Google reportedly is negotiating to buy WhatsApp, the popular messaging app. Though both moves--selling 1-Gbps fixed network broadband, and owning and packaging WhatsApp, will affect communications service providers, it is WhatsApp, not Google Fiber, that will have the bigger immediate financial impact.
The reason is that people use WhatsApp as a primary messaging app, and then use text messaging only when they cannot use WhatsApp. That is dangerous for mobile service providers because messaging most frequently is used between friends and people who already know each other.
Since most communication happens between people who know each other, you can figure out what WhatsApp means for carrier revenue.
In the lucrative international SMS business, growth has gone into reverse, precisely because of the use of WhatsApp and other messaging services.
For service providers, the biggest problem with WhatsApp and other messaging services is not so much that they disrupt revenue streams by shifting demand. WhatsApp and other messaging services do that.
But the bigger problem is simply that over the top messaging apps destroy the market, turning what once was a highly lucrative, high margin revenue stream into a feature that generates only modest revenue.
Google Fiber is a potential threat. WhatsApp already is disrupting a key mobile revenue stream. If Google gets WhatsApp, that trend only will accelerate.
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