Facebook - the telcos' new friend?

ZUCKER PUNCH: Facebook CEO Zuckerberg was in good spirits before his keynote speech at the Mobile World Congress in Barcelona on Monday. His firm beat out Google in a US$19 billion (S$24 billion) acquisition of free messaging service WhatsApp.


    Feb 27, 2014

    Facebook - the telcos' new friend?

    FACEBOOK'S quest to bring free Internet access to the world has started having ramifications in this region and might eventually shape how telcos make their money.

    Its tie-up with the Philippines' Globe Telecom has sparked off a doubling in the number of data and Internet users on the telco's network, Facebook's co-founder and chief executive, Mr Mark Zuckerberg, said at the Mobile World Congress in Barcelona on Monday.

    SingTel owns about 47 per cent of Globe, which has more than 38 million mobile customers. Even before the Facebook tie-up, Globe saw robust mobile-revenue growth last year, attributed to a strong take-up of data services.

    The carrier also fared the best among SingTel's regional associates in mobile-customer growth then.

    The Facebook partnership, launched in October, gave Globe users free access to the service over their mobile devices for three months.

    The hope is to "upsell" users on external content - news and videos, for example - that are displayed on Facebook and which have to be paid for.

    On a broader level, Mr Zuckerberg is hoping to position Facebook as a service that helps telcos entice the denizens of developing markets onto the lucrative data wagon.

    Even so, the months-old Facebook-Globe partnership will need time to pay off. Asked if Globe has made money off it, Mr Zuckerberg said that they are "near break-even".

    "We're highly confident that we can get this to a point where it's going to be very profitable," he added.

    Fresh from his firm's US$19 billion (S$24 billion) buyout of WhatsApp, Mr Zuckerberg cited a recent Facebook-commissioned Deloitte report, noting that only 2.7 billion people in the world have Internet access.

    While the other 4.3 billion might not immediately see the point of a data plan, it will be easier for them to see the point of using Facebook or WhatsApp, he said.

    "What we envision for carriers is a model that can help them get more subscribers and connect more people," Mr Zuckerberg noted.

    While carriers and over-the-top (OTT) players like Facebook have long been seen as being at odds with each other, this model of cooperation is an evolution in the relationship.

    While Facebook does not have the capacity to work with many carriers, it is looking for "three or five" of them to have similar partnerships with, Mr Zuckerberg said.

    Even as both telcos and Facebook can ostensibly benefit in markets of low data penetration, carriers in saturated markets, like Singapore, are faced with the uphill task of monetising data.

    StarHub, for example, formed an alliance with WhatsApp rival, Japanese chat app Line, earlier this month, on the back of an alliance with WeChat last year.

    On Tuesday, Line said that the service has seen a 200 per cent increase in the number of free calls made by its Singapore user base since it upgraded its call quality on Feb 6. It declined to reveal the number of free calls in nominal terms.

    This feature puts it on a collision course with WhatsApp, which plans to offer free voice calls by the second quarter of this year, as it pushes towards its target of one billion users.

    With the Facebook-WhatsApp alliance, both telcos and rival apps will have to adjust their strategies quickly, especially in South-east Asia.

    The region, a paradox of low overall Internet penetration and booming economies, is set to become the next hotly contested battleground for data dollars.