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Jonny Evans: So WhatsApp, Facebook?

At the heart of the $19B WhatsApp acquisition may be Facebook's continuing desire to take over your mobile phone

By Jonny Evans
February 27, 2014 01:11 PM ET

Computerworld - Depending on whom you speak to, Facebook's $19 billion purchase of WhatsApp is either a stroke of brilliance or a colossal waste of money -- but mobile phone firms face both threat and opportunity as Mark Zuckerberg's network makes its (free) call.

You see, mobile telcos already know they've been outflanked by the big tech firms that now offer key services over their networks. They even have a name for such services: over-the-top (OTT) content. The term encompasses things like iCloud, Facebook, Twitter, Google services, Netflix and many more.

While all these services are different, what they share is that they all make at least some of their money by piggy-backing connectivity offered by the carriers. These services are great for customers, of course, but carriers already recognize the steady erosion of their traditional profit centers: voice calls and SMS.

That's a real problem for carriers, which need new sources of revenue to compensate for the loss of those profitable businesses. Yet OTT operators, like Facebook, offer most of the key services smartphone users choose in this mobile connected age, reducing the value of a carrier's business to that of supplying the pipes.

In conjunction with the need to continually invest in new communications technologies, such as LTE/4G, carriers know they need to find some way to create a sustainable business -- they can't make the kind of profits they need offering mobile bandwidth at an all-in price.

Word from the B/OSS (billing and operations support systems) world is that carriers are well advanced on plans to find a way to make money out of OTT services, using an inherent ability within LTE to limit bandwidth access and tie bandwidth and service deals to individual users and devices. At its simplest, carriers seek an excuse to introduce tiered service-specific pricing schedules in an attempt to supplement their mobile provision revenues.

What does that mean?

It means you'll pay for service-level guarantees for the specific services you like to use. You might add a video services bolt-on, you might pay for guaranteed stutter-free Facebook access. You might pay for WhatsApp, if you want your voice or messaging communications to get around in timely fashion.

Trust me. This isn't a pipe dream. This move to tiered pricing has been discussed within the mobile industry for years. Carriers have sold most of us on LTE/4G services because of its faster mobile broadband, but they want us to like LTE because of its support for a thing called on-device policy control. What that means is that it is possible to charge device- or user-specific pricing for services. You might be watching a video on a train and want it in higher resolution with guaranteed service, and carriers will offer you this. Netflix and others are already reaching deals with mobile telcos in order to guarantee bandwidth to video viewers choosing to watch something on their mobile devices. These deals see a portion of customer charges passed along to carriers in exchange for a service guarantee.

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