File - Facebook’s $19 billion deal for WhatsApp places the social network in an arena where competition is fierce, particularly in Asia.
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Facebook Inc.'s $19 billion purchase of mobile-messaging startup WhatsApp Inc. is a stark reminder of how much money phone carriers are losing out on as competitors let users text and chat at no charge.Free social-messaging applications like WhatsApp cost phone providers around the world – from Vodafone Group Plc. to America Movil SAB and Verizon Communications Corp. – $32.5 billion in texting fees in 2013, according to research from Ovum Ltd. Free for the first year and 99 cents annually thereafter, WhatsApp is almost always cheaper than texting, especially across national borders.TEXTING DECLINEAs free services continue to gain in popularity, U.S. text-messaging revenue will decline 3 percent to 4 percent this year from $21 billion in 2013, Sharma estimated. Globally, carriers' texting revenues will peak by 2016 and then start to drop as well, he said. That took away the incentive to join WhatsApp".However, carriers in other parts of the world still charge high fees for texts, and their revenue will be affected as WhatsApp's popularity spreads, Entner said. WhatsApp also had an impact in Holland, where carrier Royal KPN NV didn't offer free texts as a part of its bundles, Mark Little, a London-based consumer analyst at Ovum, said in an interview.
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