect to Facebook.

Facebook currently counts 680 million mobile monthly active users, and last year the company's mobile traffic outgrew its desktop traffic. Facebook said that 23 percent of its revenues came from mobile during its most recent quarter, up from nothing a year ago.

For more:
- see this Facebook post
- see this FierceWireless:Europe article

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Facebook expands Messenger voice calling to U.S. iPhone users
Facebook: Mobile users outnumber Web users
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