Analysts at Pyramid Research argue that social networks, because they are often used as a venue for communications, including instant messaging, email and posting, are a mixed blessing for access providers. As often is the case with IP-based applications, there is some chance that new applications will displace, as much as extend or enhance, existing modes of communication that represent revenue streams for access providers.
Facebook’s email service, added to Facebook-suupplied instant and text messaging, will for many users, perhaps scores of millions, be a substitute for carrier-provided text messaging, says Jan ten Sythoff, Pyramid Research analyst.
That’s true, but basically no more true than would be the case for many other popular applications.
It is true, as ten Sythoff notes, that “this threatens operators both directly, by impacting their voice and messaging revenues, and indirectly because their brands are overshadowed by social networking brands.”
He therefore warns that operators “therefore need to strike a delicate balance between leveraging the demand for social network mobile access and the threat of social networking cannibalizing their basic suite of services.” See http://www.pyramidresearch.com/store/ins_eur_110615.htm?msg=d.
Some of us would disagree, nearly completely, with that thesis. There is almost no room for “balancing” at all. If a mobile service provider does not want to make hugely-popular third applications easy to use, that will harm a business as much as if a multichannel video supplier wanted to make ESPN had to use.
Are there tensions? Of course. But there is little, if anything, to be gained by putting barriers between end users and their most-favored applications, when those applications do not directly displace current service revenues.
The one caveat is that access providers might not want to be too aggressive about destroying the value of the applications they currently provide, for a recurring fee, by moving too quickly.
In other words, incumbent telcos were rational about slowly migrating to consumer VoIP, as a matter of pricing, features and packaging, rather than destroying the value of their legacy voice operations.
That has meant giving up some market share, but the alternative was worse. Forgetting for the moment the issue of new features, it is better to lose some share, and maintain pricing, than to keep share, and drop prices across the board.
End user demand for applications is what creates the need for broadband access, and that will always be the case. Some of those applications can, and will, compete with traditional carrier-provided applications.
Some of those applications can be enhanced for experience on a mobile device.
And, sooner or later, some mechanism will be found to embed access providers more fully into the application ecosystems.
So ask yourself this question: if “getting paid” in some way for optimizing and enabling all third party applications created meaningful revenue for an access provider, would any access provider think doing so was a problem?
If the answer is basically or substantially “no,” then the real issue is business arrangements between access providers and app providers, not the “threat” of third party apps in a strategic sense. That trend cannot be stopped, in any case.
