Drones, Oculus, WhatsApp & the Future of Communication
[Corrected 4/14/14, 6:13 pm. See below.] Facebook is aiming to become a telco. Drones are the towers. Oculus are the phones. WhatsApp is the service.
Twenty-one billion dollars is cheap for a next-generation telco. There is more behind the WhatsApp and Oculus deals than the apparent need to bring teens and gamers under Facebook’s fold. Facebook and Google are in a heated race to become international telcos. Consider the value of a service with the potential to disrupt an aging international telecommunications industry worth well over a trillion dollars. Imagine the subscriber base of AT&T, Verizon, T-Mobile, and NTT DoCoMo combined. Under that lens, WhatsApp was a steal. So, how does one become a telco?
First you start with infrastructure: drones, fiber, and airships. Investment in infrastructure in one market can lead to an advantageous beachhead when entering larger related markets. Think, for example, about the humble origins of the telco MCI, which provided coast-to-coast relay stations for truckers using CB radios in the 1960s. Today MCI is part of Verizon, the largest mobile carrier in the U.S.
With Google’s balloon-based Project Loon and drone-based Titan Aerospace and Facebook’s acquisition of Ascenta, these Internet companies are targeting regions with the least competition—those without towers or with limited connectivity, such as developing nations and medium-sized cities—as test-beds for next generation technology. [The previous sentence had stated that Facebook acquired Titan.] What happens once these new technologies are perfected and become faster and cheaper than maintaining cable? Similar to Moore’s Law and silicon, we are witness to an exponential performance curve in wireless. Look at the relative speed in which Wi-Fi has progressed in the 2000s. Now imagine a mobile fleet of drones that could be retrofitted or replaced at the speed of a Formula 1 pit stop.
Think of that time when you walked behind a building or drove past part of a highway where the signal goes dead, or you are in the crowd at SXSW and there is just too much traffic for the telcos to handle. Usually, AT&T would drive in extra trucks with cellular towers on top in order to add a few more bars back to your phone’s signal, but that takes months of planning. Imagine a system of drones that could swarm over cities like vultures, reacting in real time and seeking out locations where phones are reporting low signals before customers even notice.
So where does Oculus VR fit in? Oculus Rift is the phone. Client hardware such as the Rift, Google Glass, and the Moto 360 is required to run a service. One utility for the Rift is for tele-presence, getting experts in areas where they can’t be at an instant. However, the acquisition of Oculus means more than people in masks playing hardcore video games or controlling iPads on Segways. It is about, to steal a phrase from Nokia, “connecting people.”
The real reason to acquire Oculus is to attract the best and the brightest to Facebook to work on cutting-edge technology. Whether the team comes up with anything that would appeal to the masses doesn’t matter. The Oculus team can be the breeding ground and focus point for hardware inside Facebook.
Think about what the Xbox did for Microsoft. Talent from that team helped spawn the Kinect, the Courier, and the Surface. Research from Oculus will be the foundation for set-top boxes, wearables, augmented-reality glasses, phones, and more. It’s not the first time Facebook has done this. To build Paper, Facebook took top talent from Gowalla, Tweetie, iBooks, and Push Pop Play.
The last thing needed for a full-blown telco is the service. Enter WhatsApp. WhatsApp is the evolution of communication in the mobile app era. The iPhone made phones much more than calling and SMS. In much the same way, the next-generation of telco is no longer about voice and text exchange.
Will WhatsApp replace Facebook? Not necessarily. It won’t replace Paper, Instagram, or the core Facebook experience. In the long run, these services will be channels. In much the same way, we have ESPN, HBO, PBS, and Cartoon Network. Each service Facebook provides a different stream of content and interaction.
If the future of telecommunication is Google and Facebook, what will it look like? How will the future be any different? Well, it won’t change much. Human habits are hard to change. In some ways the user experience will be simpler. Contacting someone could be much more straight forward, where users only have to care about who they contact and not how they contact them. Much of the conversation around protocols such as LTE and Wi-Fi might go the way of the dodo, similar to how technology marketing used to focus on computer chips for sales. In other ways, there will be more options for interacting with people, as diverse as the sea of apps on app stores.
Remember, this is not the first time that Facebook and Google have been compared to telcos. We can see the outlines of the shadows of the strategy emerging from the darkness. If Internet companies are to be social utilities, then the entire philosophy of what they are leads to this ultimate conclusion. And what about the traditional telcos? It will be a game of margins until they are no longer needed. Net neutrality gave Internet companies a way to make profit and afford the resources to build a better foundation, one that doesn’t require traditional cables and towers.
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