Last month, Facebook seized the attention of entire business community across the world by announcing its intention to buy messaging service WhatsApp for a staggering amount of $19 Billion. It is an astonishing figure for a company that is five year old with 55 employees and that translates into about $345 million per employee in terms of deal valuation. There have been many views as usual by different media entities about whether this is right price to pay and what next etc All this aside, we must note that WhatsApp has shown explosive subscriber growth compared to even Facebook and Twitter.
Being part of telecommunications infrastructure industry, I can't help but share the feelings with telco operators who usually resent and whine about these so called over-the-top (OTT) players like Facebook,WhatsApp,Skype etc who walk away with gold pot whereas the telcos are working 24X7 to ensure the services are up and alive. At the same time, I feel that it won't change much for telcos because these two players are very different. Telcos are bound by geography,country specific regulatory frameworks and other such constraints that make the whole business as one with strong entry barriers. In a way, this naturally protects telcos from new entrants competing for the market share. On the other hand, OTT players sit on top of the infrastructure and they benefit from the so called Net Neutrality principle. In that sense, OTT players have far less entry barriers when it comes to creating something new applications and delivering them. Telcos also need these OTT players for the fact that these OTT applications are key drivers of data growth which in turn provides impetus for the telcos to invest in network expansion and improve their business.
Considering the fact that Facebook paid WhatsApp such an amount primarily to gain access to the huge subscriber base that WhatsApp is holding, the simple question pops up. Telcos too have access to subcribers and Why not telcos monetize that? I think this is still happening to some extent but not like the way Google or Facebook does. For example, AT&T provides the 'aggregated' info about the subscribers and their key usage to some enterprise customers. However, this doesn't reveal the privacy of single individual subcriber.
Looking at the Indian telecom landscape and the massive amount paid by Indian operators in recent spectrum auctions, it will be interesting to watch how telcos are going to recover these investments in the near future.