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Is Mark Zuckerberg changing telecoms as we know it?

NetworksFeatures
by John Hayduk, 27 Apr 2014Features
Is Mark Zuckerberg changing telecoms as we know it?

In Mark Zuckerberg’s keynote address at MWC 2014, he talked about his goal to connect everyone on the globe centred around the involvement in the Internet.org Consortium.

In his vision, hundreds of millions of new users living in industrialising nations access the Internet on their handsets for free or after paying a nominal charge.

Sounds like great news for the app developers and for the Facebook’s of the world, especially given Zuckerberg’s recent WhatsApp acquisition and his plans for it to connect one billion people worldwide through data and voice messaging, but what does this vision mean in the short term and long term for the mobile operators of today?  

The goals of internet.org are entirely laudable and I wholeheartedly agree that connecting people is essential for the planet on every level. Just one third of the world’s population has access to the internet and the pace of growth is slowing.

However the plan is not without its challenges. The approach outlined by Zuckerberg is undoubtedly Facebook-focused with Facebook and the OTT content providers as the beneficiaries. The opportunities for telecommunications companies are slim as things stand.  

The goal of internet.org is to level the online playing field and give people access to services in an almost democratic way.

Should it have the impact it is clearly aiming for, operators will need to look for new means of generating revenues.

In the short term the SMS revenue stream will be at risk as more users adopt WhatsApp in its place. In the long term, consumers are unlikely to want to pay a premium for a newly redefined set of core services (messaging, social and voice) when such services are being given away to achieve a new level of global connectivity.  

Why does this matter? Well, for a start, where will the bandwidth come from to support an additional six billion internet users? It is unlikely that service providers will be willing to invest the very large sums needed to build out the infrastructure or to purchase spectrum if they are unable to monetise the investment.

The raw user numbers may look appealing but at some level, someone has to pay for the services provided. Operators will be forced to focus on high ARPU generating services and solutions just to make ends meet.  

Furthermore, with revenue under pressure operators will be forced to squeeze their costs. This potentially impacts manageability and security just as 6 billion more internet users come on line – and history shows that more internet users equals more security and privacy risks and more pressure on bandwidth.

It’s interesting that there are no mobile operators on the consortium at this point and the support and engagement of the telco industry will be critical to the success of a wholly connected globe.

 John Hayduk is president of product management and service development at Tata Communications

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