Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Next Threat to Wireless Carriers: Facebook?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

SMS texting is an antiquated technology that deserves to die.

There, I said it. Although as a pure profit center, wireless carriers have every incentive to further entrench the technology.

The clearest examples of this effort are how Verizon (NYSE: VZ  ) now requires new subscribers to sign up for pricey Share Everything plans that include both unlimited talk and text, forcing consumers to overpay for services where usage is on the decline. AT&T (NYSE: T  ) doesn't require customers to pay for its similar Mobile Share plans, but in August of last year it axed its tiered texting plans and began offering only an unlimited option.

That move by Ma Bell was very likely a response to Apple's (NASDAQ: AAPL  ) free iMessage service that was unveiled just two months prior with iOS 5. A report released this month by industry analyst Chetan Sharma showed that the number of SMS texts sent as well as total messaging revenue in the market declined for the first time ever in the third quarter.

There have long been alternatives to SMS, but many have had trouble gaining traction simply due to lacking the inherent network effects that SMS has. For example, iMessage is only available to iOS users. That's a large installed base, but chances are iOS users still have enough non-iOS contacts that they still can't ditch their pricey SMS plans entirely.

Enter Facebook (NASDAQ: FB  ) . As the largest social network on the planet, Facebook has obvious network effects. The company launched its Facebook Messenger app long ago, which has more promise in some ways as a cross-platform app also available on Google (NASDAQ: GOOGL  ) Android and Microsoft (NASDAQ: MSFT  ) Windows Phone.

The company has 189 million monthly active users in the U.S. and Canada, so most people have a Facebook account anyway. Well, Facebook messenger just became even more of a threat to carriers' SMS businesses, as it's now open to users who don't have Facebook accounts. Starting with an update to the Android version, users can now create a Facebook Messenger account with just a name and phone number. Presumably, updates for other platforms like iOS and Windows Phone will follow.

That's just another addition to the growing list of SMS threats facing carriers.

After the world's most hyped IPO turned out to be a dunce, most investors probably don't even want to think about shares of Facebook. But there are things every investor needs to know about this company. We've outlined them in our newest premium research report. There's a lot more to Facebook than meets the eye, so read up on whether there is anything to "like" about it today, and we'll tell you whether we think Facebook deserves a place in your portfolio. Access your report by clicking here.

Read/Post Comments (2) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 04, 2012, at 7:24 PM, matthewluke wrote:

    Not specifically a Facebook thing. You have services like WhatsApp that are available on iOS, Android, Windows Phone, BlackBerry... even Symbian and Nokia S40. Cross-platform, so my iOS WhatsApp talks to every other version of the app.

  • Report this Comment On December 06, 2012, at 11:31 AM, exeter17 wrote:

    I think the cruz though is almost everyone has a FB account by now (whether they use it or not is a different story). I've never heard of Whatsapp and its not on my phone, whereas FB is

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2138797, ~/Articles/ArticleHandler.aspx, 10/22/2016 11:36:10 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
FB $132.07 Up +2.07 +1.59%
Facebook CAPS Rating: ***
AAPL $116.60 Down -0.46 -0.39%
Apple CAPS Rating: ****
GOOGL $824.06 Up +2.43 +0.30%
Alphabet (A shares… CAPS Rating: *****
MSFT $59.66 Up +2.41 +4.21%
Microsoft CAPS Rating: ****
T $37.49 Down -1.16 -3.00%
AT and T CAPS Rating: ****
VZ $48.20 Down -0.94 -1.91%
Verizon Communicat… CAPS Rating: ****