Attention cellcos: don't underestimate Facebook

Eden Zoller/Ovum
OvumOperators are in danger of underestimating the extent of Facebook’s ambitions and the fact that it is shaping up be a disruptive, competitive presence not just online but in mobile too, and in a way that strikes at the heart of a telco’s business. Facebook is much more than a social network; its actual domain spreads much wider.
 
Facebook is better viewed as an increasingly rich communications and content platform that wants to integrate with everything and be the main way that people consume and share information, anywhere and on any device. Alongside this, Facebook is building a strong developer community, enticing them with attractive APIs and massive scale.
 
Moreover, Facebook is building its empire on a web paradigm where the rules of engagement are very different from a traditional telco environment and where operators are typically at a disadvantage. 
 
Facebook is not always your new best friend
 
When we talk to mobile operators about the biggest threat they face from adjacent players they typically cite Google, and understandably so. Google has moved way beyond search and has proven adept at harnessing key sweet spots on the communications and digital content value chain, and in areas that are not its traditional core capabilities – notably mobile device platforms, applications, and more recently Internet TV.
 
Facebook’s name does not typically crop up in the same competitive framework, although interestingly Google increasingly sees Facebook in this way. In contrast, operators view Facebook as a benign presence, unlike Google, and one that they like to partner with, particularly on the mobile front.
 
Facebook claims there are more than 200 mobile operators in 60 countries working to deploy and promote Facebook mobile products. Although there are some good reasons why operators should wish to partner with Facebook, operators should be more alert to the fact that it is shaping up to be a strong competitor. It is only by understanding Facebook fully that operators can engage with it effectively, be that on a collaborative or competitive basis.
 
Encroaching on operator territory, integrating across the Web
Facebook has a huge base of more than 500 million users that already love to communicate and share, and Facebook is giving them richer ways to do this. It has an integration deal with Skype for voice communications and in November 2010 took the wraps off an email offering.
 
It is turning increasing attention to location-based services and building up a strong applications and content portfolio, initially in the shape of virtual gifts but now across the spectrum with particular strength in games where it has several big names on board including Zynga. Facebook claims to have over 2.5 million developer and partner applications currently on the Facebook platform, while every month 70% of Facebook users engage with Facebook platform applications.

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