Facebook vs. the wireless industry

Facebook hasn’t yet figured out how to make meaningful revenue from mobile, the fastest growing industry in the world, but it has done plenty to create both opportunities and headaches for the wireless carriers. While Facebook is undoubtedly encouraging people to send fewer text messages, it’s also allowing carriers to take part in new revenue streams. That’s just the beginning of what we’ll see from Facebook’s mobile efforts, as the company recently told investors that mobility is one of its major priorities this year. Here are some ways that Facebook is good for the carriers: Facebook this month introduced App Center, an app store similar to Apple’s and Google’s. In the store, Facebook users will be able to buy Web apps for smartphones; each sale gives Facebook a 30 percent cut, leaving the developer with 70 percent. But unlike Apple’s and Google’s app stores, Facebook’s gives the carriers  the potential to make some money through a partnership with Facebook to streamline Web-based payments. With the new system, people programming Web apps for Facebook will be able to embed some code to make charges appear on a user’s phone bill, so they don’t have to enter a credit card number to buy an app. Web apps that use this system will give both carriers and Facebook a chunk of each sale. Facebook’s huge popularity has given many customers a reason to buy smartphones as opposed to traditional cellphones. And smartphones — in particular, the data plans that customers pay for to get on the Internet — have driven enormous revenue for carriers. AT&T and Verizon, for example, both had $6 billion in revenue last quarter from mobile data alone. Facebook in some cases is letting carriers use its popularity to attract users. Some South American carriers are shipping phones with data plans that use Facebook as the sole gateway to the Internet. Here are some ways Facebook is bad for carriers: Thanks partly to the ease of posting status updates, uploading photos and sending messages with the Facebook mobile app, carriers are seeing a decline in text-message revenue. Strand Consult, a telecommunications consulting firm, says that based on measured minutes of use, smartphone users are spending more time on Facebook and thus probably sending more messages with its service than they are text messages. In some cases, Facebook’s App Center showcases apps made just for iPhones or Android phones and points the user to where to download the software. When an  app is showcased this way, Facebook does not receive part of the revenue. It does, however, get to promote apps that use Facebook credentials to log in, thus increasing the use of its network. Apps sold this way benefit Apple, Google and Facebook. But the carriers are left out. As Facebook evolves to become more sophisticated, it threatens to create a greater impact on carriers’ networks. Facebook has become a gateway for high-bandwidth activities like uploading large photos or high-definition videos, said Jan Dawson, a telecom analyst with Ovum. But voice could be part of this use of the site. “Today, if two or more people are carrying on a conversation through Facebook chat, and they want to ‘escalate’ it to voice, they have to pick up the phone,” Mr. Dawson explained. “Adding a built-in voice option could be really compelling and would remove all that voice usage from carriers.”