Why Google, Facebook, Apple "Mobile Service Provider" Rumors Never Cease

From time to time there are new rumors that Facebook, Apple or Google "might" become mobile service providers, using a mobile virtual network operator model. Some think it doesn't make sense.

But the rationale for being a mobile service provider is a bit more complicated than it used to be. For starters, "voice" revenue is not the only reason for doing so. These days, Internet access makes almost as much sense.

Also, for application providers with other revenue models, becoming a service provider would allow creation of packages and plans that cold be much more differentiated than currently are available from the leading mobile service providers.

But the lure of revenue might still be important. In the global telecom business, there have been 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.

In a potentially new development, some application providers might be taking a similar view, sensing that they create huge value for telcos, but do not participate in the access revenue stream, for example.

Strand Consult now speculates on whether Facebook, for example, 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 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 smart phone, 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, the firm argues.

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.  

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.

Facebook arguably is in no mood to consider such diversions. But Google or Apple, both with key application and gadget businesses, might have more motivation to do so.