This Is The Agenda Behind Mark Zuckerberg's Secret Dinner With Terrified Wireless Execs In Barcelona

Facebook CEO Mark Zuckerberg had dinner in Barcelona with several wireless carrier executives, many of whom are clearly terrified of his $US19 billion acquisition of the WhatsApp messaging service.

The event was “private” and many of its guests declined to identify themselves, according to Bloomberg.

They’re scared for two reasons: First, users can send messages for free on WhatsApp using wifi — thus completely bypassing the need to use wireless carriers’ expensive mobile phone data plans. It renders the wireless carriers’ traditional SMS texting services pointless, and removes Facebook and WhatsApp’s 1.2 billion and 450 million respective users from their text messaging ecosystem.

Second, the carriers must continue to pay for the wireless infrastructure on which Facebook and WhatsApp sit — even though neither company has spent a penny to build it. Zuckerberg is creating a world in which Facebook provides people with free services and creams off the ad revenue, and the carriers are stuck with the bill.

Long the titans of the mobile landscape — carriers are the people you pay up to $US100 a month just to text and talk — they’re now looking at a Zuckerberg-world in which they are “downgraded to simple pipes,” as one of the dinner guests put it.

Ste╠üphane Richard Stephane OrangeWikimedia, CCStephane Richard: ‘We’ll be downgraded to simple pipes.’

The ironic icing on Zuckerberg’s chutzpah-filled cake is that on Monday he asked for up to five of the biggest wireless carriers to work with him on a project that would provide free basic wireless service to developing countries — in hopes that later, down the line, they might get some revenue from add-on services once poor users there realised the benefits.

But the execs showed up to dinner with Zuckerberg anyway because Facebook has shown that it has gigantic sway over the mobile user base. Facebook’s market cap is also now $US180 billion — bigger than Vodafone, Orange and Telecom Italia combined — making the carriers look like trembling chihuahuas on a windy sidewalk by comparison.

Here are a few quotes from people at the dinner, courtesy of Bloomberg:

“The risk for us is being excluded from the world of services,” [Orange CEO Stephane Richard] said in an interview this week at the Mobile World Congress in Barcelona. “If that happens, we’ll be downgraded to simple pipes.”

… “Over-the-top operators have no intentions of investing in fibre networks,” Telecom Italia CEO Marco Patuano said in an interview this week. “The Facebook-WhatsApp deal teaches us that with $US19 billion Facebook could have built new fibre networks in both Italy and France.”

… “A service like WhatsApp, to be honest, that’s something we could’ve and should’ve come up with before,” said Orange’s Richard. “We’re well decided to catch up.”

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