Should Facebook Become a Mobile Service Provider?

By Gary Kim October 16, 2012

You’ve heard complaints for years from telecom executives that third-party app providers build businesses on the back of telco-provided access services, but that the access providers do not share in the revenue created.

Now you have the reverse being argued, that application providers such as Facebook create huge value for telos, but do not participate in the access revenue stream.

In other words, nobody is ever completely happy with their share of ecosystem revenue. Strand Consult speculates on whether Facebook is willing to look beyond advertising as a source of revenue, and whether Facebook would become a mobile virtual network operator – as a way to create a new revenue stream, as well as to recapture some of the value it believes it is creating in the ecosystem.

As some have speculated about the value of Facebook creating its own branded smartphone, Strand Consult now speculates about the value of Facebook becoming a service provider.

Becoming an “MVNO is a logical step for Facebook the world’s largest communication platform,” Strand Consult analysts argue.

One billion users already consider Facebook as their de facto telephone book for friends and family and use the platform for communicating by SMS, text, image and video, according to the firm.

So adding mobile voice and data wouldn’t be completely odd.

Aside from its huge user base, Facebook has credit card credentials on file already for millions of its users, many of whom purchase premium games, driving one-sixth of Facebook’s revenue.  

Facebook could offer mobile SIM cards online, and there are a number of companies than can provide the billing and fulfillment.

If the mission of the company is to “help the world connect,” you can see the resonance of Facebook as a mobile service provider. By launching an MNVO, Facebook could become the world’s largest mobile operator, allowing its users to connect via voice, and make the money its investors demand.

How much could Facebook earn as an MVNO? Facebook currently earns annual revenue per user of $4. An MNVO can earn between $10 a month and $50 a month per customer with an operating margin between 20 percent and 25 percent.

Edited by Braden Becker

Contributing Editor

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